Tom DiLorenzo on Big Oil's ability to manipulate gasoline prices

The American oil industry started out in a laissez-faire environment in which there was little, if any, government regulation and no income taxation.  Entrepreneurs like John D. Rockefeller were able literally to create one of the most important industries in world history from nothing.  In doing so they transformed the world, made the machine age possible, improved the standard of living for millions, created hundreds of thousands of jobs, and invented management practices that would be emulated by other capitalists around the world.  Capitalism, or market entrepreneurship, is what created all of these economic benefits.  But from the early twentieth century on, the oil industry has been a regulated industry and has become less and less capitalistic.  Today the industry is heavily regulated - strangled, some would say - by governmnt.  And inevitably, government regulation - not the capitalistic nature of the industry - causes high prices, shortages, and other problems.

Still, the myth persists that the industry's capitalistic nature is precisely what creates problems.  Indeed, virtually every time there is a jump in gasoline prices the oil companies are accused of "price gouging," their profits are reported on the front pages of America's newspapers, and, more often than not, some congressional committee commences an investigation or holds hearings to look into the matter.  During the so-called energy crisis of the 1970s the accusastions against the oil companies were more strident, as the seven largest companies - "the seven sisters," as they were called - were accused of somehow orchestrating a shortage to boost their own profits.  But on the face of it, the notion that a price-fixing conspiracy can periodically increase gasoline prices makes no sense.  If oil companies are able to raise prices in such a manne, why don't they do it all the time?  Why only every several years?  Why do they throw all that money away by holding prices down?  And why are the incapable of stopping oil prices from falling?  (During the 2000 presidential election vice president Dick Cheney appeared on Meet the Press to say that oil and gas prices were too low and that some kind of government "price stabilization program" was needed.  At the time, he had just left his position as a top oil industry executive.)  The obvious answer to these questions is that the oil companies do not have the price-fixing powers that the mainstream media - and anticapitalistic intellectuals - ascribe to them.

~ Tom DiLorenzo, How Capitalism Saved America, pp. 206-207

Tom DiLorenzo on the claim that government subsidies were needed to build American industry

The lesson here is that most historians are hopelessly confused about the rise of capitalism in America. They usually fail to adequately appreciate the entrepreneurial genius of men like James J. Hill, John D. Rockefeller, and Cornelius Vanderbilt, and more often than not they lump these men (and other market entrepreneurs) in with genuine "robber barons" or political entrepreneurs.

Most historians also uncritically repeat the claim that government subsidies were necessary to building America's transcontinental railroad industry, steamship industry, steel industry, and other industries. But while clinging to this "market failure" argument, they ignore (or at least are unaware of) the fact that market entrepreneurs performed quite well without government subsidies. They also ignore the fact that the subsidies themselves were a great source of inefficiency and business failure, even though they enriched the direct recipients of the subsidies and advanced the political careers of those who dished them out.

Political entrepreneurs and their governmental patrons are the real villains of American business history and should be portrayed as such. They are the real robber barons.

At the same time, the market entrepreneurs who practiced genuine capitalism, whose genius and energy fueled extraordinary economic achievement and also brought tremendous benefits to Americans, should be recognized for their achievements rather than demonized, as they so often are. Men like James J. Hill, John D. Rockefeller, and Cornelius Vanderbilt were heroes who improved the lives of millions of consumers; employed thousands and enabled them to support their families and educate their children; created entire cities because of the success of their enterprises (for example, Scranton, Pennsylvania); pioneered efficient management techniques that are still employed today; and donated hundreds of millions of dollars to charities and nonprofit organizations of all kinds, from libraries to hospitals to symphonies, public parks, and zoos. It is absolutely perverse that historians usually look at these men as crooks or cheaters while praising and advocating "business/government partnerships," which can only lead to corruption and economic decline.

~ Thomas J. DiLorenzo, "The Truth About the 'Robber Barons'," Mises.org, September 23, 2006, excerpted from How Capitalism Saved America, chapter 7