Friday, May 12, 2006
Oil & Gas - Pandering is no solution
Some interesting (and obvious) points here...
From an opinion column by Stephen Chapman in the Jacksonville (North Carolina) Daily News:
"Critics always look for evidence of illegal manipulation, but they might be better off setting traps for the ivory-billed woodpecker. For one thing, executives who do it can be convicted of a felony. Those not deterred by prison face a practical obstacle: If one oil company tries to boost prices above what supply and demand warrant, it will lose sales to competitors who are willing to charge less."
"You could squeeze consumers if you got all the sellers to agree to reduce sales. But in a market with numerous producers, it’s devilishly hard to achieve the collusion needed to keep supplies artificially low and prices artificially high. If Big Oil knew how to do it, we’d have been paying $3 a gallon long before now."
"The biggest reason for the soaring cost of motor fuel is the soaring price of crude oil. Far from being under the control of Exxon Mobil, price increases are caused partly by growing worldwide demand, partly by supply disruptions in major producing countries like Nigeria and partly by OPEC’s design. Oil companies may benefit from such developments, just as American farmers may benefit from a drought in Argentina, but that doesn’t mean they cause them."
