Thursday, March 17, 2011

Restricting oil production to ensure a higher price.

The Texas Railroad Commission’s mandate was to “prevent waste”, which from the beginning was a mixture of the legitimate engineering issue of efficient field management and the more controversial economic goal of restricting production in order to ensure that producers received a higher price.

Perhaps a more interesting conclusion in this article is the association between oil price shocks and economic downturns. The conclusion is that whoever controls the price of oil controls the economy as a whole.

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