Big Oil Song and Dance.

• Author: Hightower, Jim Allen
• Position: The Lowdown - Viewpoint essay

The Big Oil Quintet made an appearance before Congress on May 22, singing their old standard: "The Magic of the Free Market."

The CEOs of the five biggest oil corporations turned in a boffo performance for a demanding crowd of lawmakers: You ask us why gas prices are so high/But all we can do is sigh and say/It's just that old free market at play. The lead harmonizer was Shell Oil President John Hofmeister, who crooned: "As repetitive and uninteresting as it may sound, the fundamental laws of supply and demand are at work."

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Bovine excrement! There is no free market in the oil industry. Supply is controlled by two intertwined oligopolies: OPEC and Big Oil.

Sure, global demand is on the increase, but under free market "law," supply is supposed to rise to meet that need, thus holding consumer prices stable. However, here comes Oligopoly #1: oil producers. OPEC is the chief monkey wrench controlling the world's flow of crude, and its members have refused to get off their ample rumps to ratchet up production enough to make a difference.

Enter Oligopoly #2: oil refiners. These would be the same gentlemen who sang that free market ode to Congress. Interestingly, the refiners don't really want crude prices to come down, because they also happen to be oil producers--ExxonMobil, for example, produces more oil than any OPEC member except Saudi Arabia and Iran.

While more expensive crude does raise Big Oil's cost of making gasoline, so what? Thanks to a rash of mergers waved through by Washington in the past dozen years, gasoline refining and marketing are in the oligopolistic grasp of ExxonMobil, Shell, BE Valero, and ConocoPhillips. Even as oil executives were lecturing Congress about how the free market works, they were slashing output at their refineries in order to hold supply down and jack up prices.

But wait--there's another culprit in the fun-filled game of gasoline gouging: rich global speculators. Yes, the same manipulators who brought us the housing mess are presently squirreling the oil market.

In just the past year, crude prices have more than doubled, from $60 a barrel to $140. Even the Saudi oil...