Protherian Conspiracies

Donald Prothero, on the subject of why gas prices are so high in California:

How did this happen? Who is really behind it?

As usual, the public and even the media are blaming the wrong people, with crazy conspiracy theories abounding.

Mr. Prothero goes on to point out, correctly, that politicians have little ability to affect short-term oil- and gas-prices. This point needs to be made regularly and often, particularly around election time. 

Unfortunately, that is all the skepticism Mr. Prothero has to provide in his blog post.

It might be useful to look at the moral of Mr. Prothero's story and work backwards:

[T]he next time you hear someone raving about the virtues of unfettered capitalism, just remember [...] the robber barons of the oil industry that still hold the nation’s largest state as a hostage.

Fair enough. Unfettered capitalism surely has its share of problems. In this particular instance, Mr. Prothero explains unusually high gas prices by relying on two factors.

Some are outraged that our gas here averages 30 cents per gallon more than most other states (except Hawaii, isolated from refineries). That extra surcharge was put in place long ago to combat California’s severe pollution problems and clean up our air. It’s a price that those of us who used to choke and get sick from smog are willing to pay.

 Factor #1: California's strong environmental protection.

Because California’s anti-pollution laws make it necessary to refine special gas for California alone, the oil companies have deliberately kept their refining capacity just barely above the minimum, so any short-term disruption means a huge price spike.

Factor #2: An oil company conspiracy to restrict supply and gouge the consumer.

Now, bearing in mind that the first factor is a direct cause of the second factor - at least in the universe Mr. Prothero thinks he lives in - it would seem as if 'unfettered capitalism' has nothing to do with California's high gas prices. I'm not sure how Mr. Prothero makes the leap from regulations providing the opportunity for oil companies to restrict supply to blaming the free market.

Mr. Prothero again contradicts the moral of his article with the following:

[T]he underlying problem is consolidation: too few companies hold almost all our refining capacity, and there is no strong incentive for them to compete or make gas cheaper when gouging California drivers is so profitable.

Since California's anti-pollution laws (apparently[1]) make it necessary to refine special gas for California alone, and thus restrict market access to companies able and willing to do so, there is no outside pressure to provide gas at low prices.[2] That is to say, the problem is compounded by barriers to trade. Again, not a lot of 'unfettered capitalism' going around.

And the evidence for a conspiracy? A paragraph of allusions to Enron...

Back in 2005, Shell attempted to bulldoze some of its refining capacity, and they were stopped by Sen. Barbara Boxer and Attorney General Bill Lockyer. Internal Shell documents released later showed that these refineries were very profitable and not losing money, so the only reason for Shell to destroy them was to tighten supply even further.

 ...and innuendo.

The moral? Call for more regulation and blame 'unfettered capitalism'. Yeah, right. While you're at it, Mr. Prothero, why not (rightly) criticize crazy conspiracy theories while conspiracy-mongering?
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Why pick apart Mr. Prothero's article like this?

Well, for one, people who identify as skeptics have to be held to the same standards as anyone else. That means pointing out flaws on Skepticblog, and it means pointing out that I am being insufficiently thorough by criticizing Mr. Prothero without doing a speck of research.

But there is another reason.

One of the aims of Skepticblog is to promote skepticism and critical thinking. Now hold that thought, and place yourself in the position of a non-skeptic visiting Skepticblog for the first time and seeing that article. What is your reaction? A man with an axe to grind[3] starts off with a few good points and then launches into a poorly-reasoned conspiracy theory. Barring a niche audience of credulous anti-capitalists, who does that impress? What does it say about skepticism if that sort of nonsense goes unchallenged?

What does it say to conspiracy theorists when a skeptic promotes conspiracy theories on shaky grounds?
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[1] Regular readers know that I am incredibly lazy when it comes to conducting actual research. I am at heart an editor, not an author. And I certainly make no claim to be a fact-checker. For the purposes of this post I am taking Mr. Prothero at his word.

[2] Again, I have no idea if anything Mr. Prothero says is true. I am merely criticizing this from an in-universe standpoint at this stage. (That is, the universe according to Mr. Prothero.)

[3] Yes, guilty as charged. Pot, meet kettle, etc.
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Note: Incidentally, who benefits most from the artificial restriction of supply? Those companies which do not restrict supply - they see prices rise for the same quantity of their product. Who benefits least? Those which restrict supply - they quickly suffer diminishing returns as the increased price is partially offset by their reduced supply. In markets which aren't artificially restricted, other producers will then see the signals given off by the higher prices and increase supply. Price-gouging conspiracies are difficult to operate without the backup of force or a heavily-restricted market.

If there is any oil company conspiracy in California - a big if - it is not made possible by 'unfettered capitalism'.

Nota bene: I fully expect and hope that any dear economics-enthusiasts will point out any flaws in the logic of the above Note.