Petroleum Dismemberment

This article endeavors to explain the rationale of vertical integration, to discuss some of the arguments surrounding divestiture,and to describe the consequences of divestiture if S. 2387 becomes law. The following discussion shows that careful examination of the structure and performance of the petroleum industry fails to yield any conclusive evidence of inordinate monopoly power. On the contrary, the economic indicia strongly suggest that at the very least the industry is "workably competitive" at all stages.' Further, the contention that divestiture would strengthen this nation's interests vis-a-vis the Organization of Petroleum Exporting Companies nations has been dispelled. Thus the grounds used publicly to justify divestiture efforts appear to be specious.

Unless there is some unperceived rationale for passing such legislation, its enactment would seem to be without reason and without any avowed or discernible benefit to society.