By Plain Rhetoric

They’ve got us over a barrel

May 8, 2018 | 5:00 AM

Have you ever wondered how to get the attention of gas retailers such as Petro Can, Chevron or others? I have, and if coffee shop conversations are any indicator, so too have many of you.

The price of gasoline at the pump has been ridiculously high and no, it has nothing to do with the pipeline and Alberta’s little hissy fit over BC wanting the court to rule on jurisdictional issues. In fact, depending on who you want to believe, the retail price has been impacted by refinery shutdowns for maintenance, worldwide shortages, switchover to summer grade gas, demand or any other story being spun by the oil companies and petro-states. However, the one-thing oil companies seldom blame is the cost they are paying for a barrel of oil. It’s something they don’t seem to mention all that often and that omission is in it self a bit odd.

Inventory cost should be a major component in determining retail price. The spread between product cost and retail price is what many refer to as gross margin, yet I now get a sense that oil companies are defining their spread differently. I think they have left economics out of it and have quickly and efficiently moved into an area more commonly known as gouging.

If true, they do it with the full knowledge that we really don’t have much in the way of a choice. If you need your vehicle then you have to come to them and pay the price they demand. And through a quirk of fate, they all seem to demand exactly the same price at exactly the same time. They have us over a barrel. Or do they?

Consumer activism has to date been pretty meek, mild, unorganized and ineffective. The last attempt asked consumers to not buy gas on one specific day. A one day protest that at best was a feel good moment for consumers. Gas companies knew they’d make it all back the following day when you filled the tank you were going to fill the day before, so why should they worry.

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The all-encompassing boycott day failed because it simply delayed (for 24 hours) the purchase, as opposed to being an action that takes your money and business elsewhere and for a long time. Unlike the one-day boycott, moving your business away for a longer period of time hurts a company and can eventually hurt it badly.

You need gas and the retailers need to sell gas, so what do you think would happen if for one month everyone agreed to not buy gas from just one brand? Say, for instance, that during the month of June, you and everyone else didn’t buy from Petro Can. You are still buying the gas you need but not from that retailer.

Their sales plummet; franchisees complain about the lack of business and Petro Can ends up with a surplus of fuel.

Imagine for a moment all other brands are delighted as they’re still selling gas, lots of gas for that matter. Yet in this example, poor old Petro Can is now sitting on a surplus of fuel. They need to unload it in order to make money and they’ve got three choices. First, they can wait it out for a month. Second, they can up their prices to try and recover lost profits from those still buying from them. Third, they can lower their prices to try and get you back to their stations.

Waiting it out and doing nothing would be a huge and expensive gamble. Upping the price to try and make more money will drive what customers are left across the street to their competitor. Lowering prices will get customers back and force other stations to price match.

What do you think they would do?