I don't say that oil companies have better buying power than the US government. If the US government were to impose a price ceiling as described in the subject article, it would affect the entire US oil import market, which is obviously larger than any particular company's share of the market.
It is interesting that you are now exploring the flip-side of this affair. If a government-imposed price ceiling of the sort described works like collective bargaining (I think it does), then it follows that removing restraints to collective bargaining by buyers would have similar effects. Indeed, one might argue that if all legal barriers to collective bargaining were removed, then there would be very little left to "negotiate down" with a government price ceiling. Regarding the question not copied here, "why isn't the government imposing a price ceiling or higher tariffs?", I can't directly answer -- I'm not the government. But, governments always want more in tax revenue and the people are always resistant to tax increases. I think an oil tariff would be very unpopular, showing up in increased prices at the pump. I think an oil price ceiling, practically speaking, would not be able to achieve the sweet spot suggested in the subject article, and that the ceiling would cause oil shortages, which would certainly cost legislators their seats in the next election cycle, if not spark a few recalls. -gil -----Original Message----- From: ArmChair List [mailto:[EMAIL PROTECTED] On Behalf Of Wei Dai Sent: Wednesday, April 28, 2004 3:00 AM To: [EMAIL PROTECTED] Subject: Re: oil trade policies On Tue, Apr 20, 2004 at 08:25:49AM -0500, Gil Guillory wrote: > However, in this latter case, the price ceiling functions as a type of > collective bargaining. But there are professionals in oil companies that > study the oil market and do their very best to pay as little as possible > for the oil that they buy. The purchasing power of many of these > companies quite large, so they already act like international > Wal-Mart's, buying in bulk and having significant bargaining power. It > is reasonable to conclude that the government price-ceiling-setters will > be in no better position to "negotiate" a good price than will be the > oil company buyers. There are reasons to think that the oil company > buyers will be in a better position. Nonetheless, even if it's a > toss-up, the presumption should be in favor of economic liberty. I don't see how an individual oil company could have more bargaining power than the U.S. government. Can you please explain? Oil companies could increase their bargaining power if they formed a purchasing cartel, but they have no incentive to do so since competition would force them to pass any savings resulting from a lower oil price on to their customers, and antitrust laws prevent them for cartelizing the output markets.
