The Marketing Magic Behind Rising Gas Prices
by Susan Kirkland
Published on this site: August 30th, 2005 - See
more articles from this month
Marketing with a Mission
Summary: There's no mystery to the high cost of gasoline
for industry insiders. Neither the Iraqi war, finite resources,
market manipulations nor supply and demand are the real cause.
Back in 1988, when the price of oil bottomed out, almost
every small Texas entrepreneur suffered cash flow problems
unless they were smart enough to diversify. Business in Houston,
especially, depended on some facet of the oil economy for
healthy cash flow. One evening after a board meeting at my
luxury high rise, I struck up a conversation with a neighbor
who worked for a big oil company. I asked him what he did at his forty-story office
tower in downtown Houston. "I'm one of the big nasties
that sit around all day and decide how much you'll pay at
the pump," he chuckled. He was a career marketing man
at one of the big four oil companies. The whole country was
in an uproar about the recent rise in gas prices and it was a hot topic of conversation.
Gas was selling for a comfortable US$1.05 a gallon two weeks
earlier, and had recently risen to US$1.35. News reports were
rife with information about shortages, high demand, and the
importance of national reserves during a time of war during
the Gulf War. Sound familiar? "Americans have been getting a deal and
the price of gas will continue to rise, take my word for it.
Do you know how much they get for gas in Europe?" Note
that he was concerned with "what they get" while
I was focused on giving way too much. "We have marketing
goals just like any other business the price of gas will
continue to rise until it reaches or surpasses what the rest
of the world pays." Here we are 17 years later, steeped
in another war on the other side of the world. Gas prices
are skyrocketing, politicians are showboating and cash-strapped
citizens wonder helplessly when the price of gas will level
off; before or after it reaches the cost of a gallon of milk.
Sometimes only a cliche can do justice to an unjust situation
those who do not learn from history are destined to repeat
it. Yet here we are, a nation of car lovers swallowing the
big oil companies' explanation hook, line and sinker. Like
little fish, we jiggle and wiggle, making the hook sink deeper,
sold on the benefits of raising families in the suburbs, the
safety advantage of a big car in collisions and the efficiency
of high-speed highways that link us to workplaces. Americans
believe press statements regarding the high price of oil as
if marketing professionals are bound by rules of patriotism.
"By the year 2000, a total of 900 billion barrels of
oil had been produced.18 Total world oil production in 2000
was 25 billion barrels. If world oil consumption continues
to increase at an average rate of 1.4 percent a year, and
no further resources are discovered, the world's oil supply
will not be exhausted until the year 2056," writes David
Deming in "How Much Oil is Left?"
"The estimates above do not include unconventional oil
resources. Conventional oil refers to oil that is pumped out
of the ground with minimal processing; unconventional oil
resources consist largely of tar sands and oil shales that
require processing to extract liquid petroleum. Unconventional
oil resources are very large. In the future, new technologies
that allow extraction of these unconventional resources likely
will increase the world's reserves." You can read the
entire article at the National Center for Policy Analysis
by following the link below.
Marketing departments are responsible to the companies they
work for and concern themselves with positioning, promotion
and price. Their marketing plans don't consider whether a
family bypasses prescribed medication to put gas in the car
so Dad can make a living. What's the solution in a free-enterprise,
market-driven economy? The solution should be simple. Congress
should remember our government is for the people, by the people and end the
gas-gouging on moral grounds. Instead of acting on behalf
of the majority, they're held back by the lining of their
pants pockets, firmly held by a minority lobbyists for big
oil interests. They can get away with this as long as Americans
have better things to do than email their congressional representatives. In order
for this to be truly a government for the people, by the people;
you must participate. If you don't vote and you don't make
your wishes known to your representatives in Congress; complaints
about the high price of commodities fall under idle chit-chat. Complain where it counts and work for change through the democratic
process.
DID YOU KNOW Crude oil can be traded ten times before it
even leaves the barge?
Read David Deming's full article at The National Center for
Policy Analysis website:
http://www.ncpa.org/pub/bg/bg159/index.html#c
Find your Senator's email address here:
http://www.senate.gov/general/contact_information/senators_cfm.c
Find your House Representatives here:
http://www.house.gov/house/MemberWWW_by_State.shtml
Susan Kirkland, veteran small business owner and author
of Start and Run a Creative Services Business, shares the
secrets to finding and keeping clients, negotiating with vendors,
protecting yourself from scoundrels and scalawags--a valuable
resource for everyone, no matter what line of work. To view
excerpts from the book and get a free cartoon, visit www.sdkirkland.com
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