By Harpal Brar
In the September/October issue of LALKAR, I published the article 'More on Imperialism', which gave a broad picture of the breathtaking monopolisation of the world economy witnessed during the brief four years since 1 wrote my book on imperialism. At the end of that article I promised to deal with consolidation in some of the important industries in subsequent issues. In this issue I briefly summarise the consolidation which has taken place in the oil industry, which can rightly be described as one of the most important industries, if not the most important industry. The period of plummeting oil prices between 1990 and 1998 - a period of rising energy consumption and flat energy prices - provided the background to the consolidation in the oil industry. By the end of 1998, the price of oil had come down to $10 a barrel - a price which would not merely hit the exploration and development activities (which are by far the most important source of their revenues) of the oil companies but also bring some of their existing wells in high cost zones close to being uneconomic. The oil giants, faced with the reality of declining profits and the need to cut costs drastically, found, and could only find, the way out through consolidation. Only the biggest could hope to survive in this jungle of cut-throat struggle for market share and control over raw materials. Monopolisation alone could guarantee the continued flow of the maximum profit, which is so characteristic of the economics of the era of imperialism. Through mergers and acquisitions, the notorious Seven Sisters have ben reduced to the present three - Exxon, B.P. and Royal Dutch/Shell - or, perhaps four if we include Total Fina, since the latter's victory in its battle to acquire Elf Aquitaine in March 1999.
Confining ourselves to the period since the publication of my book on imperialism (Feb. 1997), we get the following picture as far as the consolidation of the oil industry is concerned.
BP's acquisitions
On 11 August 1998, British Petroleum (which started life in 1909 as Anglo-Persian, then became Anglo-Iranian, before adopting its present name) sent tremors through the international oil industry by announcing an agreed $50 billion (£30.3 bn) takeover of the US oil company, Amoco. Not without reason the takeover was characterised as the world's biggest industrial merger, creating the third largest oil company, with a market capitalisation of $110 billion and a roll of 100,000 employees worldwide and reserves of 15 billion barrels. The takeover of Amoco, put BP in the top league alongside Exxon and Royal/Dutch Shell. The deal catapulted BP, in the words of its chief executive, Sir John Browne (as he then was, now Lord Browne), from being at the "top of the second division" into the superleague inhabited by Exxon and Shell.
With assets straddling the globe, from Alaska to Azerbaijan and Colombia, BP became, through the above merger, one of the world's top three quoted companies in the field of oil and gas production, reserves and refining capacity. Further, the merger helped BP to acquire critical mass in chemicals, making it the third - largest global petro-chemicals business after Royal/Dutch Shell and BASF of Germany. It became the world's second-largest publicly owned oil and gas producer with 2.9 million barrels of oil equivalent per day and the second owner of reserves with 15 billion barrels of oil equivalent (BOE) - respectably close to Shell's 19 billion. With a refining capacity of 2.9 billion barrels, it came close to Exxon's although still way behind that of Shell whose refining capacity stands at a huge 4.46 billion barrels. The merger provided BP with the distinction of being the biggest producer of oil and natural gas in the US, the world's biggest energy market, as well as the biggest marketer of petrol in the US, east of the Rocky Mountains (Texas excluded).
Each one of this superleague of three, in the words of the leading article of the Financial Times "… will be about twice as big as their nearest rivals and therefore in a position to take higher risks in the battles for the next big tranche of reserves, whether in Iran, Russia or Khazakstan. In the past size has mattered; and BP, the dominant partner in the new group, doubtless hopes that it will continue to mean higher profits." (The birth of a giant, Financial Times, 12/8/99). BP, with its experience of swallowing large companies, as its earlier purchase of Standard Oil of Ohio and Britoil in 1987 shows, and packing a much stronger financial punch since its acquisition of Amoco and Atlantic Richfield (of which more anon), is on course to proving how to use its new strength.
Barely had the ink dried on its merger with Amoco when BP shocked the global oil industry by striking a $26.8 billion (£16.7 bn) deal with Atlantic Richfield (Arco) of the US to create the world's number two oil company after Exxon, and one of the ten biggest companies on earth. BP's April Fool's Day (1 April, 1999) announcement had the oil industry elite gasping for breath. The merger with Arco created a company with a market capitalisation of $184.2 billion (£120 bn) and sales close to $80 billion (£50 bn) a year. BP's acquisition of Arco, strengthened its position in Asia, for Arco owns 40% of the Tangguh site in Indonesia, which is reliably known to contain 14 trillion cubic feet of gas reserves with a further 6 trillion cubic feet expected to be confirmed after further exploration. With the world demand for gas growing faster than for oil at the present, BP is highly placed to supply markets in the far east, especially Japan and China. With its latest acquisition, BP also gained control of Arc's refinery and petrol-station operations on the west coast of the US, including California. With 1,700 filling stations and two refineries, in an area with high incomes and big cars, BP finds itself happily ensconced in the world's most profitable of oil markets.
With this merger, Arco and BP together control three-quarters of oil production in Alaska, which accounts for 40% of the oil supplies to the west coast of the US.
Less than a year later, BP went on to take over Burmah Castrol for £3 billion ($4.6 bn), a deal which resulted in BP "having more retail sites [BP now has 28,000 retail outlets - HB] than the ubiquitous McDonald's fast-food chain" (Sunday Times, 19 March, 2000). BP has 1,500 filling stations in the UK alone.
When BP made its approach to Arco, the oil price was only $10 a barrel. Speculation was rife that this low price would give rise to mergers and acquisitions (M & A) activity in the oil industry. The fact that, by the time the Arco deal was announced, the price of oil had climbed to $14.65, consequent upon OPEC's agreement to limit production, made little difference, for by historical standards oil is far cheaper today in real terms than in 1973, when in today's money oil prices reached $70 a barrel.
At the time of the BP - Amoco deal, the Financial Times predicted that if this deal "… does not force the super-giants to go on an acquisition spree, it may well trigger a wave of copycat mergers among the smaller companies" (BP in £30 bn takeover of Amoco, 12 August 1998). This is precisely what happened - the oil giants did indeed go on an acquisition spree as did the smaller companies for copycat mergers.
Exxon's takeover of Mobil
Three months after the BP - Amoco deal, Exxon announced that it was planning a merger with Mobil to create the largest global energy company in an $80 billion deal. The deal, creating a company with a market capitalisation of $244 billion, revenues of $164 billion, 21 billion barrels of proven oil reserves and 130,000 employees, set a benchmark for the size and scope of the top end of the industry. Consequent upon its merger with Mobil, Exxon will have a strong position in some of the prolific oil regions of the world, including the Caspian Sea, off-shore West Africa, in addition to having a share in natural gas markets in North America, Europe and Asia Pacific.
Total Fina Swallows up Elf
Shortly after the BP - Amoco mergers, on 13 September 1999, Total Fina, the Franco-Belgian group, announced its takeover of Elf Aquitaine, creating a group which combines Total Fina's commercial savvy with Elf's deep engineering skill base. With its victory over Elf, Total Fina became the fourth largest oil group, although considerably smaller than the big three in the superleague - with reserves and a market capitalisation of only about half of those of its nearest rival - Royal Dutch/Shell. With this merger, Total Fina is in a strong position to compete with the big three in the upstream exploration and production sector, which has been the chief source of oil company profits in the recent, and not so recent, period. Total Fina's upstream presence, with the exception of America, is approximately of the same order as the big three, particularly in the Middle East, which promises to become, along with the Caspian basin, one of the principal arenas for upstream competition in this decade.
Chevron takes over Texaco
A year later, on 16 October 2000, Chevron announced the $43 billion (£29.6 bn) agreed takeover of Texaco, a deal that brought under one roof the second and third biggest oil groups in the US.
Three Sisters
As a result of the mergers and acquisitions spree during just two years (August 1998 to October 2000), the oil industry of the leading imperialist countries has emerged more consolidated than ever before, with a superleague of three (Exxon Mobil, BP Amoco & Arco and Royal Dutch/Shell) at the top. Partly as a result of this consolidation, accompanied as it is by aggressive cost cutting and massive job losses, and partly owing to the rise in oil prices (which tripled from $10 (£7) a barrel at the end of 1998 to $33 (£22.8) at the end of 2000) the profits of the giant oil monopolies have reached astronomical proportions. In the year 2000, the profits of the four biggest oil companies - what we call the three big sisters and their relatively poor cousin Total Fina - more than doubled to a combined total of $50 billion (£35 bn).
This latest round in the monopolisation of the imperialist oil industry has produced a striking change. Not only has the number of oil companies been reduced considerably, resulting in the emergence of a superleague of just three (four, if we include Total Fina), with huge resources, financial muscle and reserves at their command, but also their respective place in the league of leading ten oil companies has undergone a remarkable change. Whereas BP has been propelled from the second division into the privileged superleague of the three sisters, Royal Dutch/Shell has, depending on the year, been relegated from being number one to number two or three in the pecking order in terms of revenues, profits and market capitalisation.
Before the above round of consolidation, the respective place of the relevant oil companies in the top ten league by revenue at the end of 1997 is revealed by table 1 below.
| Table 1: World's biggest oil companies Listed companies, by 1997 revenue. |
|
| $ billion | |
 |
|
| Royal Dutch/Shell | 128.2 |
| Exxon | 120.3 |
| BP-Amoco | 107.0 |
| Mobil | 65.9 |
| Texaco | 45.2 |
| Elf Aquitaine | 43.6 |
| Chevron | 40.6 |
| ENI | 37.0 |
| Total | 32.8 |
| Atlantic Richfield | 19.3 |
[Source: Financial Times, 12 August 1998] |
|
A year later, the picture changed radically with the takeover of Amoco and Arco by BP and Mobil by Exxon, as is clear from the table 2 below, which reveals the place of the top ten in the league table by market capitalisation (a different measure from the one based on revenue, but still a fairly reliable guide) as at 26 March 1999:
Table 2:
A more detailed picture of the top oil companies emerges from the table 3 below (which omits the last two in the graph immediately above, namely Repsol and Phillips), for in addition to market capitalisation, it provides us with the data concerning the profits, sales and the number of employees, of these companies.
| Table 3: The World's Top Oil Companies |
||||
| Company | Market Value (£bn) |
Profits (£bn) |
Sales (£bn) |
Staff |
|
||||
| Exxon-Mobil | 149 | 12 | 111 | 130,000 |
| BP Amoco-Arco | 119 | 5 | 53 | 115,000 |
| Royal Dutch-Shell | 112 | 9 | 88 | 102,000 |
| Chevron | 35 | 3 | 22 | 43,000 |
| ENI | 32 | 3 | 31 | 81,000 |
| Total/Petrofina | 29 | 2 | 32 | 69,100 |
| Elf | 23 | 2 | 26 | 85,000 |
| Texaco | 19 | 2 | 28 | 28,000 |
[Source: Sunday Times, 4 April 1999] |
||||
In the year 2000, the profits of the top five oil companies - Exxon, Shell, BP, Chevron/Texaco and Total Fina - amounted to a whopping $56 billion (£40bn), double that of 1999. The profits of the three sisters, which alone accounted for $42.30 billion of profits in 2000, were as shown in table 4.
| Table 4: Profits of the three sisters in 2000 |
||
| Company | Profit in 2000 (£bn) |
Increase in profit from 1999 (%) |
|
||
| Exxon-Mobil | 17.70 | 124 |
| Royal Dutch/Shell | 12.70 | 48 |
| BP Amoco | 11.90 | 54 |
Profit figures for 2001 are likely to turn out to be higher still. In the first quarter, the profits of the three sisters, in the order listed above, were $5,050 million (Exxon); $3,850 million (Shell); and $4,126 million (BP).
No sooner had the above described furious round of consolidation finished than a new one started - this time for complete supremacy among the top three. Reporting the second quarter profits for year 2000, of Shell and BP, Robert Corzine wrote in the Financial Times:
"The bell has rung in the fight for supremacy between the three heavyweights that now top the oil industry - Exxon Mobil, Royal Dutch/Shell and BP Amoco.
"But senior executives agreed that the results [profit figures for each quarter] will increasingly have the feel of a quarterly beauty parade as each tries to upstage the others" (Oil's giants vow to punch their weight, 8 August 2000).
Hardly had the dust settled on the deals described above when, on 18 November, 2001, Conoco and Phillips of the US announced a $35 billion (£24.3 bn) merger of equals, although Phillips emerges from this deal with an edge. This biggest corporate deal is a continuation of the trend towards consolidation in the oil and gas industry. Archie Dunham, Chairman and Chief Executive of Conoco, has been known to stress during recent consolidation of the oil industry that while size is unimportant, being nimble, quick and aggressive is. His actions, however, speak louder than words. Having acquired only recently (July 2001) for $6.3 bn Gulf Canada - the biggest oil and gas deal in Canadian history - Conoco has hurried to join forces with Phillips. Size does matter, for the medium-sized companies are painfully aware that from the long-term perspective, they need new sources of natural gas and oil, which in turn require that the companies be of a certain size in order to compete for those resources.
If the merger goes ahead, the new company, to be known as Conoco Phillips, will become the third-largest integrated oil and gas group (before the merger, Conoco was the fourth-largest US oil company) in the US and the world's sixth biggest energy company - and the fifth largest refiner. The combined reserves of these two companies will be 8.7 billion barrels of oil equivalent (BOE) as against Chevron Texaco's (the number 2) 11.6 bn; its upstream daily production will amount to 1.7 million BOE; it will operate or have an equity interest in 19 refineries in the US, Britain, Germany, Ireland, the Czech Republic and Malaysia, with a refining capacity of 2.6 million barrels a day. Presently Conoco, based in Texas operates in more than 40 countries, employs 20,000 people and has assets of $27.7 billion, while Phillips, based in Oklahoma, has world-wide interests, a staff of 38,500, and assets amounting to $35.4 billion. Though formidable, by the standards of the three big sisters, it will still be a rather small group. It must thus either carry on the road to further acquisitions or submit to its own acquisition by one of the big three.
Rise of monopolies - a fundamental law
What lies behind this furious consolidation of the oil industry? The answer lies in the normal functioning of the laws of capitalism, whereby free competition leads to concentration of production which in turn, at a certain stage of development, leads to monopoly. This is as true of the oil and energy sector as of any other. There is nothing surprising in it, for the "rise of monopolies, as a result of the concentration of production, is a general and fundamental law of the present [i.e. imperialist - HB] stage of development of capitalism" (Lenin, Imperialism, the highest stage of capitalism, p.20)
Rising demand and finite oil reserves
In addition to the above normal reason, which applies to any sector of industry, there are additional compelling reasons, peculiar to the oil industry, which accelerate the process of concentration and monopolisation even further than in other spheres of the economy. The oil resources of the world are finite and they are running out fast. Although experts disagree on the number of years within which the oil wells of the world will run dry, they are all agreed that at the present rate of consumption (about 70 million barrels per day - mbpd), oil resources will be exhausted in the coming 40 to 60 years.
The added problem is that the demand for oil rises with each passing decade. If in 1973, global oil consumption stood at 57 mbpd, by September 2000 it had risen to 70 mbpd. In 1970, the US consumed 16 million barrels of oil a day, today it consumes 22 million barrels; in 1970 the Western European countries used 12 million barrels a day, today they gobble up 15 million barrels; in 1970 Japan consumed 4 million barrels a day, today it consumes 6 million barrels. Although they use oil more efficiently (in the sense that they secure greater units of GDP for each unit of oil than they did in 1973), the imperialist countries have presently a greater dependence on oil than at any other time in the past. The US, with a mere 5% of the global population and with only 3% of the global oil reserves, alone accounts for 25% of the global oil consumption
What is more, the imperialist countries are ever-increasingly - even dangerously - reliant on imported oil, especially from the Middle East, which is the repository of two-thirds of the world's proven oil reserves. In the year 2000, the Organisation for Economic Co-operation and Development (OECD) (composed of 28 rich countries, a tiny few of which cannot be characterised as imperialist) as a whole imported 51.8% of its oil needs (of which 38.3% was from Organisation of Petroleum Exporting Countries (OPEC) countries); Japan imported 100% of her oil needs (80.9% from OPEC); and the US imported 52.9% (26.3% from OPEC) [see Financial Times, 8 November, 2001 - table 5]. The US's oil imports have nearly doubled from 6 million barrels a day in 1973 to more than 11 million barrels a day today - nearly a third more than the entire oil of Saudi Arabia.
Table 5:
Importance of cheap raw materials
The fact that it is running out only serves to enhance the importance of oil, which is the staple diet of modern industry and the power behind the imperialist war machines. Even the thought, let alone the prospect, of expensive oil (not to speak of no oil) sends alarm bells ringing in imperialist quarters. After all cheap oil, to a considerable extent, accounted for the golden age, so fondly remembered by the bourgeoisie and its ideologues, of the non-inflationary growth of the 1950s and 1960s, which was brought to an abrupt halt in the aftermath of the Yom Kippur War (1973), when oil prices rose from less than $2 a barrel in 1972 to more than $10 in 1974, and then to nearly $36 in 1980, plunging the imperialist economies into a prolonged period of stagflation (low growth and high inflation). Equally, it was the combination of rising demand and flat oil prices, which played a very important role in the unprecedented growth witnessed during most of the 1990s, especially in the US, which was dubbed by the bourgeois economists as the 'goldilocks' economy, characteristic, we were told, of a new era whereby the non-inflationary boom could last for ever. Not much is heard of that nonsense, for capitalism would not be capitalism if it could get rid of the periodic crisis of overproduction which are inherent to it. Then there is the military aspect. Without oil, the imperialist war machine would grind to a juddering halt - and with it the ability of imperialism to threaten, bully, and terrorise the whole world. In a letter to the Financial Times, dated 1st November 2000, Andrew Oswald, professor of economics, Warwick University, having warned imperialist organs against the complacency of thinking that western economies are less dependent on oil than before, goes on to make this point apropos the reliance of the war machines of the imperialist countries on oil and the dire consequences of it running out.
"Although it is out of my area of expertise one might hope, too, that somewhere there are analysts who are considering what happens when the US notices that its domestic oil supply is about to run out but that a military machine is of no use without the petroleum necessary to fuel one's ships, tanks, rockets and jets. The complacency in western newspapers is a mistake". In view of the importance of oil in the functioning of a modern economy, it is not surprising that cheap oil should have figured so prominently in imperialist profits and the general prosperity witnessed in the centres of imperialism in the 50s, 60s and 90s of the last century. Marx long ago explained the importance of cheap raw materials (and oil is the most important raw material today) for increasing the rate of profit:
"Other conditions being equal the rate of profit … falls and rises inversely to the price of raw materials. This shows, among other things, how important the low price of raw materials is for the industrial countries. … It follows further that foreign trade influences the rate of profit, regardless of its influence on wages …" (Capital Vol. 3).
The development of monopoly only serves to intensify the struggle for the seizure of raw materials. Developing Marx's analysis, and applying it to the era of monopoly capitalism, Lenin concluded: "The more capitalism is developed, the more strongly the shortage of raw materials is felt, the more intense the competition and the hunt for sources of raw materials throughout the whole world, the more desperate the struggle for the acquisition of colonies" (Lenin, ibid). Today this shortage of raw materials is felt even more strongly, the global competition and hunt for sources of these raw materials has become more intense, and the struggle for the seizure of places richly endowed with these resources more desperate than even in Lenin's day. This alone explains the struggles over the routing of oil and gas pipelines, the Machiavellian tactics adopted by the various oil groups and states in the cut-throat competition to grab energy resources and deprive their rivals of the same, and last, and most important, the imperialist wars in the Middle East and the Balkans, and the present war in Afghanistan. Bourgeois writers, who hate Leninism with all the ignorance and prejudice of the educated philistine, are in total agreement with Leninism on this score - of course without being conscious of it. Writing in the Sunday Times of 29 March 1998, Mr David Smith stated:
"Oil is so unique that nations will send men to die to ensure an unimpeded flow of the stuff. Indeed, they will send men to die merely to make sure the price is right - and with reason." This single sentence, with all the defects of its formulation, explains more about the wars referred to in the preceding paragraph than the nauseating guff about sovereignty of nations, humanitarianism, democracy and the crusade against terrorism, which fills the airwaves and graces the print media of the imperialist countries. This single sentence furnishes the answer to the question as to why a huge proportion of the defence budgets of the various imperialist countries, especially of the US, goes toward defending the continued flow of oil from potentially unstable and explosive regions such as in the Middle East.
Another writer, Robert Corzine, commenting on the takeover of Amoco by BP, which had then just taken place, described the rationale behind that deal in the following correct terms:
"The world-wide search for outstanding reserves has become an obsession of the leading companies in the sector. Traditionally, even the biggest oil companies have had just a handful of assets that are seen as 'company builders'. These are the prolific and long-lasting fields that produce very high rates of return and fund an oil company's constant - and phenomenally expensive - search for yet more assets.
"… competition to secure a new generation of such reserves has intensified. This is partly because such oilfields are becoming increasingly hard to find; oil companies are scouring for them in more and more remote regions. Competition for those reserves that remain has also grown as state oil companies and recently privatised groups move outside their domestic markets." Continues Mr Corzine:
"… it is generally those oil companies with the lowest-cost assets that do best in cyclical downturns. They can also move faster in responding to opportunities when markets begin to recover.
"Big companies can also spread their risks more widely. The new group will have the financial clout and reach to take on the riskiest long-term development projects in remote areas of the world" (Into the super league, Financial Times, 12 August, 1998).
He concludes by emphasising the crucial importance of size in the never-ending chase of monopoly capital for maximum profit, against which small capital (even if it be of a goodly size) is helpless, in these terms:
"Whatever actions smaller companies may contemplate, and eventually take, none will be able to attain the intangible benefit that can come from being first. If nothing else, yesterday's deal shows that Sir John is willing to act on one of his most treasured business principles: that the biggest gains go to those who are boldest".
This is only a coded way of saying that the biggest gains go to the geniuses of financial manipulation who are able to pull a fast one on their rivals by upstaging them.
Competition from state oil companies
The giant oil monopolies which hitherto had the world to themselves in the most lucrative field of upstream exploration and production, as well as in downstream refining and marketing, are suddenly faced with competition from state oil companies such as Petronas of Malaysia and China's National Petroleum Corporation (CNPC). Both of them have been encroaching on the turf of the oil giants from the imperialist countries, have bought companies from South Africa to Kazakhstan. In the summer of 1997, CNPC bought a 60% stake in the Aktyubinsk oil field in Kazakhstan for $325 million in cash and a promise to invest an additional $4 billion over the following 20 years - mostly on pipelines to the east. In the teeth of American opposition, the CNPC defeated a consortium, at the time led by Amoco, for the sole right to negotiate a contract for developing the giant Uzen field in Kazakhstan. About the same time, the CNPC beat several western oil groups in the bid to secure a $358 million deal for the development of two oilfields in Venezuela. It has also concluded a $1.3 billion contract with Iraq for the development of Al Ahdab field when UN sanctions are removed.
Although China is the world's third-largest oil producer (3.28 mbpd), the rapid development of the Chinese economy is outstripping the ability of the CNPC to come up with new reserves to replace older depleted fields. It is forecast that by 2015, China may need to import as much as 4 million barrels a day - the equivalent of half the current output of Saudi Arabia, the world's largest producer.
The entry of giant state corporations such as the CNPC are frightening the daylights out of the three sisters, who have had the exclusive enjoyment of fabulous profits from their upstream exploration and production activities. To get an idea of the massive fortunes raked in by the big three, in most years they secure close to 20% return on capital employed. It is no surprise then that the western oil companies spend about $115 billion (£80 bn) a year on exploration. The CNPC, with reserves of 16.5 billion barrels of oil and nearly $7 billion annual profit, is the fourth-largest oil company and among the top 15 of the US Fortune 500 (ranked by profit). Meanwhile, the state-owned oil company of Venezuela, Petroleos de Venezuela, has become the biggest retailer of petroleum products in the US.
Race to the Finishing Line
In the rush to monopolise the oil resources of the world, the oil giants are guided by the Chechen saying that he who goes to the tree first, picks the plum. The fear of being a latecomer drives them all to desperate attempts to beat all possible rivals. And in their attempts to corner oil reserves, there is not a crime that these giants will not commit - from maintaining para-military thugs to defend their operations (as BP does in Colombia), to enlisting the services of the army, with all the attendant brutality, to protecting their installations (as Shell does in Nigeria, where it makes $500,000 a day profit on the 800,000 bpd it lifts from that country), to overthrowing governments perceived as hostile to the oil companies (BP and the overthrow of the nationalist Mossadeq regime in Iran).
At the back of these oil giants stand their respective governments. In a 1953 report to the National Security Council, the US State Department made the case for backing the oil companies in these terms, "American oil operations are, for all practical purposes, instruments of our foreign policy towards these countries", for they "play a vital role in supplying one of the free world's most essential commodities". (Quoted in The Seven Sisters by Anthony Sampson, Hodder and Stoughton, 1975).
Elsewhere in the same book, from which the above words are quoted, Mr Sampson describes the power of the giant oil corporations in these words:
"As Rockefeller and Standard Oil in the nineteenth century had become bigger than individual states of the Union, so these giant companies had become larger and richer than most national governments. …." (ibid, p.188).
For their part, the oil companies are only too aware of their power. These are the megalomaniac terms in which BP describes its logo:
"Our new mark resembles a dynamic burst of energy; bright white at the core with radiant beams of yellow and green light. Our mark's interlocking parts represent the diversity of our people, products and services.
"Its radiance is a daily reminder of our aspirations and purpose. We call it the Helios mark, after the sun god of ancient Greece.
"Each day, Helios steered his chariot across the sky, bringing light and power to the earth. "In a hundred countries across the globe, a hundred thousand BP employees bring the world energy in the forms of light, warmth, and mobility". (quoted in the Financial Times, 25 July 2000). The truth is that, unlike the Helios of Greek mythology, in addition to light, warmth and mobility, BP brings, just like other monopolies, especially oil monopolies, darkness, death, destruction, misery and war. The peoples of the Middle East, the Balkans, as indeed of Afghanistan, Nigeria, Colombia and Iran, would readily attest to this. Nor could it be otherwise, for "imperialism is the epoch of finance capital and of monopolies, which introduce everywhere the striving for domination, not for freedom. Whatever the political system the result of these tendencies is everywhere reaction …", for "finance capital does not want liberty, it wants domination", for the "dominance, and violence that is associated with it, such are the relationships that are typical of the latest phase of capitalist development" (Lenin, Imperialism - the highest stage of capitalism, pp113-114, and p.80)
Before closing our brief survey of the recent consolidation in the oil industry, we wish to comment upon the "personal link-up" between monopoly capital, on the one hand, and the government, on the other hand, whereby seats on the boards of the big banks and industrial enterprises are offered to former civil servants, army officers, ministers, members of parliament and other influential persons "who are able to do a great deal to facilitate [!!] relations with the authorities" (Lenin, Imperialism, the highest stage of capitalism, p.41), and, conversely, representatives of big banks and industry are offered influential government posts, which they use to directly represent, and fight for, the interests of either the particular business interests with which they were connected or of finance capital in its entirety. This has now reached scandalous proportions. This is particularly true of the oil industry, which in turn, through cross-shareholdings and interlocking directorships, is inextricably connected with the big banks and armament manufacturers. As the US and Britain are home to the three largest oil companies, it can hardly come as a surprise that these oil giants exercise such an overbearing influence on government policy. The present Bush administration is stuffed full with former oil industry executives - from George W Bush, the president of the US, through his vice-president, Dick Cheney, to Don Evans, Commerce Secretary, Condoleezza Rice, National Security Advisor, and many other have had long and impeccable connections with the oil industry.
As for Britain, oil executives adorn the machinery of government at every important level.
Within weeks of the Blair government taking office, former head of BP, Lord Simpson, was given the post in the administration as Minister for Trade and Competitiveness in Europe. Since then a large number of oil executives from BP and Shell have been coopted on to influential government bodies and drafted into several departments of state, including the DTI, the Foreign Office and the Treasury, charged with the task of helping in the formulation of government policy. It would be hilarious, were it not so sick and scandalous, that representatives of the oil industry, one of the chief polluters of the environment, have been appointed to government committees on the environment. Thus we find that Mr Chris Fay, former chief executive of Shell, was given the chair of the government's Advisory Committee on Business and the Environment.
David Blunkett, in his previous job as Home Secretary, appointed Stella Shaw, a former regional finance chief at Shell, to the Funding Agency for Schools. That high-class thug, Charles Clarke (currently the Chairman of the Labour Party), during his stint at the Home Office, launched an Esso school pack with the aim of inculcating among the students an understanding of "the responsibilities of business in the community". And so on and so forth.
The oil industry of the US and Britain, even more than any other industry, furnishes proof of the correctness of the following observation of Lenin's: "Finance capital has created the epoch of monopolies, and monopolies introduce everywhere monopolist principles: the utilisation of 'connections' for profitable transactions takes the place of competition on the open market" (ibid. p.63).
Of the top 15 global companies by market capitalisation, oil accounts for 3. Exxon Mobil, Royal Dutch/Shell and BP have a combined market capitalisation of $417.5 billion. Thus it can be seen that the oil industry is at the heart of US and British imperialism. It is home to a tiny clique of bankers, industrialists, former soldiers, civil servants and politicians, who run America and Britain and who, with effortless ease, waltz from the officer corpe and the higher echelons of bureaucracy in to the boardrooms of the giant monopolies and ministerial departments. These are the people who decide questions of life and death, of peace and war; they are the ones behind the wars in Iraq, the Balkans and Afghanistan. They are the living proof of Lenin's observation that "A monopoly, once it is formed and controls thousands of millions, inevitably penetrates into every sphere of life, regardless of the form of government and all other 'details'" (ibid. p.56).
In the next issue I shall deal with Consolidation in the Pharmaceutical Industry.
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