March 17, 2022

Break Big Oil’s Monopoly

By Glenn

Insanity is doing the same thing over and over, expecting a different result. The first oil shock happened in 1973. Energy prices are set by “the market. The global energy market keeps failing us.

We have known the market is failing us for 49 years.  We know what can fix it: conservation and competition.  Conservatives have opposed these solutions every step of the way.

Real patriotism requires breaking the oil monopoly.  When any one product dominates an essential market, it can set prices. Conservation breaks the monopoly on the demand side.  Alternative sources of energy and transportation break the supply side monopoly.

Conservatives foolishly cling to a single failed effort: more domestic oil.  More domestic oil can’t solve a global market problem.  The United States is already the number one producer of crude oil.

US fields account for 15% of the annual global supply.  This is a huge turnaround from the low of 2008.  Since President Barak Obama took office, US crude oil production has risen from 5 million barrels per day to 11 million barrels per day.

We produced so much oil the US is now a net exporter of petroleum products.  US based companies sell more on the global market than American consumers can buy.

What changed in 2008?  First, in 2003 President George W. Bush lied about Weapons of Mass Destruction and invaded Iraq under false pretenses.  His management of the occupation was such a disaster that crude oil and gasoline prices soared.

This blunder triggered a fracking rush in the United States.  Fracking needs high crude oil prices to justify the exploration and drilling costs.  During the Obama years, US petroleum production rose from a distant third place behind Saudi Arabia and Russia to the number one position.

During this time world producers managed world supply to meet the demand.  They tried to keep the price per barrel of crude between $60 and $80 per barrel. US companies have enough more than wells to meet demand.  They don’t want to drill. Crude Oil Prices – 70 Year Historical Chart

Vladimir Putin’s invasion of Ukraine threatens to upset that global equilibrium.  Gas and crude prices rose based on this fear.  There is no oil shortage.  Energy traders are exploiting a fear.

When “the market” raises prices because of a POTENTIAL supply problem, we call that gouging. Do you want the government to prevent price gouging? Or should businesses be free to exploit fear?

As long as there is an oil monopoly, we will fall victim to price gouging.  Liberals wanted more energy and conservation choices. Conservatives have repeatedly said no. Can we have a better future?  Yes, we can.

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