Bogley

[MY T PIMP]

My solution, make the oil monopoly compete against itself. Rally Americans to buy local fuel only, this would have to make other companies drop their prices. The fact is OPEC is an illegal operation, if good old Teddy Roosevelt was still around he would put an unrivaled assault on this monopoly. Not to mention punch the idiots who decided to restrict constructing new refineries in the face. :bash:

I've said before concerning the move to a more eco-friendly mode of energy is very important, but what is just as important it is something that needs to be eased into. Forcing Americans into it too quickly would cause drastic economic circumstances. Explanation; who can afford to have their late model vehicle rendered worthless? Can we not have cheap oil and still promote eco-friendly energy?:ne_nau:

[trackrunner]

MY T PIMP wrote: The fact is OPEC is an illegal operation, if good old Teddy Roosevelt was still around he would put an unrivaled assault on this monopoly.

I don't think I understand. Organization of Petroleum Exporting Countries (OPEC) is a large group of countries made up of Algeria, Angola, Ecuador, Indonesia, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, the United Arab Emirates, and Venezuela. OPEC is not companies it's countries. US laws don't extend to how other countries govern their natural resources.

Now if you are talking about the largest companies I see your point: ExxonMobil, Shell, BP, and Chevron-Texaco. Some have argued that the high prices are from allowing companies to merge in this industry: example Exxon merged with Mobil, Chevron with Texaco, etc. It uses to be there were 11 major oil companies, now there are 4 after all the merger and consolidations. Argument is we didn’t see such high company profits when there were more major players in the industry.

Price fixing is illegal in this country. What isn’t illegal and yet accomplishes the same profits of price fixing is not lowering your price. Let’s say some natural force would conclude that price should go down. Chevron notices ExxonMobil has not lowered its price. Chevron management wonders why prices are higher when it should be lower. ExxonMobil has sent a signal to its competitors without doing something criminal (criminal signal would have been to call management directly had tell them what you are doing). Through its actions, ExxonMobil’s competitors can tell obviously a signal has been sent to have the industry keep prices high (higher profits) and not compete in a price war (lower profits).

I bet the oil industry has experienced some sort of this scenario. So the obvious cure you would think is to have some government central planner determine what price and output should be, right? Ask the Soviets how that turned out for them? Competition and substitute products are the fee market forces answer. Starting a new oil company is virtually impossible (capital, infrastructure, and the major companies will strive to drive new companies out of business). So the only legitimate answer to this dilemma is substitute products (alternative fuels, driving less, fuel efficiency, mass transit, etc).

[jimflint1]

trackrunner wrote: Starting a new oil company is virtually impossible (capital, infrastructure, and the major companies will strive to drive new companies out of business).
I think that's why the point about Teddy Roosevelt was made. At least partially. Monopolies are never good for consumers. Especially when the product being offered is a need rather than a want. I'm sure Bill Gates could start an oil company if he desired to do so. So why not a large pool of wealthy individuals combining into a new oil company?

[trackrunner]

jimflint1 wrote: trackrunner wrote: Starting a new oil company is virtually impossible (capital, infrastructure, and the major companies will strive to drive new companies out of business).
I think that's why the point about Teddy Roosevelt was made. At least partially. Monopolies are never good for consumers. Especially when the product being offered is a need rather than a want. I'm sure Bill Gates could start an oil company if he desired to do so. So why not a large pool of wealthy individuals combining into a new oil company?
Actualy Teddy Rossevelt and OPEC were in the same sentence hence the confussion on my part. :ne_nau: If we are talking about ExxonMobil, BP, Chevron-Texaco, Royal Dutch Shell, then I understand the Roosevelt comment. Though technically I could understand an argument being made about OPEC being a monopoly, the countries collude to exploit a higher world price of oil.

Just because I'm a nerd and majored in economics.
It's not a monopoly. Mono = one, oli = few. The oil industry is considered an oligapoly, and one where firms have strong market power. The firms collude together to act like a monopolist to exploit their market power.

Edit:
I guess I should add that I agree with My T Pimp on the buy local. Though I think it will be hard, if everyone agreed to buy from the local gas companies, Sinclair, Tesoro, Flying J, Maverik, etc, I belive these smaller gas companies could then compete on a larger scale with the big four and price may fall.

[jimflint1]

trackrunner wrote: Just because I'm a nerd and majored in economics.
It's not a monopoly. Mono = one, oli = few. The oil industry is considered an oligapoly, and one where firms have strong market power. The firms collude together to act like a monopolist to exploit their market power.



Okay, technically not a monopoly, but in an industry where no newcomers appear to be allowed, it seems to have the same outcome as a monopoly.

[trackrunner]

Thought this pic should be posted here