Oil Watchdog

"What OilWatchdog usually worries about is what refiners do to keep fuel prices higher than they should be."

What should they be? Please tell us.

"The suit dates back to events in 1996 involving Arco and Chevron, but the refining business has only grown more concentrated since then."

Still not particularly concentrated.

California refinery market share:

BP                         19%
Chevron                 19%
Valero                   13%
ConocoPhillips        12%
Tesoro                   11%
Shell                     10%
ExxonMobil              6%
Big West                 2%
Kern                       1%
New West                1%
Petro-Diamond        1%
Tower Energy          1%
IPC                         1%
Others                    3%

Well below the level of concentration that would be of interest to the Department of Justice. Yet that doesn't stop an ignorant commentator from insinuating lack of competition. Imagine if I showed a similar listing from the computer, cell phone, or automobile industries and then claimed, therefore, collusion and price fixing. Absurd.

"The ability to exchange so-called "price signal" information between refiners has also vastly increased."

Name one industry whose companies ignore their competitor's prices. Have you ever been to a supermarket and compared prices? Do you think that Jiffy doesn't know what Skippy is charging for peanut butter, or that Continental doesn't know what American is charging for a ticket to New York? Knowledge of a competitor's prices is no indication of price fixing, it's a reality of every industry, including newspapers. This comment shows the depth of Dugan's lack of understanding of the real world. With all due respect, this post is just plain stupid.

"... oligopolies (like the refining business, certainly in the West) mess with supply to affect prices. She asked for a "refinery-level audit" of costs and pricing--no doubt knowing that no such thing was or would likely ever be available."

Also no doubt not knowing much more about the refining business than Judy Dugan. Just more bald claims by a biased observer.

Look at current supply:
They're messing with oil supply? Looks high to me.

They're messing with gasoline supply? Looks high to me.

Where's the evidence?

Other examples of oligopolies: the steel, automobile, and telecommunications industries. An oligopoly can be intensely competitive. The assumption that an oligopoly is not competitive is wrong, and Dugan uses it to intentionally mislead. So, GM "messes with supply" do they? ... fewer cars means higher prices for GM right? GM can be certain that no competitor will jump ship and produce more cars, taking away its market share, right? What a great strategy. Clueless journalists and politicians should be forced to actually sell things for a living before spewing their silly ideas. When you are supported by taxpayers, contributors, or rich sugar daddies, you don't need to be accountable, and you don't really need to get your hands dirty to see how things really work.

"Cases like these--solved with gumshoe policing, including wiretaps (in Quebec) show how inadequate the law is in detecting, or even proving as a crime, the use of mutually available electronic data to create mutually agreeable prices in highly concentrated and uncompetitive industries."

Then look at the data. Gasoline selling for less than oil per barrel for much of last autumn. Price fixing to lose money? Absurd. Here Dugan refers to service station brand names to imply oil industry guilt, hiding from readers that only a tiny percentage of retail stations are actually owned by the oil industry. But then that would not make the point she wants to make.

She uses that characteristic of the lazy mind, extrapolating and generalizing to explain a complex world. I've heard of cases where journalists were dismissed for plagiarism. Therefore all journalists are plagiarists, correct?

"They're not competitive and they don't really have secrets from one another."

A comment that could only be made by the likes of Judy Dugan. Oil and gasoline prices have dropped over 50% since last year; oil and gasoline inventories are well above seasonal averages; refiners are having a terrible year; the combined market share of Big Oil world production is about 15%; damaged refineries are rebuilt in short order; and Dugan claims they're not competitive and that they can fix prices (one imagines a meeting last summer where refiners all flashed each other signals "Hey, let's drop gas prices by 60%!" OK?"). They freely swap trade secrets, she says (one imagines that Shell turns over maps of its best prospects to Exxon, or that Conoco routinely channels its latest refining technologies to Chevron). What's the basis for this flase claim? Nothing more than personal prejudice and an inability and unwillingness to think critically. I fail to see how any journalist with any self-respect could write such trash, and it's stunning that an "analyst" would make such public charges without a shred of evidence.

Here's my idea. Journalists should be able to pass a basic IQ test before going public. Journalists should have at least some evidence for their charges. The stuff written on this page is National Enquirer quality. No evidence is necessary. Claim aliens landed in Montana, Miley is really George Bush's daughter, the oil industry doesn't have secrets, whatever you want to say. Hey, who's going to check? It's fluff written by pseudo-journalists for an ignorant audience, and they're going to eat it up and ask for more.