TJP

Connors Does a Disservice by Blaming MEND for High Gasoline Prices

By Byron A. Ellis-May 31, 2008

The Time online article, dated May 28, 2008, "The Nigerian Rebel Who "Taxes" Your Gasoline," by Will Connors is interesting for what it leaves out. Connors wants his readers to believe that Henry Okah of the Nigerian Movement for the Emancipation of the Niger Delta (MEND) is the reason why they are paying more at the gas pump. And, indeed violence or the threat of violence in oil rich areas is a major driver in the rise in the price of crude oil.

Connors, however, conveniently ignores the major conflict that has had the greatest impact on the price of crude oil, the invasion of Iraq. Whether deliberately or not, this is the type of journalisms that failed to holistically evaluate the merits of Iraq invasion and ingested lock stock and barrel information from the Bush administration.

Today’s McJournalists have done a disservice to our nation and the world; had they performed investigative journalism, the Iraq war would have not been possible. And, the lives of over 4,000 soldiers and that of many more Iraqis would have been spare.

The low credibility of McJournalists, however, had led to an explosion of critical thinking bloggers, and a more critical citizenry. Nonetheless, McJournalists continue to divide the country by race, gender, class, and any divisive devise that they can use to capture non thinking viewers and sell advertisements; they even stoop with impunity to advocating assassinations.

Good investigative journalists would delve into the crude oil pricing scheme and look at correlations between pricing and supply, between pricing and trading volumes on the New York Mercantile Exchange, and the reasons for excess profiteering by refineries, and so on.

McJournalists take as gospel the mantra that supply and demand determines prices. But, do supply and demand determine prices under the market structure of oligopoly or monopoly?

Oligopoly is competition among a few firms and each firm’s output decision affects demand conditions faced by others firms; as a result there is conscious interaction among firms, leading to strategic, rather than price-taking behavior.

Under monopolistic competition there is some degree of monopoly power over subset of consumers for that particular output. For the monopolist firm, price is a falling function of output. Hence, the profit-maximizing monopolists equate marginal revenue to marginal cost, which determines the monopolist pricing structure. Competitive firms, however, produces where marginal cost is equal to the price that they charge.

Therefore, the equality of supply and demand does not determine pricing under all market structures. So, one has to be careful, or even skeptical, when industry executives, Mcjournalists, and others make the claim the crude oil pricing is determine solely by supply and demand.

Connors does disservice to his readers by pinning the blame of high gasoline prices on MEND, without evaluating the role of the current violence in Iraq and the promise by the Republican presidential candidate, John McCain to bomb, bomb Iran.

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