Forget the Middle East. There’s an oil cartel in the U.S. that’s controlling the market and taking advantage of consumers, one critic told CNBC’s Liz Claman on “Morning Call.”
The largest oil companies in the U.S., which includes Exxon Mobil , Chevron and ConocoPhillips , control nearly half of U.S. crude production and more than half of all gasoline refining capacity. But critics say oil companies should not be allowed to integrate the two roles due to competition and anti-trust issues.
“The integrated oil companies have all got us focused on gasoline when in reality they make the major portion of their profits on crude oil,” said Raymond Learsy, author of “Over a Barrel: Breaking the Middle East Oil Cartel.” “The rest of their business is bells and whistles.”
He said that Exxon, for one, reaps more than $87 billion a year in income from crude production alone, but reported a profit of $39 billion in 2006. “The rest went to salaries, to promoting those organizations who do not subscribe to global warming and to paying the K Street lobbyists millions upon millions of dollars,” he said.
But Peter Schwartz, former board chairman at the Ayn Rand Institute, contends this isn’t hurting anyone and it’s part of a free market economy.
“The product that is generated by the oil companies earns them profits,” Schwartz said. “They get those profits because they’re producing something that does not exist without them....As long as there’s no fraud involved, no one, no individual and no business, should be prohibited from creating whatever products somebody’s willing to pay for.”