The general thesis of this article, that Oil Companies are gouging
consumers, may well be correct. However the authors' case is considerably
weakend by errors, ommissions, misunderstandings and an overall simplistic
approach to a complex topic. The first problem is that both OPEC and the
Oil Majors have only been cartels in the strict sense of the word, at
various times during history. To address OPEC first. The Definition of a
cartel is: " A combination of producers to regulate the output and prices
of a commodity."
So although OPEC was called a cartel during the 1970's it was not. OPEC was
trying to set prices, but not output - yet. There were no quotas or
assigned production levels. The cartel started in March 1982 when OPEC ,
which had produced 31 million barrels per day in 1979, set an output limit
for the group of 18 million barrels per day, with individual quotas for
each country, except for Saudi Arabia, which would adjust its production to
support the system.
The quota system from this time on has on the whole been a failure. Most
countries in OPEC have pumped more oil than allocated, for the simple
reason that they want to make more money. Their revenue is tied to oil
production.
The issue of the Oil Companies being cartels is a complex one. Because not
just the companies, but also governments have been involved in trying to
organize quotas and stabilize prices. It would take too long to go into all
the details here, but the claim by Quigley that:
"This world cartel had developed from a tripartite agreement signed on
September 17, 1920 by Royal Dutch Shell, Anglo-Iranian, and Standard
Oil.These agreed to manage oil prices on the world market by charging an
agreed fixed price plus freight costs, and to store surplus oil which might
weaken the fixed price level, " Needs to be questioned.
In the book "The Prize" by Daniel Yergin, a history of the oil industry, he
makes no mention of this agreement. Now if Quigley is correct and Yergin
wrong, there is a major problem. This is because in August 1928, the major
oil companies had a meeting at Achnacarry Castle in the Scottish Highlands.
The purpose of the meeting was to address the problems of over production
(hence low prices) and high costs in the industry. After two weeks, a 17
page document, which became known as the "As-Is" agreement was produced,
but was NEVER SIGNED. So even though the majors tried to be a cartel at
this point, setting market shares and production quotas, it was never
ratified and never worked in practice.
Throughout the 1930's and 40's, the industry kept trying to get the As-Is
agreement to work, but there was too much distrust between the oil
companies, and the independent (mainly American) oil companies kept
selling oil, regardless of what quotas the majors wanted. Consequently, it
appears that Quigley has either got confused or flat-out got it wrong.
Likewise the claim about a 1949 agreement is equally dubious, especially as
the details given of the participating Oil Companies, contains a number of
errors. Enrico Mattei, president of Italian industrial conglomerate ENI,
coined the term the seven sisters in the 1950's. The seven sisters
included: The Aramco* partners - Exxon (Standard NJ), Mobil
(Socony-Vacuum), Chevron (Standard of California), and Texaco, plus Gulf,
Royal/Dutch Shell, and BP (Anglo-Iranian).
* Aramco (Oil Company of Arabia) was set up in 1948 as the original oil
concession in Saudi Arabia.
* Gulf Oil was created in 1901 by Richard and Andrew Mellon, with a merger
of Gulf Refining and Guffey Petroleum. It was later sold to Chevron in 1984.
* Royal/Dutch Shell was created in 1907 with a merger between Shell (UK)
and Royal Dutch. It was a 60/40 split, with the majority shareholding being
with Royal Dutch. It got the name Royal because William III of Netherlands
gave the company his royal approval in 1890. Not because it's owned by the
Dutch Royal family.
*Texaco was created in 1906 as a brand name for the Texas Fuel Company
created by Joseph Cullinan in 1897.
The profit comparison given in the article is misleading, because those
profit margins vary from market to market, and it also ignores the huge tax
take countries other than USA get from oil.
In 1975 , for instance, about 45% of what the Western European consumer
paid for oil products went to their government, while about 35% was
accounted for by the OPEC price. The other 20% went for shipping, refining,
dealer's margins, and so forth. In the USA, where the tax rate was only
18%, the share going to the OPEC producer was more on the order of 50%. In
Japan, the government took 28%, with 45% going to OPEC.
The comments about oil production and ownership are incorrect. During the
1970's the majority of OPEC producers either nationalised or bought out
the oil companies' oil concessions. For example,
The Kuwaiti Oil Company had been established in 1934 by BP and Gulf. Forty
years later, at the beginning of 1974, Kuwait acquired 60% participation in
the Kuwait Oil Company. In early March 1975, Kuwait took over the balance
of the company.
The major producers now are: Saudi Aramco, Petroleos de Venezuela, Pemex
(Mexico), Kuwait Petroleum Co, Pertaming, Statoil (Norway).
Furthermore, the oil producers then started to take over the marketing and
distribution of their oil as well.
The oil sold directly into the market by the oil producers increased from
8% in 1973 to 42% in 1979.This has likely increased even more by now. By
1990, non-OPEC oil production (such as North Sea, Indonesia etc) was
greater than OPEC oil production.
Ivan
>Delivered-To: [EMAIL PROTECTED]
>X-Mailer: AOL 5.0 for Windows sub 120
>Date: Sat, 2 Sep 2000 21:24:09 EDT
>Reply-To: Conspiracy Theory Research List <[EMAIL PROTECTED]>
>Sender: Conspiracy Theory Research List <[EMAIL PROTECTED]>
>Comments: RFC822 error: <W> Incorrect or incomplete address field
found and
> ignored.
>From: Bill Richer <[EMAIL PROTECTED]>
>Subject: [CTRL] OPEC "THEY" IS "US!"
>To: [EMAIL PROTECTED]
>
>WJPBR Email News List [EMAIL PROTECTED]
>Peace at any cost is a Prelude to War!
>
>Friends:
> Ralph Epperson has given me permission to send you one of his
>articles:
>
>God Bless;
>
>Bill
>
>OPEC
>"THEY"
>IS
>"US!"
>
>by
>Ralph Epperson
>author
>of
>THE UNSEEN HAND
>AN INTRODUCTION TO
>THE CONSPIRATORIAL VIEW
>OF HISTORY
>
>
>
>Newspaper headlines scream:
>
>OPEC REDUCES PRODUCTION,
>OIL PRICES RISE
>
>and we, the American people, flail our arms in contempt as we see our
>gasoline prices increase! Those blasted "oil producing countries" have done
>it to us again! (OPEC stands for "The Organization of Petroleum Exporting
>Countries.")
>
>And our American oil producing companies seem powerless to do anything about
>the increase in price! Why isn't something done to get us gasoline at a
>reduced price? Why are we so dependent on OPEC for our oil needs?
>
>But we do not know who the "they" in the OPEC nations are, but all we know is
>that "they" are "foreign nations!" Because our American oil companies would
>not do such a thing to their fellow Americans!!
>
>Because we have the "free enterprise system" in America where competition
>forces down the high prices, and it doesn't occur to us that OPEC might be
>the American (and European) oil companies!!
>
>But let me tell you ................. they are!
>
>Because OPEC is not "the foreigners," it is "us!"
>
>However, proving that statement is more difficult than making it, because
>there is but a little information that I am aware of that tells us just who
>these "foreigners" are. However, there are adequate clues that OPEC is not
>owned by the "foreigners" at all.
>
>But to understand OPEC, we must first understand a few simple economic terms,
>such as NATURAL MONOPOLY, COERCIVE MONOPOLY, and CARTEL
>
>The industrialists of the "industrial revolution" soon learned that
>exorbitant profits could not be made in the "FREE ENTERPRISE SYSTEM," where
>competitors could enter the market place and compete by selling the same
>product at a reduced price.
>
>The "industrialists" soon learned the merits of the MONOPOLY, a market place
>where they could continue to charge their exorbitant prices and no one would
>compete. But in a "FREE ENTERPRISE SYSTEM," another producer could enter the
>market place even if they had a monopoly and once again, reduce the price.
>
>A NATURAL MONOPOLY is defined as a market place where one seller is allowed
>to be the only producer of a product, because no one wishes to compete. But
>that threat of future competition caused the MONOPOLIST concern: that
>competition could always enter the market place at a future date and drive
>prices down.
>
>The NATURAL MONOPOLIST soon discovered the joys of hiring a government to
>protect his NATURAL MONOPOLY by closing the door to its competition. (A
>basket full of money given to the right person at the right time has strange
>effects on politicians!) This NATURAL MONOPOLY became a COERCIVE MONOPOLY
beca
>use the hired government closed the market place by making it illegal to
>compete. So the MONOPOLIST turned to government and together they creates
>what is called a COERCIVE MONOPOLY. This exists when govern-ment and the
>MONOPOLIST combine to restrict the access of their competitors to the market
>place.
>
>But how does THE COERCIVE MONOPOLIST control the world market place when
>there is another COERCIVE MONOPOLIST in another nation with its government
>supporting its COERCIVE MONOPOLY?
>
>The answer is obvious: THE MONOPOLIST signs an agreement with the competing
>COERCIVE MONOPOLY and that resulting agreement is called a CARTEL!
>
>OPEC is a "CARTEL" (defined as "a few sellers in a market place, combining to
>set the price of a good sold.")
>
>This connection between the monopolists and government was correctly
>discerned by Frederick Clemson Howe, Ph.D., an economist, lawyer, and a
>special assistant to Henry Wallace, the Secretary of Agriculture and later a
>Vice-President to Franklin Roosevelt. He wrote:
>
> "These are the rules of big business: Get a monopoly.
>
> Let society work for you, and remember that the best business is
politics,
> for a legislative grant, franchise, subsidy, or tax exemption is worth
>more
> than a Kimberly or Comstock Lode, since it does not require any labor
>either mental or physical, for its exploitation."
>
>John D. Rockefeller, the American oil magnate, one who correctly learned the
>lesson about MONOPOLIES as well, expressed his opinion that "Competition is a
>sin."
>
>Another who wrote of this connection was Dr. Antony Sutton, who wrote in his
>book WALL STREET AND FDR: (meaning Franklin D. Roosevelt)
>
> "Old John Rockefeller and his 19th century fellow capitalists were
>convinced
> of an absolute truth: that no great monetary wealth could be accumulated
> under the impartial rules of competitive laissez-faire [the
>free-enterprise
> system] society.
>
> The only sure road to the acquisition of massive wealth was mo-nopoly:
> drive out your competitors, reduce competition, eliminate laissez-faire
> [the free enterprise system] and above all get state protection for your
> industry through compliant politicians and government regulation.
>
> The last avenue yields a huge [COERCIVE] monopoly and a legal
> monopoly always leads to wealth."
>
>And in his book, WALL STREET AND THE BOLSHEVIK REVOLUTION, Dr. Sutton further
>amplified his point:
>
> "The financiers ... could by government control ... more easily avoid the
> rigors of competition.
>
> Through political influence they could manipulate the police power of the
> state to achieve what they had been unable, or what was too costly, to
> achieve under the private enterprise system."
>
>In other words, the police power of the state was a means of maintaining a
>private COERCIVE MONOPOLY.
>
>As I said before, the best known cartel in the world is OPEC. This cartel is
>thought to be foreign, primarily Arabian, in ownership. However, there is
>ample reason to believe that the principle ownership of OPEC is not primarily
>Arabian but international, primarily American.
>
>Dr. Carroll Quigley, the mentor of President Bill Clinton at Georgetown
>University, (Clinton praised Quigley in 1992 on national television as being
>one of the two men who got him into politics) in his massive 1300 page book
>entitled TRAGEDY AND HOPE, discussed an oil cartel formed in 1928:
>
> "This world cartel had developed from a tripartite agreement signed on
>September 17, 1920 by Royal Dutch Shell, Anglo-Iranian, and Standard Oil.
>
> These agreed to manage oil prices on the world market by charging an
> agreed fixed price plus freight costs, and to store surplus oil which
>might
> weaken the fixed price level.
>
> By 1949 the cartel had as members the seven greatest oil com-panies in
> the world: Anglo-Iranian, Socony-Vacuum, Royal Dutch Shell, Gulf, Esso,
>Texaco, and Calso.
>
> Excluding the United States domestic market, the Soviet Union and
> Mexico, it controlled 92% of the world's reserves of oil . . . ."
>
>It might help if I try and identify each of these 7 oil companies:
>
> Anglo-Iranian: an Iranian company in partnership with
> several American and European oil companies
>
> Socony-Vacuum: Standard Oil Company of New York and
> Vacuum (an English company)
>
> Royal Dutch Shell: owned in the main by the Royal Family of
> Holland
>
> Gulf: Not certain, but I believe this is an American owned
>oil
> company
>
> ESSO: Standard Oil of England
>
> Texaco: A Rockefeller oil company
>
> Calso: Standard Oil of California
>
>(Not much Arabian ownership in that list!!)
>
>
>James P. Warburg, who should know, further discussed the cartel in his book
>entitled THE WEST IN CRISIS. Apparently the cartel had grown to include an
>additional member:
>
> "Eight giant oil companies - five of them American - control the non-
> Communist world's supply of oil, maintaining administered prices which
> . . . yield exorbitant profits.
>
> The oil companies extract oil from the Middle East, which contains 90%
> of the known reserves of the non-communist world, at a cost of 20 to 30
> cents a barrel and sell it at a collusive price, varying over a period of
>recent
> years from $1.75 to $2.16 per barrel, f.o.b., the Persian Gulf.
>
> The resulting profit has, as a rule, been split on a fifty-fifty basis
>with the government of the country in which the oil is produced."
>
>See how noble these oil companies are? They share the profits "50 - 50" with
>the country they take the oil out of!
>
>Now for the fun part: I will use the figures shown above to show you just why
>there is money to be made in the CARTEL BUSINESS! Using Mr. Warburg's
>figures, it is easy to extrapolate price increases to today's oil market
>prices.
>
> Years Cost Price Profit % of Profit
>
> 1950 $ .30 $ 2.16 $ 1.86 620
> 1979 ** $3.25 $20.00 $16.75 515
>
>** presuming a lO% per year increase in costs and using the OPEC price of
>$20.00 in 1979, the profit of $16.75 is approximately the same as that
>pointed out in Warburg's book. (Gee, it doesn't take a brain surgeon to
>determine that a 620% profit on your investment is NOT TOO SHABBY!)
>
>(I must admit that these figures come from my 1985 book THE UNSEEN HAND and I
>have not updated them.)
>
>In other words, the OPEC countries are increasing oil prices today (in 1979)
>in order to maintain their profit percentages of 30 years ago.
>
>It is interesting to note that both Dr. Quigley and Mr. Warburg wrote about
>the years 1949 and 1950. OPEC was formed in 1951, right after both authors
>pointed out that the Arabian oil reserves were owned by non-Arabian oil
>companies.
>
>It is doubtful that these non-Arabian oil companies gave up the ability to
>make a 620 percent profit to the OPEC nations when OPEC was formed. So, I
>think it is fair to conclude that they still own the oil from "the middle
>east."
>
>In summary, then, these agreements that artificially set prices, (the cartels
>and their cousin, the monopolies) lead to the accumulation of large
>quantities of amassed wealth through exorbitant profits!
>
>These marketplace aberrations exist solely because the monopolists have
>formed a partnership with the government, and the result is higher prices for
>the consumer.
>
>Think about this as you pay the higher price for your gallon of
>gasoline!!!!!!!
>
>"They" is "us!"
>
>(If you want to read THE UNSEEN HAND by Ralph Epperson, call him at (520)
>886-4380 or contact him at [EMAIL PROTECTED])
>
>end of article
>
>
>
>*COPYRIGHT NOTICE** In accordance with Title 17 U. S. C. Section 107,
>any copyrighted work in this message is distributed under fair use
>without profit or payment to those who have expressed a prior interest
>in receiving the included information for nonprofit research and educational
>purposes only.[Ref. http://www.law.cornell.edu/uscode/17/107.shtml ]
>
>Want to be on our lists? Write at [EMAIL PROTECTED] for a menu of our lists!
>
>
>***************************************************************************
***
>*******************
>A vote for Bush or Gore is a vote to continue Clinton policies!
>A vote for Buchanan is a vote to continue America!
>Therefore a vote for Gore or Bush is a wasted vote for America!
>Don't waste your vote! Vote for Patrick Buchanan!
>
>
>Today, candor compels us to admit that our vaunted two-party system is a
>snare and a delusion, a fraud upon the nation. Our two parties have become
>nothing but two wings of the same bird of prey...
>Patrick Buchanan
>
><A HREF="http://www.ctrl.org/">www.ctrl.org</A>
>DECLARATION & DISCLAIMER
>==========
>CTRL is a discussion & informational exchange list. Proselytizing propagandic
>screeds are unwelcomed. Substance—not soap-boxing—please! These are
>sordid matters and 'conspiracy theory'—with its many half-truths, mis-
>directions and outright frauds—is used politically by different groups with
>major and minor effects spread throughout the spectrum of time and thought.
>That being said, CTRLgives no endorsement to the validity of posts, and
>always suggests to readers; be wary of what you read. CTRL gives no
>credence to Holocaust denial and nazi's need not apply.
>
>Let us please be civil and as always, Caveat Lector.
>========================================================================
>Archives Available at:
>http://peach.ease.lsoft.com/archives/ctrl.html
> <A HREF="http://peach.ease.lsoft.com/archives/ctrl.html">Archives of
>[EMAIL PROTECTED]</A>
>
>http:[EMAIL PROTECTED]/
> <A HREF="http:[EMAIL PROTECTED]/">ctrl</A>
>========================================================================
>To subscribe to Conspiracy Theory Research List[CTRL] send email:
>SUBSCRIBE CTRL [to:] [EMAIL PROTECTED]
>
>To UNsubscribe to Conspiracy Theory Research List[CTRL] send email:
>SIGNOFF CTRL [to:] [EMAIL PROTECTED]
>
>Om
>
>
<A HREF="http://www.ctrl.org/">www.ctrl.org</A>
DECLARATION & DISCLAIMER
==========
CTRL is a discussion & informational exchange list. Proselytizing propagandic
screeds are unwelcomed. Substance—not soap-boxing—please! These are
sordid matters and 'conspiracy theory'—with its many half-truths, mis-
directions and outright frauds—is used politically by different groups with
major and minor effects spread throughout the spectrum of time and thought.
That being said, CTRLgives no endorsement to the validity of posts, and
always suggests to readers; be wary of what you read. CTRL gives no
credence to Holocaust denial and nazi's need not apply.
Let us please be civil and as always, Caveat Lector.
========================================================================
Archives Available at:
http://peach.ease.lsoft.com/archives/ctrl.html
<A HREF="http://peach.ease.lsoft.com/archives/ctrl.html">Archives of
[EMAIL PROTECTED]</A>
http:[EMAIL PROTECTED]/
<A HREF="http:[EMAIL PROTECTED]/">ctrl</A>
========================================================================
To subscribe to Conspiracy Theory Research List[CTRL] send email:
SUBSCRIBE CTRL [to:] [EMAIL PROTECTED]
To UNsubscribe to Conspiracy Theory Research List[CTRL] send email:
SIGNOFF CTRL [to:] [EMAIL PROTECTED]
Om
