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113 comments on The Economics of Oil, Part I: Supply and Demand Curves

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oilmanbob on August 19, 2007 - 12:50pm

edspievack

What king of nonsense do you mean? Classic economic theory? or the "myth" we live in a free rather than an oligopolstic market?

82% of the oil production in the world is by national oil companies rather than multi-national companies, and as we import about 1/4th of our gasoline and some national oil has refining in the US and about half of the refining is by companies without production or marketing of their own,a very small part of the US market are in what I think you are calling oligopolies .

I agree that classic economic theory is screwed up, there is a physical limit to resources that it is ignoring. But you need to examine your "facts" if you think prices are controlled by big oil companies.
Bob Ebersole

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auntiegrav on August 19, 2007 - 10:50pm

I don't know why I seem to be responding to your comments so often, Bob; maybe you say things that I'm interested in...

82% of the oil production in the world is by national oil companies rather than multi-national companies, and as we import about 1/4th of our gasoline and some national oil has refining in the US and about half of the refining is by companies without production or marketing of their own,a very small part of the US market are in what I think you are calling oligopolies .

I am curious about how much of the infrastructure of these 82% national companies is really built and maintained by branches of the IOC's. I also wonder how much of the oil handling is done by the IOC's for those national interests, but not in name. In other words, how much of the '82% national oil companies' is in name only? How many people are really making decisions about poking holes or opening valves? Are the IOC's really proportional in their influence, or do the talking heads making recommendations get all their information from IOC representatives, then the Wall St. representatives and boardrooms of the NOC's take their cues from these ("Exxon's not drilling, why should we?")?
This is critical when making evaluations of the influences which 'control' the flow of oil and the flow of cash from oil. If most of the oil money ends up plastered around in the offices of Wall Street when all is said and done, then calling the Kettle a "Black Oligopoly" might be appropriate. It doesn't mean that the prices are 'controlled', but perhaps the System which we think of as competitive is simply part of a much larger System of Systems which has taken on a life of its own that has no decency for the living world that created it (RE: Collective Corporate Charter Mores).
The Blue Pill may simply be the illusion that we can put the genie back in the bottle at any time before the market 'clears'.

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“This order [i.e. capitalism] is now bound to the technical and economic conditions of machine production which today determine the lives of all the individuals who are born into this mechanism, not only those directly concerned with the economic acquisition, with irresistible force. Perhaps it will so determine them until the last ton of fossilized coal is burnt.”

—Max Weber, 1905