Posted by LAA on June 12, 2012 at 09:18:22 from (86.51.147.113):
In Reply to: Re: Fuel prices?? posted by Nancy Howell on June 12, 2012 at 05:42:15:
The most efficient production controls ever administered were used by the Texas Rail Road commission to limit production and maintain oil prices at artificially high levels, it was only in 1971 when proration was set at 100% and Texas producers (oil companies) were allowed to produce at will. OPEC modeled their own price fixing scheme on the Texas Railroad commission example but it has never been as effective because it is largely unenforcible due to dealing with several different nations, the Texas Rail Road comission had the Texas Rangers to enforce their rules, I am not disparaging Texas, just a stating a little historical fact. American producers cut production from 1973 to 1981 due to federal government price controls whereby US production was priced approximately 50% less than imports, in effect, US oil producers were subsidizing the consumers. President Reagan ended the price controls as one of his first acts after taking office in 1981 and within months domestic production was up and the price fell dramatically and stayed low for over 20 years. I would never claim that oil companies are run by choir boys but most are astute businessmen who know if the price gets too high, demand goes down. During the last decade, China and India accounted for nearly all of the increase in demand, their economies could absorb the price because of low wages, high export to import ratios and cheap money.
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