"The free market is a myth. In the late seventies and early eighties OPEC (i.e., Exxon, et al) cut of oil supplies to the U.S. and drove independent refineries into bankruptcy."
Nice theory.
Doesn't match with reality.
Prior to 1979 Iran was the largest middle Eastern supplier of oil to the United States. The Shah was a very close ally of the US, even closer than the Saudis.
When the Iranian Revolution occurred, that not only broke the close US-Iranian alliance, it also resulted in Iran's oil production dropping by nearly 70% for a year or more until the situation stabilized.
Even after it stabilized, Iran's oil production was about 40% less than what it had been in the Shah's days, largely because the Revolutionary government EJECTED most of the foreign oil companies, including Exxon.
Reality;
1. The government of Saudi Arabia owns 51% of ARAMCO. Exxon and some other international oil companies own the other 49%.
2. These international oil companies have similar deals with numerous other countries.
3. In the late seventies, these countries curtailed oil shipments to the U.S. and raised prices.
4. U.S. oil prices had been regulated since WWII. In the early eighties U.S. oil was bringing $16.00 per barrel while oil was bringing $40.00 per barrel on the world market. The oil companies said that if the U.S. deregulated oil prices and let them float on the world marker, domestic production would increase and our dependence on imported oil would decrease. Congress and the President deregulated oil prices in the early eighties.
5. Upon deregulation, independent domestic oil producers invested millions of dollars increasing production.
6. International oil companies had, and still have, leases to drill on thousands of acres in the U.S. They did not drill and are still not drilling. Does anyone wonder why?
7. After domestic producers had gone millions of dollars into debt, these countries and the international oil companies flooded the market and dropped prices to $10.50 per barrel. At the time the average break even price in the U.S. was $12.50 per barrel. Under Clinton, oil dropped to $8.50 per barrel. This gutted domestic production and put around 250,000 people out of work. It also caused the savings and loan companies to crash. George Bush I bailed out the savings and loan companies but let the home owners sink. Is this a free market or mercantilism?
8. After gutting domestic oil, the international oil companies and the countries they own started raising prices again.
9. This time, we are investing billions in domestic energy production. Expect oil prices to drop again and another round of U.S. bankruptcies when it looks like we might become able to wean ourselves off of imported oil.
Like most Baby Boomers, I used to believe in the free market. I was duped. We are at the mercy of international robber barons as long as worship at the shrine of the free market.
