MEDIUM RARE by Jim Rarey

April 27, 2000

WHAT’S WRONG WITH THIS NEWS ITEM?

Detroit News – April 26, 2000 Page 3B (in the Business Section)

Oil Companies report record earnings

NEW YORK – Three of the nation’s biggest oil companies reported better-than-expected first-quarter earnings, boosted by the surge in crude oil prices over the last year. Exxon Mobil Corp., Texaco, Inc. and Conoco Inc.’s profits all topped Wall Street analysts’ estimates for the quarter.

Oil companies benefited from the Organization of Petroleum Exporting Countries’ decision last year to cut oil production. That sent crude oil prices surging over the last year, climbing to more that $34 a barrel in March 2000 on the New York Mercantile Exchange – the highest level since the Gulf War.

Prices, however, have weakened somewhat since OPEC announced last month that it would undo the production cuts, but still remain well above year-ago levels, trading around $26 a barrel.

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How can it be that the oil companies’ profits can increase when the cost of crude oil to them went up? The obvious answer is that they boosted the pump price of gasoline and diesel fuel by more than their increased costs. Is that called profiteering or just the normal operation of the free enterprise system?

Although the news article didn’t explain that anomaly, it isn’t too hard for even the average citizen to understand. What is missing from the article is any announcement that the Anti-Trust Division of the Justice Department is launching an investigation into possible collusion between the oil companies and the international monopoly OPEC. The reason it’s missing, of course, is that the Justice Department is not taking any such action.

The original rationale for the Sherman Anti-Trust Act was that the (federal) government had an interest in prohibiting actions by a combination of companies or a single company that lessened competition and resulted in harm to consumers. Under the current Justice Department, that rationale has been turned upside down.

Anti-trust laws are being interpreted to protect certain companies from competition. In the Microsoft case, no claim is made that consumers suffered any harm from that company’s practice of including a web-search feature in its Windows operating system at no extra charge. (Some say that Bill Gates’ only crime was to make millionaires of a number of his employees and donate billions to charity instead of directing that money to lobbyists and politicians in Washington). To the contrary, the Reno Justice Department is only claiming that a competitor (Netscape) was harmed. Isn’t that what free enterprise is all about? Those who can’t compete are harmed and may even go out of business.

There must be something in the anti-trust laws that would allow the Justice Department to go after U.S companies that cooperate with and take advantage of actions by the international monopolies. If not, maybe the laws should be repealed and let consumer boycotts keep the market honest.

What we have now is big government and mega-corporations (with no loyalty to any country) colluding to rip off the taxpayers and consumers. In Mussolini’s Italy that was called fascism. What should we call it here?

Permission is granted to reproduce this article in its entirety.

The author is a free lance writer based in Romulus, Michigan. He is a former newspaper editor and investigative reporter, a retired customs administrator and accountant, and a student of history and the U.S. Constitution.

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