After a bitter price war from 2014-2016, American Oil Producers got tired of competing on price with the Organization of Petroleum Exporting Countries, or the OPEC oil cartel, and at some point from 2017-2021, decided to join the cartel and cut supply to the market. This action had the affect of raising oil prices, costing oil consumers something on the order of $200 billion a year.
Yesterday, the Federal Trade Commission released evidence confirming that collusion played a serious role in hiking oil prices at that time. Pioneer Natural Resources CEO Scott Sheffield, a leader in the fracking field, “exchanged hundreds of text messages with OPEC representatives and officials discussing crude oil market dynamics, pricing and output.” Sheffield was explicit about his goal, saying that “if Texas leads the way, maybe we can get OPEC to cut production. Maybe Saudi and Russia will follow. That was our plan,” he said, adding: “I was using the tactics of OPEC+ to get a bigger OPEC+ done.” He talked to shareholders, publicly threatened rivals, and ultimately achieved output cuts across the industry regardless of price. “Even if oil gets to $200/barrel,” he said, “the independent producers are going to be disciplined.”
How do you aggregate just the oil industry? Well, it’s pretty clear that in 2021 and 2022, the industry did fantastically well, with the “the top 25 companies [making] more than $205 billion in profits in 2021,” and an “even more astounding” amount in 2022. Of course, not all profits are due to price-fixing, but $205 billion is just the top 25, not the whole industry. And profits got much much better the next year.
So let’s layer on a rough guess of a $200 billion increase in profits in 2021 that Scott Sheffield implies, which is 27% of the total corporate profit increase that year. That’s a pretty astounding amount, more than a quarter of the total inflationary increase being a result purely of a price-fixing scheme.
@9M5DR2S2wks2W
America should vote for Biden or Kennedy because Trump is just like Andrew Jackson and we need to form a more powerful Whig party.
US is producing more oil than at any time in history. How do you reconcile this fact with the accusation of colluding to keep production artificially low? OPEC can't even keep its own members from going over production quotas and they're an actual cartel.
@Tr3atyWeaverNo Labels2wks2W
So you are using a system of cartels to make your point? They've colluded for 50 years. That what highly regulated industries do. You want less of it, don't block thousands of oil leases in the US. Without the prospect of future production incentives push for lower supply.
I get that this is outrageous, but why does no one ever mention that this has been the entire history of the diamond industry
@Bip4rtisanMareSocialist2wks2W
Pres Biden should access to outrageous billions profits oil co, Amazon, Walmart, etc with price increases to go back into the people’s pockets or Medicare coverage for all, schools lunches, affordable housing, help homeless/veterans, free child daycare, trade schools, education
This is election interference
@ISIDEWITH2wks2W
@ISIDEWITH2wks2W
@ISIDEWITH2wks2W
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