Exxon Mobil is not alone among Big Oil exiting the retail gas business, a market where profits have gotten tougher as crude oil prices have risen. Gas station owners say they’re struggling to turn a profit because while wholesale gasoline prices have risen sharply, they’ve been unable to raise pump prices fast enough to keep pace.
a. Is Exxon Mobil making a shutdown or exit decision in the retail gasoline market?
b. Under what conditions will this decision maximize Exxon Mobil’s economic profit?
c. How might Exxon Mobil’s decision affect the economic profit of other gasoline retailers?