Abstract
The history and market structure of the petroleum industry are studied. It is pointed out that without a competitive infrastructure, market forces can not be counted on to curb inflation and unemployment or to allocate resources efficiently and equitably. Comparing concentration ratios and econometric models of the petroleum industry with those of other industries will probably not result in the best public policy decisions. Rhetoric and scholarly announcements have sometimes been substituted for professionally competent opinion. In the petroleum industry a non-competitive market does not produce the best results because of the inelasticity of short-run supply and demand. Current pressures on Congress to set market value rather than cost as a basis for natural gas pricing, for example, should be balanced with an awareness that market value is derived from the market structure. With the petroleum industry tied together in inter-corporate and joint venture arrangements, the separate corporations cannot be viewed as parallel market rivals. (DCK)
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