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How to pressure the oil industry

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A practical dilemma with a logical solution: focus, focus, focus.

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Market forces are supposed to work for consumers as well as for business, weeding out less worthy product lines and encouraging superior ones, at the same time driving up production and lowering prices.

A problem for the market approach arises when an entire industry violates the spirit of competition, and instead colludes (perhaps with a wink and a nod from government) to drive up prices.  This may be what is happening now in the oil industry.

The natural, market-driven correction that works to eliminate unworthy or overpriced products may not work in a situation where an entire industry is engaged in a price-fixing scheme.  This is especially true when the product is seen as a necessity, such as gas for cars and heating oil for homes.

The obvious response is not easily implemented owing to inherent chaos on the demand side of the market.  (This chaos is sometimes supposed to be teleologically directed to benign economic ends, under which interpretation it is called "the invisible hand" after Adam Smith.)  Consumers simply do not have the option of not buying gas and heating oil.  Put in another way, consumers cannot easily punish an entire industry using normal market-driven behaviors.

What consumers can do is extremely difficult on an organizational level, but it may be the only possible way to use  market forces to influence an entire industry. The method might be called "making an example of bad companies, one at a time, until things start to change".  Following this method, one company is chosen more or less at random for total annihilation.  (Perhaps the weakest company would be selected, or the nastiest, but in the end, the choice is arbitrary--a throw of the dice.)  The goal is to force one company (at a time) out of business because consumers are sick and tired of that one company's collusion in a price-fixing scheme.  

The closing of one company (at a time) would of course cause stockholders and speculators to lose a great deal of money.  But hey, that's what the market is for, and why it is so beautiful.  In a working market, there is competition among suppliers, and there are are winners and losers.  Gas and oil would remain available as always.  The big difference would be that  the gas and oil companies would have been served notice that they had better start competing with one another to lower prices, or face another campaign against one of their members.

When the consumers talk as one, industries listen.  More or less that is what Adam Smith taught.

 

Born: Spokane, Washington Highest degree: PhD Linguistics, University of Hawaii Profession: Associate Professor Emeritus, Linguistics Department, Ohio University Research interests: Malayo-Polynesian linguistics, with particular emphasis on (more...)
 

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