Yes grandma Oddball and I are old enough to remember gas price wars. Real price wars not like these wimpy wars shown in the accompanying picture and in those days the wars included give aways like drinking glasses, free maps and restrooms. These gas stations are pikers compared to the prices we remember. When we lived in Idaho (1960s and 1970s) gas prices were typically $ .309/gallon (yes, just 30 cents/gallon!) and at the peak of the price wars the price dropped to $ .179/gallon (back then the 9/10 cent tax surcharge was actually a significant amount). Ah, the good old days when there was real competition not the pseudo-monopolistic situation we find ourselves facing today.

I remember all this because we happened to visit grandma Oddball’s parents in California at that time and the entire round trip cost less than $25.00 for gas and lodging (at that time Oregon actually subsidized motels in winter to increase tourism. Lodging in Bend, Oregon cost us $4.00 for the night plus $ .50 for a crib for our daughter – even then a great deal for a couple of struggling students).

So why the change? Well, many people blame OPEC but they aren’t as effective as they used to be (OPEC only controls 38% of global oil), and as usual there are a variety of reasons from inflation to scarcity of supply but that’s not the whole story. In fact the majority of the world’s oil (over 60%) is produced by non-OPEC countries (Russia, the United States, China, Mexico, Canada, Norway, and Brazil). No, the real reason for these outrageous gasoline prices has to do laid at the feet of our politicians who have screwed up the economy so badly that gas prices are just one symptom of a badly mismanaged economy and as we face new challenges that for the first time are actually global in nature we badly need to fix the global economic structure.

For example just look at the names of the five giant oil companies: Exxon-Mobil, Chevron-Texaco, British Petroleum-Amoco-Arco, Royal Dutch Shell and Conoco-Phillips. As pointed out by Dr. Batra (The New Golden Age: A Revolution against Political Corruption and Economic Chaos) the names of these oil giants tell the story. Each of these five giants has been formed through the merger of highly profitable firms. So where was our legal system? And why didn’t they enforce our anti-trust laws?

As a consequence these five giants control over 60% of world oil supplies and the damage this has caused is undeniable. How you ask. Well to quote a congressional study that uncovered internal oil company memos “So we now know what the operating strategy of the Five Bullies such as Exxon-Mobil is. It is to force independent refiners out of business, tighten gasoline supplies, and then jack up the price. Finally, when the profits skyrocket, take ads in newspapers to claim the the profit is reasonable“. Sound familiar? In effect these companies form an oligarchy that operates monopolistically to gouge the public but this is only the tip of iceberg. Other global industries seem to be following the same strategy.

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Tags: Economics, energy, gas prices

This entry was posted on Thursday, June 25th, 2009 at 11:16 am and is filed under Economics. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

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