Ah, springtime! The season for a number of important renewing rituals: housecleaning, the beginning of baseball season, balancing eggs on their ends, and the forwarding of outraged e-mails calling for oil company boycotts.
This year's litany is the usual one: Gasoline prices in the USA are too high; gasoline is a unique commodity whose price isn't subject to the usual market forces of supply and demand; OPEC and greedy American oil companies have deluded us into believing that current gasoline prices are actually comparatively cheap while they secretly manipulate the market to keep prices artificially high; and a simple boycott of a couple of brands of gasoline will rectify all this. (It's amusing that calls for "gas outs" predictably occur every spring, just when gasoline prices start to rise with the increased demand that accompanies the better driving weather of spring. Why don't those evil oil companies, who can apparently control the market at will, conspire to jack up their prices during winter, when prices bottom out?)
It is true that the gasoline market in California is particularly volatile, generally resulting in higher prices there than throughout the rest of the USA, because:
California is the second-biggest gasoline market in the world, outranked only by the United States as a whole. (California alone consumes as much gasoline as all of Japan.)
All of the state's refineries, running at full capacity, cannot meet California's one million barrels per day consumption, requiring the importation of more expensive product to meet consumer demand.
Since 1996, California has required a cleaner-burning formulation of gasoline which is produced at few refineries outside of California.
The four largest oil refiners in California produce almost 80% of the gasoline supply, and the six largest refiners operate about 85% of the retail gasoline outlets.
All of this makes California particularly susceptible to price increases whenever the gasoline supply is disrupted due to factors such as crude oil production cuts by OPEC nations or problems that temporarily shut down refineries.
Oil companies can manipulate their prices somewhat by controlling how much gasoline they produce and where they sell it, but they can't alter the basics of supply and demand: prices go up when people buy more of a good, and they go down when people buy less of a good. The "gas out" schemes that propose simply shunning one or two specific brands of gasoline won't work, however, because it's based on the misconception that an oil company's only outlet for gasoline is its own branded service stations. That isn't the case — gasoline is a fungible commodity, so if one oil company's product isn't being bought up in one particular market or outlet, it will simply sell its output to other companies:
Economics Prof. Pat Welch of St. Louis University says any boycott of "bad guy" gasoline in favor of "good guy" brands would have some unintended (and unhappy) results.
. . . Welch says the law of supply and demand is set in stone. "To meet the sudden demand," he says, "the good guys would have to buy gasoline wholesale from the bad guys, who are suddenly stuck with unwanted gasoline."
So motorists would end up . . . paying more for it, because they'd be buying it at fewer stations.
And yes, oil companies do buy and sell from one another. Mike Right of AAA Missouri says, "If a company has a station that can be served more economically by a competitor's refinery, they'll do it."
Right adds, "In some cases, gasoline retailers have no refinery at all. Some convenience-store chains sell a lot of gasoline — and buy it all from somebody else's refinery."
A boycott of a couple of brands wouldn't result in lower overall prices: Prices at all the non-boycotted outlets would rise due to the temporarily limited supply and increased demand, making the original prices look cheap by comparison. The shunned outlets could then make a killing by offering gasoline at its "normal" (i.e., pre-boycott) price or by selling off their output to the non-boycotted companies, who will need the extra supply to meet demand. The only person who really gets hurt in this proposed scheme is the service station operator, who has almost no control over the price of gasoline.
The only practical way of reducing gasoline prices is through the straightforward means of buying less gasoline, not through a simple and painless scheme of just shifting where we buy it. The inconvenience of driving less is a hardship too many people apparently aren't willing to endure, however.