For Immediate Release
Contact: Ellen Carey
April 25, 2013
New Analysis Finds Global Oil Market Manipulated, Resulting in Higher Volatility, Costs to U.S. Economy
WASHINGTON – The global oil market is significantly influenced by un-free forces such as a producers’ cartel and as a result is not a free market, says a new report authored by economists Andrew Morriss and Roger Meiners and published by Securing America’s Future Energy (SAFE). The report, “Competition in Global Oil Markets: A Meta-Analysis and Review,” was released today at an event at the Cato Institute in Washington, DC. To read the report, please click here. For a summary of key highlights, please click here.
The members of the Organization of Petroleum Exporting Countries (OPEC) control the world’s largest and most accessible petroleum resources, and have undertaken a collaborative effort to maximize their collective profits through output restrictions over the past four decades. In this academic analysis, Morriss and Meiners provide an overview of the many market failures which exist in the global oil market, and a comprehensive literature review which presents a consensus: the international market for oil is not free.
Key findings of the paper include:
• OPEC has at times successfully forced oil prices higher than a free market would dictate;
• OPEC’s market manipulation harms the U.S. economy and directly costs Americans money by causing higher gasoline prices;
• The “non-free” nature of the oil market causes increased price volatility, which is particularly problematic for U.S. businesses.
Andrew P. Morriss is the D. Paul Jones, Jr. and Charlene A. Jones Chairholder in Law & Professor of Business, University of Alabama School of Law. Roger E. Meiners is the Goolsby-Rosenthal Chair in Economics and Law, Department of Economics, University of Texas at Arlington.
“The conclusion of this report, that ‘the international market for oil is not a free market,’ underscores the dangers that oil dependence poses to the United States and that a smart policy is needed to tackle the problem,” SAFE CEO Robbie Diamond said.
SAFE advocates for reducing U.S. dependence on oil through increased domestic energy production, more efficient oil use, and the advancement of alternatives to oil in the transportation sector.
About SAFE: SAFE is a nonpartisan organization that aims to reduce America’s dependence on oil and improve U.S. energy security to bolster national security and strengthen the economy. SAFE advocates for expanded domestic production of U.S. oil and gas resources, continued improvements in fuel efficiency, and in the long-term, breaking oil’s stranglehold on the transportation sector through alternatives like natural gas for heavy-duty trucks and plug-in electric vehicles. In 2006, SAFE joined with General P.X. Kelley (Ret.), 28th Commandant of the U.S. Marine Corps, and Frederick W. Smith, Chairman, President, and CEO of FedEx Corporation, to form the Energy Security Leadership Council (ESLC), a group of business and former military leaders committed to reducing U.S. oil dependence.