In the late 1890s the problem was monopoly, so the Sherman Anti-Trust Act1 was enacted to counter manufacturing monopolies. Were Sherman alive today he’d say monopolies are still with us, except they don’t manufacture, they create services, but the real danger to society is from oligopoly2, not monopoly, as the former sets the terms of their exploitation and obfuscation. You don’t need to go any further than today’s transparent oil industry price-gouging conundrum. Transparent, because the oil oligopoly operates (to their advantage and our disadvantage) contrary to what any clear-thinking person should tolerate. The demonstration of the truth just stated is laid out below.
Over the period of 2019 to 2022, the cost of bringing oil to market as gasoline (refining, transporting, advertising) has been relatively stable.3 The price of a barrel of oil in 2019 was $64, and $115 in 2022.4 When 45.2% of the $64 per barrel in 2019 was the cost for acquiring the oil (including royalties to U.S. government) and bringing it to market5, a perceptive person would call the remainder (54.8%) profit. The price of gasoline is going up, but why? Just as any respectable mobster would do, use a crisis (create victims then offer protection) to blame your high prices on (pick one): Putin’s Ukraine War, Biden’s inflation, OPEC’s price-setting. But wait, imagine you have to explain the oil oligopoly to Sherman who has time traveled; in three-years: a) costs of bringing goods to market stayed roughly the same, yet b) industry profits went from $32 per barrel to $83 (a 159% hike). The price of a gallon of gasoline went from $3.00 to $4.856 (62% increase), when it should have gone down to offset record profits. I’m certain Mr. Sherman would say what a monopoly can’t do, an oligopoly does with a smiling face, knowing that campaign contributions7 have greased the necessary skids to keep the non-perceptive public running faster in their mental hamster wheels.
1 Sherman Anti-Trust Act, see https://www.archives.gov/milestone-documents/sherman-anti-trust-act#:~:text=The%20Sherman%20Anti%2DTrust%20Act%20authorized%20the%20federal%20government%20to,foreign%20nations%22%20was%20declared%20illegal.
2 Monopoly is a single company having control of a market; oligopoly is two or more companies controlling a market, none of which can keep the others from having significant influence. see https://www.investopedia.com/ask/answers/121514/what-are-major-differences-between-monopoly-and-oligopoly.asp#:~:text=A%20monopoly%20occurs%20when%20a,others%20from%20having%20significant%20influence.
3 Cost of bringing gasoline to market, profit, see https://www.eia.gov/energyexplained/gasoline/factors-affecting-gasoline-prices.php.
4 Price of barrel of oil in 2019, see https://www.eia.gov/todayinenergy/detail.php?id=42415#:~:text=Crude%20oil%20prices%20were%20generally%20lower%20in%202019%20than%20in%202018&text=The%20price%20of%20Brent%20crude,b%20lower%20than%20in%202018. Price in 2022, see https://www.statista.com/statistics/326017/weekly-crude-oil-prices/.
5 When an oil company sells its crude to itself, that cost is 100% profit.
6 Price for gallon of gasoline 2019 and 2022, see https://www.bls.gov/regions/new-york-new-jersey/news-release/2019/averageenergyprices_newyorkarea_20190614.htm#:~:text=(Data%20in%20this%20release%20are,close%20to%20the%20national%20average and https://www.nyserda.ny.gov/researchers-and-policymakers/energy-prices/motor-gasoline/weekly-average-motor-gasoline-prices.
7 Campaign contributions to Congress ($12.4 million), see https://www.opensecrets.org/news/2022/04/top-oil-gas-companies-increase-lobbying-spending-amid-global-energy-crisis/#:~:text=Top%20oil%20and%20gas%20companies%20increase%20lobbying%20spending%20amid%20global%20energy%20crisis,-By%20Jimmy%20Cloutier&text=The%20top%20oil%20and%20gas,upends%20the%20global%20energy%20market.