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Competition in the U.S. Energy Industry
Table 1-2. Oil Company Involvement in Other
Energy Sources: Response to Continental Oil Co. Survey
|
Number of Oil
Companies |
|
| Energy Source |
Active or Planned
Production |
Positions |
Total |
| Coal |
7 |
9 |
16 |
| Uranium |
6 |
18 |
24 |
| Oil shale |
3 |
14 |
17 |
| Tar sands |
3 |
13 |
16 |
| Source: L.C. Rogers, "Oil
Finding Talent Pours into Broad Minerals Drive," The Oil and Gas
Journal, February 24, 1969, p.
37. |
Characterization of the Energy Company
Development
The
transformation of oil companies into energy companies is a major
development in the primary fuels sector of the U.S. economy. The
energy company development has been characterized in various ways.
Critics of the industry see it as a drive by oil companies to
monopolize energy production in the U.S. Entry, by itself,
certainly does not warrant this charge. In defending themselves,
oil firms depict such entry as the result of the decision-making
process that allocates investment in response to after-tax profit
differentials. The question remains of why, starting in 1965, oil
companies launched an expansion into coal and uranium. An even more
fundamental question concerns the impact of the expansion on
interfuel competition. This can, in part, be determined by an
analysis of the effect of these mergers upon market structure. In
particular, it is necessary to determine the extent to which oil
companies have become dominant suppliers of coal and uranium, and
to see how this has affected levels of seller concentration and
entry conditions.
SUMMARY
The U.S.
relies heavily upon a system of competitive markets to allocate
resources among alternative uses. Competition in energy production
includes both interfuel and intrafuel competition. Concern for the
continued existence and health of competition in the production of
primary energy has recently increased as a consequence of energy
company development. Public policy designed to preserve effective
competition must be concerned with both aspects.
An analysis
of competition focuses heavily upon the structure of the particular
market being studied. This book is concerned with the structural
setting of coal, oil, natural gas, and uranium production in the
U.S.