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Frank Hovis

Railroad Commission Of Texas

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This was referred to in a Telegraph story today; I'd never even heard of it.

It goes to show how quickly these purely practical organisations disappear from the public consciousness once their influence falls away.

It was, surprisingly despite its being restricted to a single US state and set up to deal with railways, the body that effectively set world oil prices for forty years until 1973 when OPEC gained prominence.

It was cited as it looks like OPEC is just about to also enter the books of obscure history.

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It's early history is covered in Antony Sampsons book the Seven Sisters. Although technically a public body it was essentially a front used by the Oil Companies to fix oil prices. They preferred regulation by the compliant Texas state than from the U.S. Federal government which had a more anti monopolistic history of trust busting. It also enabled the big corporations to keep out the oil from smaller producers on the margins of the market. As you rightly state the power to fix prices moved to the producer countries in the 1970s when OPEC became dominant though in fact both the Texas Railroad Commission and Opec fulfilled the function of protecting the flow of oil onto the market. Without this mechanism the oil business has always been prone to booms and busts as producers respond to price spikes by pumping more oil causing the value of the product to collapse. Essentially the frackers have done for Opec since they have made it impossible for Opec to control the oil flows on the margin of the market as they have done in the past. Interestingly Russia has always been the key swing producer in the Oil market as it has never been controlled by either the western oil companies or been part of Opec. When you realise that fact the frantic efforts of the West and the Arab world to undermine Putin and get him replaced by someone more compliant explains a lot about modern geopolitics.

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It's early history is covered in Antony Sampsons book the Seven Sisters. Although technically a public body it was essentially a front used by the Oil Companies to fix oil prices. They preferred regulation by the compliant Texas state than from the U.S. Federal government which had a more anti monopolistic history of trust busting. It also enabled the big corporations to keep out the oil from smaller producers on the margins of the market. As you rightly state the power to fix prices moved to the producer countries in the 1970s when OPEC became dominant though in fact both the Texas Railroad Commission and Opec fulfilled the function of protecting the flow of oil onto the market. Without this mechanism the oil business has always been prone to booms and busts as producers respond to price spikes by pumping more oil causing the value of the product to collapse. Essentially the frackers have done for Opec since they have made it impossible for Opec to control the oil flows on the margin of the market as they have done in the past. Interestingly Russia has always been the key swing producer in the Oil market as it has never been controlled by either the western oil companies or been part of Opec. When you realise that fact the frantic efforts of the West and the Arab world to undermine Putin and get him replaced by someone more compliant explains a lot about modern geopolitics.

This is interesting. I have been listening lately to a US financial commentator and he keeps pointing out that the oil price will be set at the margin.

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Interestingly Russia has always been the key swing producer in the Oil market as it has never been controlled by either the western oil companies or been part of Opec. When you realise that fact the frantic efforts of the West and the Arab world to undermine Putin and get him replaced by someone more compliant explains a lot about modern geopolitics.

That has just made me think that Days of Thunder is an allegory for modern geopolitics.

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