The Most Educated Senator Looks At Gas Prices

Senator Charles Schumer of New York has a law degree from the Harvard Law School. He is then perhaps the best educated Senator in the United States, but he is still a Democrat. It is quite interesting to see how a mind that is at once very intelligent and very Democratic works. Last night he provided a wonderful example. He was quite perturbed over rising gas prices; so he proposed that anti-trust legislation be used to break up the big oil companies. His theory being that 5 major oil companies was not enough to encourage the competition that would drive down prices to a level he thought was "good".

On the face of it, it seemed a little silly since most product categories in the United States seem to have about 5 competitors. If you look at the market for airplanes, cars, computers, tomato sauce, and refrigerators you'll see that the top 5 competitors usually control about 95% of the market. The gasoline industry is really not special even despite the massive consolidation that was encouraged during the Democratic Clinton Administration by the merger between Exxon and Mobil. In fact, over the last 10 years the ROI (return on Investment) in the supposedly oligopolistic oil business has been lower than the average for most fortune 500 companies.

During the first oil crisis of the 1970's Exxon (the biggest at the time) concluded that the future of the industry was grim as supplies dwindled and oil companies became non-value added conduits trapped between those who owned the oil in the ground and those who merely pumped it into cars on the other end. And, oil was to be gone or mostly depleted by the 1990's anyway, they proclaimed. It turned out that even their expert predictions about the future were wrong, as most predictions about he future usually are. There were more and bigger cars than ever in the 1990's in the United States. And, countries like China, India, and Russia were literally adding million of new cars to the world's fleet. The price, adjusted for inflation, was actually lower during the entire period following the first energy crisis. Exxon was so sure that it had no future in oil that it invested billions in Exxon Office Systems from which it consistently earned only huge losses. Today ExxonMobil is the most profitable energy company on earth, selling twice what they sold in the first, so called, energy crisis.

But all that has not stopped Sen. Schumer from predicting the future. Perhaps he thinks his Harvard Law degree gives him special insight into the future of the oil and automobile industries? Somehow his Harvard polished liberal crystal ball has predicted that a future with ExonMobil broken up will be better than a future with it together as per Bill Clinton's contradictory liberal crystal ball.

To make Schumer and his Democratic friends seem even more arrogantly unhinged you only have to consider the notion of a Democrat proclaiming that competition is good. If competition was good why would the acephalous Schumer even be a Democrat? If they believe in anything it is that we must have socialist government monopolies everywhere to achieve authentic utopian goodness. Republicans want vouchers in education to make it competitive while Democrats want only a continued government monopoly that produces the dumbest kids in the civilized world.

Republicans want HSAs (Health Savings Accounts) and many other measures to make health care private and competitive, wh