COULD this Monopoly actaully Exist?

Suppose the US Congrees gets soft, and allows all of the major oil companies to merge…and they form a new oil entity…“Monolithis Oil Co,”.
Monolithis buys up all of the gas stations…and the Texaco, BP, Exxon signs , etc., all come down and are replaced by Monlithic’s new logo…perhaps a big dollar sign. Monolithis boosts gasoline prices…regular is now $5.00/gallon, high test $7.00/gallon. Diesel is $4.50 (a break for truckers).
Now the fun starts…Monolithis is HUGELY profitable…its share price surges! But motorists are desperate=a fillup on you average SUV is now pushing $100.00/
My question: how long would it take for a competitor to emerge to challenge Monolithic? Would this in fact stimulate the electric-car market?
Or would people be torching their 6 MPG SUVs and be lining up yo buy Insights and Priuses? :eek:

#3 is the quickest thing that would happen.

Then would come the outcry to congress to ‘do something’ about it leading to hearings and anti-trust work from DoJ.

Then would come a competitor. It sure ain’t easy to start up something that big. Far easier to see small time mom and pop gas stands occuring regionally.

<Randian naivete>
Why, John Galt, hard-working son of a garage mechanic in Ohio, would immediately surmise he can make a lot of money setting up a competing corporation. Within the week, he’d have loads of investment capital from financial institutions around the world that would never bow to pressure from Monolithis. Within the month, GaltCo would be incorporated with the brightest minds from around the world that could never be bought out. Within the year, the first sales of gasoline would occur, refined from all those oil fields Monolithis doesn’t own. And finally, within ten years, GaltCo would take half of Monolithis’s market share and blaze a trail for poor, bright people everywhere to establish their own oil companies leading to an intensely competitive market.

Isn’t the self-correcting market a beautiful thing?
</Randian naivete>

In the real world, we’d be screwed. #1 would take a hell of a long time and Monolithis would do everything it could to prevent #1 from happening, which would be quite a lot. #2 and #3 might seem possible, but what’s to prevent Monolithis from just gobbling those industries up as well? Unlike a real pendulum, when this pendulum swings too far in one direction, it tends to stick there.

Umm, am I missing something. Which #1,2,3 are you guys talking about?

I doubt effective direct competition could ever be mounted against such an entity. Perhaps local gas co-ops would spring up or someone could make money doing gasoline to alcohol conversions & selling distilling equipment. IOW, low level resistance.

The inter-ownership and alliances between the oil industry and the car industry would mean fuel alternatives wouldn’t neccessarily be jump started from this. Monolith could probably be pretty effective in blocking foreign competition in this regard also (through both market&legislative means).

Suppose the people got soft and lost their vigilance, and there emerged a monolithic new governmental monopoly called The United States. TUS grabs all the land it can, using rifles and canons against people who fight with sticks and arrows. It assembles a small group of white men who appoint a magistrate to excute, a congess to legislate, and a judiciary to interpret the rights of all people and negroes. It begins with the notion that its purpose is to secure liberty for the white men in its borders. And now the fun begins.

It changes its foundational document so that it may now charge whatever it wishes per head, with or without the consent of those it governs, ostensibly as a temporary measure to fight a war in Europe. Suddenly, TUS is HUGELY profitable … it takes first 5%, then 10%, then 15%, 30%, and eventually as much as 70% of the income from its citizens! It begins to expand like a couch potato at Thanksgiving, building a GARGANTUAN complex of manifold bureaucracies, each of which becomes self-propogating, demanding more and more from the big budget every year, until it finally has concentrated some $4 trillion dollars of the people’s wealth within itself.

My question: how long would it take for a pissed off generation of fed up citizens to arise and challenge TUS? Would this in fact motivate TUS to trim its fat? Or would people just decide they’d be better off producing nothing, and living off Free Government Money?

LiberalTwo questions:
Are bureaucrats citizens?


Did you mean to post a new thread?

Yes and no.

History has shown that monopolies such as this don’t happen because governments get “soft”, but because they come down **actively **on the side of a particular business. I don’t see your scenario becoming a reality unless Monolith were given some sort of significant subsidy and/or other type of help from the federal government.

Well I guess I’ll answer your hijack then:

The citizenry directly benefitting from this massive government: law firm, PR firms, weapons manufacturers, vehicle manufacturers, paper industry, construction firms, highway laying/repair,welfare recipients etc. will never be fed up.

Others will be fed up when the percieved benefit of living in the safest,most prosperous, and free nations in the world plus food&rent outweighs 70% of their income. Clearly you percieve that the nation would be just as safe/prosperous/etc. without the big gov but generally people don’t want to risk what they’ve got on the words of philosopher kings.


Lib, you’re being a weenie again.


The fact remains that TUS (as you put it) continues to exist because the American people wish it to. And no amount of carping will change that.

You know, prices would indeed be about that high if the government didn’t subsidize oil in the first place. Aren’t they close to that in much of Europe, anyway?

And please point out an example of a monopoly that came into existence and survived for at least a little while without extensive government backing.

Due to much higher taxes, not free market forces.

Does the US directly subsidize the oil industry? I thought the idea of US oil being “subsidized” is slightly less straightforward. That it was based on the idea that oil/gas doesn’t bear the true cost of the required infrastructure: industry supervision, highways, military protection, diplomatic lobbying/wrangling, etc.

I know many people here are younger than I (and I’m only 30 for God’s sake), but didn’t you people ever hear about Standard Oil in history class? It’s one of the classic monopoly-breakup stories. If Standard Oil II came to be, I think we’d see an antitrust case brought against it with due haste (assuming the FTC allowed the merger creating it to ever take place, which seems unlikely).

Same same for the OP. Those who benefit directly from this massive monopoly: the IRS and by extension the entire federal government, the Congressman from the district, his major contributors, the monopoly’s shareholders and officers, the lobbyists who represent it in Washington, its law firms, the legislators who participate in crafting laws that give it leverage, PR firms, local government, state government (for corporate income tax), etc. will never be fed up.

Others will be fed up when the perceived benefit of having a universal and dependable source of fuel is outweighed by the tiresome chore of having to subsidize a de facto extension of government. Clearly you perceive that the gas customers would be just as satisfied without the big monopoly, but generally people don’t want to risk what they know they can get on the words of philosopher neophytes.

Jonathan Chance

[Moderator Hat ON]

Jonathan, calling people “weenies” does NOT belong here. Take it to the Pit.

[Moderator Hat OFF]

Well, obviously if Monolith Ic was a real jerk about it there would be popular support for legislation to break it up, popular enough to affect elections. More people drive than use PCs after all.

The real question is how much of

actually happens. Would the monopoly act substantially different than the current tight oligopy?

Hmmm. There was hardly a peep from the government when Exxon and Mobil reunited recently, after all those years apart after the trustbusters broke up Standard Oil. I’m not so sure there’s any “suppose” about this at all.

If we broke up an oil monopoly we would still have the reliable fuel source so I miss your point.
And I consider myself a philosopher aphyte.

There is a also a misconception that monopolies, per se, are illegal. Coercive tactics that cause monopolies are illegal, but you need to do more (in the US) than just claim that a company has complete or near complete market domination in order to take legal action. IIRC, you need to demonstrate that the public is harmed by the existence of the monopoly.