Your Money, Their Politics
Commentary on government action impacting consumers and investors.
OPEC and Anti-trust law

Mrs. Clinton has suggested that we use American anti-trust law to address the Organization of Petroleum Exporting Countries or OPEC.  Anti-trust law addresses the promotion of competition and consumer choice in the United States.  Courts try to maximize consumer welfare with their decisions.  Courts and the appropriate regulatory agencies focus on concentration of economic power. 


Mrs. Clinton is arguing that OPEC represents concentration of economic power.  In general, this is what a cartel represents.  What Mrs. Clinton fails to do, however, is to point out that consumers are endusers of gasoline.  The cartel that she wants to after via the use of anti-trust law sells oil as a wholesaler to other wholesalers who in turn sell their refined product, whether it be jet fuel, diesel fuel, or fuel for vehicles, to retailers.  The reality is that consumers have choice.  Going after OPEC only provides additional aid to Exxon and Hess.


American anti-trust law is not designed to break up a cartel that does not operate in the United States.  Also, the complexity of OPEC makes the use of anti-trust law inappropriate.  OPEC serves primarily a political purpose with oil as its chief weapon.  If Mrs. Clinton is really interested in sound policy designed to reduce the cost of gasoline, Mrs. Clinton needs to focus on supply and demand issues and determine what incentives government can provide to reduce the demand for oil and gas.


 .... good luck, Mrs. Clinton. 

2008-05-06 22:45:17 GMT
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