Executive Summary

A monopsony is a single buyer for multiple suppliers where the buyer forces the suppliers to pay lower than normal prices. An example of a monopsony is a single employer in a town that hires all the workers in town and where the workers have no competitive choice about where else to work and so are forced to accept lower than normal wages offered by the monopsonist, and where the monopsonist gains higher than normal employer surplus from the workers. The same situation can happen with oil, such as when John D. Rockefeller in the early 1900s owned or controlled most refining capacity in the U.S. such that oil producers were forced to sell to Standard Oil at a below normal price. Here we show a situation from 1965 to 1974 where Saudi Arabia and possibly other OPEC members were forced to accept monopsonistic oil mineral right prices given by the U.S. and the West, a situation that may actually violate the U.S. Sherman Anti-Trust Act of 1890. Evidence indicates that Saudi Aramco, a majority American owned entity at the time, contracted to receive petroleum mineral rights at below normal prices, which ended up monetarily injuring Saudi Arabia and its people. Other enhancing evidence is provided, such as the CIA’s involvement in the overthrow of the Iranian democratic government in the 1950s, which engendered a threat to oil producing countries in general to accept monopsony power and which would have influenced Saudi Arabia’s Kings. An estimate of damages is made.