A Solution to the Energy Crisis: The Case for Increased Competition

Abstract

Monopoly practices and concentration of power in the hands of the major oil companies have caused much of the current shortage of fuel oil and gasoline supplies and the increase in prices for such fuels in the United States. These practices are found at four levels in the petroleum industry: production, refinement, transportation and marketing. Furthermore, the petroleum industry has undertaken horizontal expansion into other energy areas, such as coal and uranium; this suggests that the American consumer of energy will face even more problems, unless remedial action is taken. One solution to the problems of energy supply and price in the United States is legislation which would require divestiture of vertically and horizontally integrated petroleum companies. Legislation which calls for the reorganization of vertically integrated companies into four substantially independent units for production, transportation by pipeline, refinement and final marketing has recently been introduced into both houses of the Congress. If passed, such divestiture legisla tion would: encourage competition, lower consumer prices, stimulate increased exploration and result in an increase of petroleum supplies. Legislation designed to break apart the developing horizontal integration of petroleum companies and those in other energy areas should be seriously considered.