Q: Is there evidence that market power is manipulating prices in the downstream oil industry?
A: None whatsoever. No evidence has been produced regarding collusion of the industry players, whether implicit or explicit.
Stupid congressmen or senators though may point to phenomena such as price matching as evidence for collusion. That is, competitors often charge the same price, with near-simultaneous adjustment of prices. As the Report blandly puts it: "Similar prices may also arise due to competition." By the way, I found similar (in many cases, exactly the same) prices on a variety of products across several supermarkets. I guess we should hale SM, Robinson, Rustan's, Cost-U-Less, Shopwise, plus innumerable smaller retail groceries, to court for anti-competitive practices!
Contra the claim of collusion, after deregulation (1998 vs 2005), the following are observed:
- The oil company share in revenues has fallen from 23% to 16%.
- Two of the top players, Petron and Shell, have earned a Return on Equity of only 3.0 to 3.7 percent.
- The new players' market share has risen from 4.3 to 13.3 percent. In certain sectors their share is large; in LPG it is 43%. They now account for one fifth of the gasoline stations in the country.
- Domestic fuel prices have risen more slowly than international fuel prices.
Henceforth any Senator or Congressman advocating "Reregulation" should first publish a point-by-point refutation of said study. The refutation should itself be critiqued by experts and academics, not least the authors of the Independent Review Report. That is my dream scenario for an intellectually respectable debate on the oil "crisis". I have a funny feeling though that instead, the usual stupidity will just play itself out. "August halls of congress" my ass.