Monopolies

I came across this great ad from 1976 the other day, I wish I knew the complete context behind the it.

It struck me as interesting in two ways.

First, it's an ad in National Geographic by an oil company taking an unapologetic look at the state of it's industry. It's actually pretty aggressive in it's own defense.

You're looking at some of the brands and names of companies that sell gasoline. Some people say oil companies are a monopoly. If so, it's the world's most inept monopoly.

This "monopoly" is so inept, it offers the world's richest country some of the world's most inexpensive gasoline.

This "monopoly" is so inept that it lets everybody and his brother horn in on the action. Did you know that of the thousands of American oil companies, none has larger than 8.5% share of the national gasoline market?

In fact, this "monopoly" is so inept, that you probably wouldn't recognize that it is a monopoly, because it looks so much like a competitive marketing system.

People who call us a monopoly don't know what they're talking about.

Self-defense from a company or industry is always fascinating. The American Petroleum Institute did this a year ago when they compared their profit rates with other industries. Oil came in in the middle of the pack at about 7.5 cents on the dollar. Banking was at 20%.

There's also a great defensive cartoon from the 50's.

Secondly, thirty years later, some things have changed.

ExxonMobil, the largest American oil company now controls something like 15% of American gasoline refining, Roughly double the "largest" block in 1976. By contrast Coke and Pepsi are at 41% and 31% of the soft drink market, respectively.

Of course that's comparing apples to oranges. Coke and Pepsi compete globally. There is no OPEC of dyed sugar-water. XOM's market is artificially manipulated.

Looking the companies shown, you have ask yourself, how many of these are still around? Most have been merged into other brands. Perhaps only Sunoco, Shell and Tesoro are the only companies still existing in the same sense as 30 years ago.

Of the large oil companies listed above, Gulf, Sohio, Texaco, Conoco, Amoco, Getty, Chevron, Union, Arco, Union, Exxon, Mobil, Phillips 66, Hess and Citgo have all been acquired by another or merged with each other in some way... and that's without counting up the minors and regional players.

Overall, pretty neat stuff.

(graphic from GasSigns.org)

Update: An email from a friend of mine who really should be blogging.

In 1976 the oil companies a.k.a. "big oil", were under attack not only for their usual evilness but also for the companies' operations known as "vertical integration". (A term that came and went like so much political wind.) Which meant they held ownership of upstream and downstream companies; the entire oil delivery mechanism. There was political talk about breaking that "monopoly" up.

As ever, it was a politically motivated extortion threat generated out of the heat for Congress to "do something" after one or more of the '70s oil shocks. The McCain-Feingold act of the time, sorry, I can't remember its name, forbade the companies from donating directly to politicians. Political Action Committees (PAC)s were the result. I suspect the ad that you show - and a zillion others of the time - was financed by one of the oil company PACs.

PACs probably still exist but have probably morphed into a "Section 1701" or some similar techno-lawyer rubbish term for the same thing.

Oil and Energy Posted by AlexC at November 20, 2006 2:25 PM