E. Eugene Webb PhD
In Search of Robin
The petroleum industry is continuing to approach the retail distribution of motor fuel as a long range given.
Even as electric vehicles, cars and trucks, production is ramping up, the motor fuel retailers large and small are continuing to do business as usual.
Have you ever wondered why the retail price of gasoline at almost all gas stations is the same?
The short answer is the petroleum industry eliminated competition for gasoline prices long ago as a method to control prices and manipulate revenue. This marketing approach also allowed an “even” distribution of supply and revenue.
As the number of electric vehicle's increases, the demand for gasoline, and more importantly crude oil, will drop significantly.
It is anticipated; this drop in demand will cause a glut of crude oil forcing prices down. In the past, crude oil producers have simply reduced output causing prices to rise to the levels, they need to sustain operations.
The problem is this downward trend in demand is not a one time or short-term event it will be a continuing downward spiral. The geopolitical impact of rapidly declining oil revenues globally will cause significant economic and political disruption.
As of now the petroleum industry is not addressing this problem at any significant level.
Take retail gasoline prices, for example. The industry continues to allow retail prices to fluctuate wildly, often based on unclear reasons. Consumers see their cost at the pump go up with no clear reason only to drop suddenly. There also is no competitive option in gasoline allowing the consumer to “shop” for fuel at a lower cost.
The uncertainty of available, reasonably priced fuel is a concern to most motorists.
Continuing to allow gasoline prices to fluctuate significantly in a price-controlled environment is becoming a factor as consumers consider the electric vehicle option.
Fuel prices are already a prime driver of the electric vehicle purchase decision.
The predictions of doom in the oil business, may become a self-fulfilling prophecy if the industry does not take a consumer look at how the pricing and marketing of gasoline are done.
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