BP offering deals at the pump during Gulf disaster

[Joanne98]

Run time: 02:32 https://www.youtube.com/watch?v=as2KZ_fQ2go   Posted on YouTube: May 26, 2010 By YouTube Member: wish Views on YouTube: 8   Posted on DU: May 26, 2010 By DU Member: Joanne98 Views on DU: 1219

 

People are buying it because it's cheaper!

[Taverner]

1. This is Capitalism

A man would be a fool not to buy this gas - after all. What would a boycott do? Hurt them - please! They can make up for this by reducing rates.

Kill the system, or suffer the consequences

[Statistical]

2. Which is why boycotts of commoditized products can never work.

If store doesn't sell enough gas they lower their price. When they lower their price enough people come to that store to offset the effect of any demand destruction via a boycott.

However to all those boycotting. Keep it up. Encourage everyone you know to do it. It will help out those of us who understand economics. :rofl:

[ooglymoogly]

3. Gee I wonder how the Florida Orange Juice

boycott was such a resounding success. If you do not think boycotts work, watch Arizona.

[Statistical]

4. Arizona is neither a commodity nor is it a required purchase.

One can go without Arizona (or even travel for that manner).
One can go without orange juice (or even all beverages for that manner).

For the vast majority of Americans they can't go without gasoline.

Hell there are websites like gasbuddy specifically designed to get lowest possible price (sometimes 2-5 cents per gallon lower).

You honestly think if BP drops their prices 10 cents they can't sell all the gasoline they want for as long as they want? Really?

[Uncle Joe]

5. To the contrary, BP's price reduction is proof that boycotts of commoditized products do work.

BP must reduce the price of it's product below that of it's competitors to sell, they're operating out of an adverse position and they know it.

If BP drops the price of it's fuel just to sell and overcome the motivation of boycott, it's competitors will not need to reduce the price of their fuel to such a degree and recapture more of BP's business.

So long as this Gulf oil gusher remains unchecked BP will be increasingly at the mercy of boycott, the people willing to buy their fuel today for a slight discount may not be so willing as this catastrophe grows in scope.

BP has also been forced to spend money on damage control public relations, now part of this may be due to shaping public perceptions for future legal considerations but I have no doubt the thought of fighting against boycott also comes in to play.

http://upload.democraticunderground.com/discuss/duboard.php?az=view_all&address=389x8413897

[Statistical]

6. No. BP station owner operators need to cut price below other retail gas stations.

BP sells oil/gasoline to anyone.

If more people buy from Exxon or Hess or Costco then BP will simply sell them more gasoline wholesale.

[Uncle Joe]

7. Does BP own stations or get an increased profit from selling its own brand?

[Statistical]

8. Nope.

Stations are independently owned and operated. My Grandfather owned 3 Chevron station by the time he owned.

A branded station gives the owner the advantage of a reliable source of fuel. Little tip: big brand stations tend to have lower gas prices when gas is rising. "No name" independents tend to have lower prices when gas is falling.

IF BP doesn't sell enough gasoline to it's owner operators (which it will because they will cut gasoline prices to avoid losing their business) but if it didn't they simply would lower their prices enough to sell to capture independents.

You don't think that Costco (who sells hundreds of millions of gallons of gasoline) wouldn't sell out your principles if BP offers them a rate 2 cents lower than Exxon?
Do you even know where Costco is getting their gasoline from right now? Raceway? Food Lion? Sams Club? etc?

[Uncle Joe]

9. Do these BP owner operators pay a franchise fee to BP?

[Statistical]

10. Of course they do and will continue to do so unless driven to bankruptcy. n/t

[Uncle Joe]

11. So boycotts do work. n/t

[Uncle Joe]

17. One other point they don't all need to be driven to bankruptcy to quit paying franchise fees.

If the brand is damaged enough, fewer of the owner operators will renew their franchise agreements; when they expire, without BP reducing the cost of those franchise fees and even then some may not do so.

Furthermore it will also become more difficult for BP to sign up new independent operators and collect more franchise fees.

The brand is everything and strong boycotts hurt brands.

[ooglymoogly]

13. But glutinous fund managers and shareholders are not too happy

with lowered profits. If a boycott continues, pension funds etc move to safer territory. A serious boycott works, always has and always will.

[demi moore]

12. keep the pressure up

the more media attention the boycott gets the bigger the drop in profits.
maybe this boycott will end anti competitive behaviour between the oil company's.

where i live if one company rises the price the rest rush to match it, making no real difference where you buy it. now lets see how long the other company's wait to drop the price too.

i have been hoping for this.. now lets see a fight at who can supply gas the cheapest.

[Statistical]

14. Why would other gas companies drop their prices.

If the boycott "works" they will see increased demand with increased prices.
Best of both worlds. Why would they do anything to change that? They want less profits?

[demi moore]

15. i dont think they could keep it up

Bp has a surge in costomers because they droped the price. if they keep it low the rest will have to drop in response.
sure they could let bp have the lowest rates i town...

as soon as the other places drop price or bp gives up being the cheapest they will notice the boycott again.

i think it would work. i did it today. i purposely drove past bp into shell. and that's all i have to do.

[ooglymoogly]

16. +1