Back in 1996, the Cato Institute published the above two-volume treatise. I subsequently lectured on the book on a promotional tour.

I recently ran across the outline/major points of my presentation, which I share below for those interested in the historical sweep of oil and gas regulation and subsidization in the United States.

“Government Intervention in U.S. Oil and Gas Markets: Searching for ‘Market Failure’” (Synopsis of Major Themes of Oil, Gas, and Government: The U.S. Experience) April, 1996

An Old-Style Treatise

• Covers all Important Historical Episodes from Inception to the mid-1980s
• Incorporates Opposing
  Viewpoints
• 1,997 pages — 6,601
  footnotes — 15,000+ citations
• Three Indexes (name,
  subject, cases)
• Extensively Cross-Referenced

Organization of the Book

• Theory (39 pages)
• Historical Section
  Chronologically Ordered by Industry Phase (upstream to downstream)

1. Exploration and Production (534 pages)
2. Transportation and Allocation (466 pages)
3. Refining (216 pages)
4. Retailing (475 pages)
5. Economic Conclusions (52 pages); Political Conclusions (55 pages)

• Policy (37 pages)

Why Is The Book So Lengthy?

• Over a Century of Experience
• Not One Industry but Many Industries
• Oil and Gas Heavily Regulated on all Governmental Levels
• Oil and Gas Inspired Major Non-Specific Regulation Covered in the Book
• Not Only a Book on Government Intervention but Market Developments

A Treatise on Government
Intervention, Not Just Oil and Gas

• Antitrust Law
• Corporate Taxation
• Government Road Building and
  Finance
• Accounting and Securities
  Regulation
• Futures Regulation
• Air and Water Emission
  Regulation
• Railroad, Waterway, and
  Trucking Regulation and Subsidization
• Labor and Safety Regulation

Distinguishing
Characteristics of the Book

• Market-Process Economic Theory (“Austrian School” of Economics)
• Public Choice School of Economics/Revisionist History
• Homestead Private Property Rights Framework
• Economies of Scale/Scope

Major Themes
of the Book

• Political:

“There are as many objections as there are differing economic interests.” (State of Louisiana v. FPC, 503 F. d 844 at 869)

• Economic/Political:

“One interference with competition necessitates another and yet another, and an industry of ‘rugged individualists’ becomes more and more tightly enmeshed with the government to which they originally turned in hope of protecting themselves from competition.” Alfred Kahn, The Economics of Regulation, 2 vols.(New York: John Wiley & Sons, 1971), vol. 2, p. 29

Five Controversial Episodes (“Market Failures”) in the U.S. Oil and Gas Experience

• “Natural Monopoly” of
  Manufactured Gas Distribution (and electric distribution)
• “Predatory Pricing” of the
  Standard Oil Trust
• Wartime or Emergency
  Planning
• Overdrilling/Overproduction
  Under the “Rule of Capture”  (depletion
  of  nonrenewable resources)
• U.S. Regulation to Mitigate
  OPEC/Energy Security

“Natural Monopoly” of
Manufactured Gas Distribution

• Free Market Era
• Turn to Public Utility Regulation
• Plugging “Regulatory Gaps”
• Established Utility Viewpoint Becomes the “Textbook” View
• Manufactured Gas: Political Origins Similar to Electricity, Interstate Railroads, etc.
• Revisionist Viewpoint: Can
  Momentum Turn into Pluralism or Even Consensus?

“Predatory
Pricing” and the Standard Oil Trust

• The “Textbook” View: From
  Ida Tarbell to Daniel Yergin
• The Economic Verdict: Price,
  Quantity, and Safety/Reliability
• The Folklore Examined: John
  McGee’s “Predatory Price Cutting: The
  Standard Oil (N.J.) Case”
• Standard’s Business Ethics
  Reconsidered

Wartime or Emergency Planning

• Supply (Initial Government Intervention) Creates its Own Demand (More Government Intervention)
• The Importance of Entrepreneurship and the “Market Discovery Process” in Normal and Abnormal Times
• Government as Resource Procurer (taxing; spending)

Overdrilling/Overproduction Under the “Rule of Capture” (Depletion of  Nonrenewable Resources)

• Textbook View: The
  Transaction Cost Problem and Government Solution
• Free Market Response:

1. Alternative Private Property Rights Allocation (“homestead” theory)
2. An Inherent Knowledge Problem
3. “Government Failure” and Noncooperation
4. Antitrust Law
5. Tax Incentives
6. Conservation Law Incentives
7. Public Lands Problem
8. Field Shutdowns (over asset reallocation)
9. Offset Drilling Rule
10. Common Carrier/Common Purchaser Requirement

OPEC and
Energy Security

• Protecting U.S. Consumers
  from World Oil Price Increases
• The Breakdown of the Grand
  Regulatory Regime
• Import Prices (entitlements
  program)
• Wellhead Price Decontrol
  Categories
• Oil Resellers: Villains or
  Heroes?
• Along with Natural Gas
  Shortages, Oil Shortages Have Made the Price and Allocation Regulation Paradigm
  Lose Credibility
• Has the World Petroleum Market Made “Energy Security” Obsolete?

Alleged “Market Failures” Today

• Energy Security (DOE)
• “A Brewing Energy R&D Crisis” (DOE)
• Energy Environmentalism (PUC/DOE)
• Public Utility Regulation (gas and electric)
• “The Natural Gas Market is not Working” (Plank) to “Natural Gas Prices Are Too Low” (Wyatt)

Conclusions

• The History of Market Forces
  in the Oil and Gas Industry Has Been the History of Technological Change
  Creating New Market Orders and Business Distress to the Nonadaptive “Old Guard”

• The History of Government
  Intervention is the History of Turning “Buyer’s Markets” into “Sellers’ Markets”
  With Oil and Gas

• On Close Inspection, There
  is Much More “Analytical Failure” and “Government Failure” Than “Market Failure”
  With Oil and Gas

• Far Too Much of Our
  Historical Perspective Has Been Through the Eyes of the Less Efficient “Old
  Guard,” Not Consumer Welfare

• Historical Analysis Is Much
  Richer With the Insights of Market-Process Economics (General Effects Instead
  of “The Seen”) and Public Choice Economics/Revisionist History (“Who Benefited,
  Who Caused?”)

• We Not Only Need to Rewrite Important
  Segments of the “Official History” but Apply a Higher Analytical Standard in
  the Future to Better Understand the Market Order and the Unintended
  Consequences of Government Intervention

This lengthy treatise is out of print–but available at a hefty price with booksellers (Amazon here). A study guide to the individual chapters has been in preparation.

It is my intention to have the book republished on its 25th anniversary in 2021 with minor errors corrected and a new retrospective introduction.

Stay tuned.