RENEE MONTAGNE, host:
And if you're wondering what you can do about the price of gas, there's an e-mail going around that claims to have the solution. It's a chain letter that suggests that if enough people stop buying gas from ExxonMobil, they can force the company to lower its price. And the e-mail says that will start a price war that will force other oil companies to drop their prices and bring the price of a gallon of gas down to as low as $1.30.
So, would it work? We called a man who has an opinion on that.
Tim Haab teaches environmental economics at Ohio State University, and co-writes a blog designed to be a lively exchange on the economics of environmental issues. He joins us now. Good morning.
Professor TIM HAAB (Professor of Environmental Economics, Ohio State University): Good morning.
MONTAGNE: Well, let's just start with the question at hand. Would a boycott of ExxonMobil Gas Stations really force that company to lower their gas prices?
Prof. HAAB: Well, I have two answers. The first answer is, well, both of the answers are no, but I have them for two different reasons. The first answer is that the boycott simply won't work because we don't have the social coordination necessary to get enough people to boycott any single gas station.
MONTAGNE: Okay, okay, but let's just take it as it's--at its premise.
Prof. HAAB: Okay.
MONTAGNE: What if the boycott worked?
Prof. HAAB: Okay.
MONTAGNE: People really stopped buying.
Prof. HAAB: That's my second answer.
MONTAGNE: Which is no.
(Soundbite of laughter)
Prof. HAAB: The boycott simply won't work because, well, imagine that Exxon has a ten to 15 percent market share. The question that comes up is what would happen to those to ten to 15 percent of the people that buy from Exxon? The answer is they'll go somewhere else. Well, basic economics tells us that when you have a ten to 15 percent increase at another gas station, the price is actually going to go up at that gas station.
MONTAGNE: So, I mean, basically Mobil wouldn't drop its price so much, you're saying, as customers will go to other gas stations and then they'll up their prices?
Prof. HAAB: That's correct.
MONTAGNE: Huh. But in a way, you know, logically, why wouldn't ExxonMobil, all in theory of course, just because of the e-mail...
Prof. HAAB: Right.
MONTAGNE: ...why wouldn't ExxonMobil drop its prices, and why wouldn't that start a war? A price war?
Prof. HAAB: Well, I mean, it may drop its prices a little bit, but that would attract some of those customers back, because consumers are--drivers are fairly responsive to small changes in price.
Imagine a four-corner gas station where you--an intersection where you have four gas stations on the corner. In that case, if one of the gas stations dropped their price by, say, five cents or ten cents, everyone would go to that gas station.
And so, if Exxon were to drop their price a little bit, they would draw some of their customers back, which would drive prices back up at that Exxon Station, back up to what they were before.
MONTAGNE: Ah, so people wouldn't stick with the boycott.
Prof. HAAB: That's correct.
MONTAGNE: Even in their best interest, in theory, if this was in their best interest?
Prof. HAAB: That's correct.
MONTAGNE: So this has been going around in e-mails.
Prof. HAAB: Right.
MONTAGNE: A chain letter. But that aside, is there anything consumers can do, realistically, individually or in groups, to bring down gas prices?
Prof. HAAB: Yes. Drive less.
(Soundbite of laughter)
MONTAGNE: All right.
Prof. HAAB: Okay.
MONTAGNE: Sounds good. In theory.
Prof. HAAB: Right.
MONTAGNE: Tim Haab is associate professor of environmental economics at the Ohio State University. Thanks very much.
Prof. HAAB: All right. Thank you. Transcript provided by NPR, Copyright NPR.