indirect substitution, in the form of increased use of
electricity, is possible. In terms of the geographic dimensions of
the markets, uranium clearly trades in a national market; the
market for crude oil tends to be national, if not international in
scope. Natural gas also trades in a national market. In the case of
coal, the results are not without some ambiguity, due to variations
in sulfur content; what was once a regional market now appears to
be a national market.
Levels of
seller concentration, based on production figures, are not high in
the case of the fossil fuels. The most significant findings is that
a steady upward trend in concentration levels has been occurring
since 1955. Concentration levels in uranium tend to be higher, but
significant amounts of excess capacity exist and it is not certain
if present concentration levels will persist. In addition, there is
reason to believe that the upward trend will continue. The proper
interpretation of observed concentration levels in the case of
crude oil is complicated by the existence of large numbers of joint
venture arrangements which create a direct interdependency among
sellers.
Interfuel
mergers have caught the public's attention in recent years, and
have raised a concern that oil company entry represents an attempt
to monopolize the industry. The analysis presented here indicates
that, while concentration levels have been rising, oil company
entry is not the major reason for the upward trend.
It cannot
be concluded from the results of the structural analysis that
effective competition exists in the production of fossil fuels and
nuclear energy in the U.S., nor can it be concluded that
competition is ineffective. Such conclusions would be premature and
must await an analysis of market conduct and performance. It should
also be emphasized that the structural analysis of energy markets
is weakened by a necessity to rely upon production data rather than
data which reveals the ownership pattern of reserves of the various
fuels.
In
conclusion, the structural analysis indicates: (1) concentration
levels tend to be low but a strong upward trend is present and (2)
oil companies have entered, to a significant degree, the coal and
uranium areas.