A fascinating line of markets and competition that I've only learned of relatively recently, and is of interest in light of YC's first category in its request for startups,[1] is the role of the Texas Railroad Commission in US oil markets.

I first ran across a reference to this in a paper from the Federal Reserve Bank of Philadelphia, written by Keith Sill, chief economist, "Macroeconomics of Oil Shocks":

"From 1948 to 1972, the price of oil produced [that is: extracted] in the U.S. was influenced by the production quotas set by the Texas Railroad Commission (TRC). Each month, the TRC (and other state regulatory agencies like it) made forecasts of petroleum demand for the upcoming month and set production quotas to meet the forecasted demand."[2]

A more complete history occupies most of Chapter 13, "The Flood", of Daniel Yergin's The Prize: The epic quest for oil, money, and power.[3]

The short version: in the 1920s, an early abundance of oil which was proving hugely useful for automobiles and machinery looked to be iffy, until vast deposits were found in Texas and Oaklahoma in 1930. But that created a new problem: with no restrictions on drilling, oil prices collapsed to as little as $0.13/bbl. Government production controls were prohibited by Texas state law (lobbied for by independent oil producers), though they were permitted in Oklahoma. A target of $1/bbl. was set but there was no way to enforce it. Before this was resolved, Oklahoma's governor had mobilized the militia to take control of its oil fields in August, 1931, Texas mobilized the National Guard and Texas Rangers shortly after, an oil shutdown was enforced stabilizing prices. With the Depression settling in across the U.S. (and in the wake of the Teapot Dome scandal, itself over oil), Franklin Roosevelt appointed Harold Ickes as Secretary of the Interior, and established a number of measures including "certificates of clearance" for all oil shipments within the US -- oil without certificates wasn't salable.

That regime remained in place until March of 1972, when peak oil extraction in the US meant that limits were no longer necessary -- slack demand was now being met through imports, not domestic production. Which left the U.S. vulnerable to a foreign oil embargo, experienced in October of 1973.

There's a pretty strong argument to be made that stable oil prices, as the base of the U.S. economy, had a great deal to do with uniform economic growth in the post-WWII period, from 1945-1972. It's after that date that many of the "modern" crises of economics have been felt: stagflation, offshoring, wage stagnation, etc.

There have been better and worse times, but those have tended to be driven by total global oil abundance (or shortages), with cheap oil beginning in the mid-1980s through the late 1990s, with few exceptions (1990 and the first Gulf War War notably).

But yes, a noncompetitive controlled market can be a good thing.

More: http://www.reddit.com/r/dredmorbius/comments/2akwjj/oil_and_...

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Notes:

1. http://www.ycombinator.com/rfs/

2. http://www.phil.frb.org/research-and-data/publications/busin...

3. http://www.powells.com/biblio/7-9781439110126-9