Political Science

The US oil industry is one of the largest players in this countrys economy. It serves a wide range of clients as its products are used for a variety of purposes. Being an important part of this countrys economy, it should be subject to government regulation to prevent acts of monopoly and to protect the consumers. By doing this, the government moves away from the laissez-faire market and moves as an active player through regulating the industry, which ensures that the industry is working towards both profits and welfare.

The Standard Oil Company, founded by John D. Rockefeller, is a testimony to the monopolistic tendencies of the oil industry. From the experience of the US government, it was seen that there is a tendency for the largest oil player to become abusive of its monopoly status in order to gain profits for personal interests. Rockefeller moved towards destabilizing the competition through elimination of independent suppliers. It came to a point when the life of Rockefeller became threatened by the public, which he responded to by hiring body guards with firearms for his own security. In order to address the issues, the US Supreme Court in 1911 ordered that the company be broken up so its monopolistic activities could no longer unduly restrain free trade and commerce in the oil industry.

The knowledge and experience gained from the breakup of Standard Oil clearly sets standards for the US government to maintain and regulate the oil industry to prevent any new monopolies from arising. In this case, regulation served as the response of the government towards the need to protect the consumers from unfair business practices and extravagant charges for needed commodities (Ayres  Braithwaite, 1992). Likewise, regulation also has the purpose of protecting small companies who are moving towards joining a particular industry.