Your points are all good ones and far be it from me to say which explanation is the correct one - few points however.
1. Correct me if I'm wrong but the strategic petroleum reserve wasn't created until later on - I want to say around the time of the first Gulf war.
2. The argument that if the oil companies were reluctant to sell *any* of their product at artificially low prices then therefore they would be reluctant to sell *all* of their product at artificially low prices just doesn't make any sense to me. They have to calculate the marginal costs and marginal benefits for each unit of product that they either sell or hold back and (at least in theory) wherever their marginal utility is maximized, then that's how much they would sell. Marginal costs would have to include political costs and political calculations as well as purely financial ones. And all of this assumes perfect wisdom on the part of the oil execs who can't be acting in *complete* collusion. Rarely in business do you see perfect wisdom, perfect collusion, or all or none solutions. That argument for me, that if the prices were artifically low that no oil would be sold just seems absurd.
3. No matter how well the FTC was run at that time, two branches of the government working at cross purposes still seems perfectly reasonable to me. I don't even know that it was the FTC that imposed the Nixonian wage and price controls or some other agency (a litttle research would resolve that problem I'm sure).
4. It could be that there is some truth to both of our conclusions - it's not clear to me that they are really that mutually exclusive - the wage and price controls could have been a factor in the oil company's behavior just as your contention that they were trying to gin up a sense of crisis and make OPEC a political pinata.
Great discussion - seems like there has not been enough of this sort of thing on FR lately.