Those who choose sides on the political divide based on whether they opt for “Big Government” or “Big Oil” may have to choose another wedge issue. Around the world, those two bugaboos are not mutually exclusive.
“Most oil is under the control of governments (particularly the governments of OPEC member nations) through national oil companies,” Andrew P. Morriss and Roger E. Meiners wrote in a recent study for Securing America’s Energy. “Such governments have strong incentives to attempt to restrict oil supply to force up prices and to maximize their revenues.”
“Their ability to accomplish this varies over time with changes in political and economic factors.” Morriss teaches at the University of Alabama’s School of Law; Meiners is an economist at the University of Texas at Arlington. “Most countries do not have a system of private ownership,” Morriss pointed out in remarks at the Cato Institute last Thursday.
“By some estimates, as much as 85 percent of global proved oil reserves are held by national oil companies (NOCs), state-run enterprises that often function as government proxies, instead of market-driven enterprises,” according to the Energy Security Leadership Council.
Even in the United States, where the aforementioned system is more ingrained, the oil industry is far from the unfettered free market its detractors, particularly the academic ones, portray it to be. “Most oil companies, such as Shell and ExxonMobil, own few oil wells; they are developers of government-owned wells by contract,” Morriss and Meiners wrote in their study.
Malcolm A. Kline is the Executive Director of Accuracy in Academia.
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