Tuesday, April 25, 2006 - The Progress & Freedom Foundation Blog

A Diversion into Oil

There is nothing like an oil price spike to bring economic populism to the fore. And it seems to be affecting everyone, even if they should know better.

Here is what I don't understand. If I am an oil company with all this supposed power to manipulate prices and gouge consumers, why would I wait to engage in my most egregious gouging when supplies are tight and hence prices are higher? After all, this is when I am most likely to incur consumer outrage and governmental regulatory interest. Instead, armed with all this power over the price of oil, it would seem much smarter to earn my monopoly profits when prices are lower and no one will notice.

To assume that the oil companies have all this power over oil prices, you also have to assume they are incredibly stupid and self-defeating as to when they exploit this power.

posted by Ray Gifford @ 2:12 PM | Antitrust & Competition Policy