Thursday, September 18, 2008

Oil Market in Portugal and Ideological Fundamentalism

Today's newspapers say that Portugal is one of the European countries where gasoline, diesel and other prices are decreasing less in response to the decrease of world crude prices. But that shouldn't be a surprise, just as Portugal being one of the European countries with the highest oil prices shouldn't be a surprise either. The cause of these two facts was already explained here (15th paragraph, in Portuguese) and it is very simple: the Portuguese consumer market is extremely concentrated: a very few number of firms, three of them serve the market almost in its entirety, and one of these - Galp -gets a huge share of all the selling. On top of this, there is an upstream monopoly: there is only one firm in the oil refining market. And finally, just to make the picture the worst possible, as bad as the worst academic example, but in real life!, that refining monopolist happens to be a player, indeed the biggest player!, in the consumer market: it is precisely that very same Galp.

For instance, in a country like Estonia, with less than one million and half people, one can't simply memorize all the names of oil suppliers: they're many. In Portugal, with ten million inhabitants, one only sees the very same oil company everywhere, from North to South, from West to East, everywhere. It just can't be a surprise that oil prices are so high in Portugal.

But the most surprising of course is not that a very bad scenario - extreme market concentration - leads to a very bad outcome - oil prices much higher and much persistently high than everywhere else. No, what is really suprising is that many Portuguese liberal rightwingers, who usually defend freedom of choice, the market system, meritocracy and so on oppose state intervention in these markets supposedly for the sake of competition! When it is just too obvious that we are in the presence of one of those typical examples in which competition and low prices are simply impossible without some kind of intervention.


Moderation and reasonability of an ideology depend on the ability to find and to know how to deal with exceptions. Failing to acknowledge the existence of exceptions always leads to some kind of tyrany of ideas. And that invariably means, at least, the implementation of stupid counter-productive policies. Ideological fundamentalism is actually and precisely that: inability to recognize the existence of exceptions and counter-examples to one's own ideology.

And in a country where stalinist communism is the third biggest political party in parliament and trotskist communism is the fourth, ideological fundamentalists in Portugal are clearly far, too far from being confined to the left side of the political spectrum...

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