I think you are somewhat narrow minded to think that collusion does not exist just because the government says it isn't happening. Isn't it possible that they are part of it?
OPEC produces it and big oil is basically the distribution network.
Too many US dollars invested in foreign oil for the US government not to covertly work with the entities involved.
There certainly is collusion among OPEC countries. In fact these countries may be manipulating some of the newer foreign energy exchanges where there is less transparency. [edit: and this is an area to look into with the oil companies as well] And, the US govt. tries to influence OPEC from time to time and has foreign policy where Oil and OPEC are clearly factors in that policy. But, ultimately high energy prices hurt the US economy and a good US economy trumps any specific special interest the oil industry may enjoy.
There are plenty of enemies to big oil in the US political process -- people who can gain much mileage sticking it to the oil industry. It is also abundantly obvious that the Oil companies cannot, to any significant degree, control low price periods (which can run the better parts of a decade) and to some extent neither can OPEC, since it is not all powerful among oil suppliers or even within itself.
I am very open minded on the issue actually. I have spent a lot of time over the past 7 years or so seeing if what appeared to be smoke really was smoke, and if there was any fire beyond that. That includes talking to some of the nationally recognized consumer advocates who testify in front of Congress on the issue. I still review new findings and theories. But over that time, most of what I’ve seen have been emotional reactions among consumers who usually have no understanding at all about how such a commodity works in the markets, politicians grandstanding to play on those emotional reactions, and the FTC confirming what logic would dictate. You see knee jerk political actions like price controls being promoted by ignorant legislators (one of whom said “I can’t understand how a hurricane in the gulf can impact the price of gasoline here in the Northwest!) that not even the consumer advocates would consider to be a good idea.
If you look at how refiners operate, and how the major integrated oil companies operate, you see decisions that do not really reflect a “happy days are here forever” attitude. They know the markets will swing, and when that happens they will take it in the shorts and nobody will be holding show trial committee hearings in Washington on how to improve the industry’s comparatively dismal profits.
The reality I have come to see is that Oil prices are driven by basic supply and demand issues, and that your typical commodity investment forces react and over react to the fundamentals just like any other commodity. The added complication to this is international politics – and that’s a big one. What do you bet the markets are nervous about Iran’s decision to put online 5000 new centrifuges to process uranium? Whether we respond or not militarily the market will likely adjust to that.
Could I be misguided? Absolutely. I know more about the industry than most people in the US, but that's not saying much. And there are plenty of people who know a lot more about it than I do. And, I have been wrong (very wrong in some cases) about a lot of things over the years. My ignorance is boundless. But, I'm pretty easy to convince I'm wrong if facts and logic dictate that. So far I haven't seen anything that would suggest any major power among the oil industry itself to do more than make money when the markets dictate, and make far less money (compared to many other industrial sectors) when the markets dictate otherwise.
Charon
