Salon reported in a recent piece that the high gas prices are all the result of the big bad corporations and their monopoly. The background is that Sen. Ted Cruz (R-Texas) has said something, so folks are shouting at him. Cruz can take care of himself, but this comment simply cannot be allowed to pass without refutation:
“The true culprit of skyrocketing gas prices is the monopolistic grasp that fossil fuel corporations have on the global energy market.”
Monopoly does, in fact, have a meaning. Other than just big and bad, which is the way some use it. It’s an important meaning because a monopoly could be responsible for high prices – like the current high gas prices.
That meaning is that there’s only the one organization. This means that it can limit production and so drive the price up – this gives it larger profits without the costs of making more. So, for there to be a monopoly there needs to be a single organization. We can also think that a market might trend toward monopoly power if there was one dominant producer that the others couldn’t match up to.
So, is there only one supplier of global energy? Or even the one dominant producer? The global energy market appears to be worth some $8 trillion a year in turnover. We can also look at the turnovers of the fossil fuel companies and even the largest of them, Saudi Aramco (which is really the Saudi Arabian government) is only just over 5% of the global market. This is not, in any way that any competent economist would recognize, a monopoly.
Now it’s true that in normal times there is a cartel – that’s a group acting together to try to be like a monopoly – in the oil market, that’s called OPEC. But that’s government, not companies. It’s also nothing to do with the current high prices.
Salon likes to think of itself as a standard-bearer for the progressive Left. As such it gains some 7 million visits a month and is within the top 100 of law and government sites by the usual listings. It’s something of a minority taste to the nation as a whole but it is highly influential among progressives.
This is why it’s so concerning to see such a statement of something so blatantly untrue. As the fossil fuel companies don’t have a monopoly grasp on the global energy market then that non-existent grip cannot be responsible for the current high price of gas. The actual explanation here is that Salon is just throwing around a word salad of things its readers will all agree are bad – big, oil, corporation, monopoly, high prices – and assuming it will be believed.
There is also a more horrifying thought, which is that Salon itself actually believes this.