From the beginnings of the oil business, the producers understood the power of
monopoly. The erratic fluctuations of the oil price had already convinced them to restrict
production in a common effort, but their accord never lasted, so great were the
incitations to cheat. A unified organization, a trust, made a rigorous control of the
quantities produces possible, and thus of the price. If we add to this monopolist power
the gigantic scale economies, we understand the tremendous profits of the Standard Oil.
The ruling of 1911 reached its objectives and gave birth to 10 integrated oil companies
among the most powerful of the world. The dissolution of the Standard stimulated
innovation and expansion through competition, although worldwide competition was
quite strong before the dissolution.
The situation from the 1970's, with a producer's cartel controlling the better part of
the world's oil output, and which does not always work smoothly, is thus not without
precedent. We need not look outside of the oil industry to find forerunners.
My generation (I was born in 1973) did not know the natural state of the oil market,
that of the great fluctuations that come from the imprevisible output. Prices today are
relatively stable, as the OPEC as taken the seat that once was occupied by Mr.