Oil - Today's world price hike and the "majors"

Nov-Dec 2000

At the beginning of September a wave of protest broke out across Europe in response to rising petrol prices. However, these increases did not come out of the blue. They were the result of a long process which began in early 1999.

Indeed, in February 1999, the price of oil reached a record low on the world's commodity markets - in London it went below the $10 per barrel level (a barrel being about 159 litres). Oil had never been so cheap, not since 1986, even though motorists never had the chance of noticing it - since petrol pump prices always go up when oil prices go up but seldom follow them down.

But then the oil price climbed. By August 2000, it reached a peak (so far at least) just below the $35/bbl mark. In just 18 months, therefore, it had increased by 250%. Of course, such a sharp increase was not unprecedented. In 1973-74 the oil price increased by 368% in just 12 months, and again, over two years in 1979-81, it increased by 178%. Business commentators even gave a name to these two brutal price hikes. They called them "oil shocks", which, by implication, was a way of blaming the oil crisis (and above all the producing countries) for the crisis of the world capitalist system - as if the oil market was suspended in mid-air, independent from the rest of the world market!

For the time being, therefore, in terms of magnitude, the current oil crisis seems to fit somewhere in between the two "oil shocks" of the past. In every other respect it has the same features. And just as they did previously, the Western media and politicians are blaming this new oil crisis on "shortages" allegedly engineered by producing countries (and particularly those belonging to OPEC, the Organisation of Petroleum Exporting Countries). At the same, like in the previous crises, they are busy preparing the Western working classes for the idea that their cost of living is going to rise and their conditions to worsen, and that they should blame the oil "shock" for this, rather than the greed of the capitalists.

But are the mechanisms which led to the present oil crisis the same as those which led to the previous ones and, more specifically, are the oil companies still as instrumental today, as they were in the 1970s, in engineering this crisis?

The oil-producing countries - convenient scapegoats

What really happened in the previous two oil "shocks"? It should be recalled that both in 1973 and in 1979 the papers launched a violent campaign against the OPEC countries, and more specifically against the Arab countries belonging to OPEC, accusing them of "taking the West "hostage in order to impose their rule". In fact, this campaign went so far as to appeal to racist prejudices in an attempt to make its argument more credible.

However, the reality was rather different. While, in 1973, a number of Arab members of OPEC threatened an oil boycott against the countries which supported Israel too openly during the Yom Kippur war, this boycott was rarely implemented and did not last long. And in 1979 the main causes for the reduction in Middle East oil production which took place at the time, were the popular uprising caused in Iran by the ruthless repression of the Shah's pro-American regime and the embargo decreed by US president Carter against Iran after this regime was overthrown.

At most one can say that on both occasions the OPEC countries tried to use a situation which, for once, was favourable to them, in order to get a higher price for their oil by limiting their oil production, albeit with uneven success. Ironically those who, at the time, had the nerve to criticize the OPEC countries' "greed" for trying to use an unusually favourable relationship of forces to their advantage, also happened to be enthusiastic supporters of the capitalist world market, that is of an economic system based on the law of the jungle! But how could anyone blame the oil-producing countries whose only source of income was - and still is - oil, for trying to make the best of it?

All the more so because, by 1971, oil prices had gone down by 40% in real terms compared with 1948, due to US inflation. And this was without taking into account the worsening of the terms of trade at the expense of the Third World, which is a permanent feature of the capitalist market. So, Third World oil-producing countries had every reason to want to regain some of the ground lost, which is what they did - to some extent - in 1973. However, the following years saw an explosion of world inflation and monetary instability. As a result, the gains made by the oil- producing countries in 1973 were soon eroded. Once again the price increases introduced from 1979 onwards were merely an attempt to make up for the losses of the previous years.

However, neither in 1973 nor in 1979 was OPEC the real master of the game. The price increases were decided and masterminded by the only real worldwide oil monopoly - the cartel of the largest oil companies, the "seven sisters" or "majors", as they were called, namely Exxon, Shell, BP, Texaco, Chevron, Mobil and Gulf (now part of Chevron)..

It may have seemed at the time that the grip of the "majors" over the oil-producing countries had been reduced by the wave of nationalisation of oil-related activities which started in Algeria in 1971 before spreading eventually to all OPEC countries. But it was merely an impression. The mere fact that regimes as subservient to imperialism in general, and to the oil companies in particular, as the Shah's regime in Iran, or the ruling monarchies of Saudi Arabia and Kuwait, had followed the example of Algeria, showed that the oil "majors" saw advantages in these nationalisations. Indeed, in most of these countries, the oil companies traded their share of the national oil companies against long-term contracts which guaranteed them a large, regular flow of cheap oil, shielded from the ups and downs of world prices. These nationalisations allowed the "majors" to get the states of the oil producing countries to share the cost of the investment required for oil production as well as the cost of the fluctuations of the oil market. But in addition, the "majors" were soon able to get the states to pay them for providing services such as carrying out exploration projects, developing new fields and even managing them. Not only did the brunt of the investment fall on the producing countries' states, but the "majors" managed to be paid for producing the oil they were going to buy as a result of the long-term contracts they had with these countries. This cut even further the real price paid by the "majors" for OPEC oil.

The "majors" in the previous "oil shocks"

To all intents and purposes, therefore, the OPEC countries remained entirely dependent on the oil "majors", who ultimately controlled everything : the technology and equipment required for oil exploration and production, the means of transportation, the refineries and the commercial networks. The oil revenue of the producing countries depended entirely on the goodwill of the "majors", and few of their leaders would ever have considered a direct confrontation with the imperialist oil companies.

Of course, the oil-producing countries did get an increased revenue out of the higher oil prices. But it was the "majors" who took the initiative of pushing the oil prices up for their own reasons. Indeed as long as they relied only on oil coming from OPEC countries, where production costs were very cheap, low oil prices did not affect the "majors"' profits. But elsewhere, particularly in the industrialised world, the oil companies were confronted with capital's usual problem - the tendency of the rate of profit to fall. There were massive oil resources to be tapped, in the North Sea, Alaska, the gulf of Mexico, etc.. but they all involved enormous investment and high production costs, which would have resulted in cutting the "majors"' to a level which was unacceptable to them.

So the "seven sisters" threw all their weight behind pushing oil prices up, both by using the mechanisms of the market and by encouraging oil producing countries to increase prices. The fact that the "majors" did indeed anticipate the rise of oil prices and that they prepared themselves to make the most of it, was shown by the large investment they made in the run-up to the two "oil shocks" in sources of energy which, so far, had been more expensive (and therefore less profitable) than Third World oil - such as coal, bituminous schists and nuclear fuel. This way the "majors" were able to hedge their position, in case the higher oil prices resulted in a larger than expected reduction of oil consumption. But only companies which knew for certain that oil prices were about to rise would have made such investments.

The "majors'" policy to push prices up was helped, in addition, by the US authorities themselves. Indeed, regardless of the harsh language used by the US government to blame the oil- producing countries in front of public opinion, it anticipated with relish the prospect of hitherto mothballed wells in the US being reopened and new ones developed, thanks to higher oil prices which would make these wells profitable. For this meant earning the gratitude of the USA's numerous small oil producers while being able to boast of having "created" new jobs and reduced oil imports - something that no US president would have sniffed at. But in addition, in a period of severe monetary disorder, this was a convenient way for the US to force the rest of the world to share a larger part of its own inflation. Since oil was always paid for in dollars, a big oil price increase implied that the rest of the world had to buy a proportionally larger amount of dollars, thereby relieving the US Treasury of a significant pile of depreciated currency.

As to the gains made by the oil-producing countries, they did result in a relative improvement in the standard of living in a handful of countries, like Saudi Arabia and the Gulf states. But these gains did not prevent the poorest among these countries - like Indonesia or Nigeria - from sliding even further into poverty. Ultimately, however, the bulk of these countries' oil revenue went back to the imperialist countries, either in the shape of state procurements - arms deals in particular - or as "petro- dollars", as they were called, that is speculative investment on the Western stock markets. One way or another, therefore, the oil price hikes resulted in a large inflow of additional profits for many imperialist companies, far beyond the oil industry.

A threat of "shortages"? Not due to OPEC in any case.

In September this year, the Western media launched yet another campaign along the same lines as in 1973 and 1979. They blamed the sharp increase in oil prices on a deliberate cut in oil production by the OPEC countries - a cut which, according to the media, was threatening the western world with "shortages". Once again the "cartel" of oil- producing countries was being scapegoated.

Yet if OPEC showed anything over the past period, it was precisely its impotence: its inability to act as a "cartel" and even to fulfil the essentially defensive role for which it was set up forty years ago - that is to prevent the oil companies from increasing their looting of the oil-producing countries by playing them off one against the other.

OPEC's failure in this last respect can be measured in two ways. A first measure is provided by the evolution of the purchasing power in dollars of a barrel of oil: in February 1999, this purchasing power fell below its pre-1973 level, whereas today, despite the oil price hike, it is still below the 1974-1985 level. And this is without taking into account the fact that OPEC countries usually sell their oil much below market prices. So despite OPEC's efforts, it has failed even to maintain the purchasing power of its members.

Another measure of OPEC's failure is provided by the relative evolution of its oil exports. Between 1974 and 1997, the dollar value of OPEC's oil exports increased by 41%. But over the same period, the dollar value of all exports throughout the world increased by 600%. So that, by 1997 - although a relatively good year for the oil market - OPEC's oil exports were down to 2.9% of world exports compared with 14.4% in 1974, and this despite a significant increase in volume. In other words, far from being a "cartel" which has the necessary weight to impose its will to the rest of the world, OPEC's economic weight has actually shrunk. And it has shrunk to the extent that, in that same year, 1997, the value of OPEC's oil exports was less than the total exports of a country like Belgium - and yet OPEC's population is 50 times larger than that of Belgium!

So it is hard to see how the OPEC countries would have been able to generate the present price hike when they were unable to prevent a price fall over the previous period. And actually the unfolding of events since the end of 1997 proves this point.

By the second quarter of 1997, there were already warning signals that some sort of crisis was about to break out in south east Asia. In particular oil orders from this region - which is a big customer for Middle Eastern oil producers - began to shrink, resulting in a moderate fall in oil prices. As a result, a number of OPEC countries (Venezuela and Nigeria among others) decided to increase their oil production beyond the quotas defined by OPEC in the hope that they would be able to maintain their revenue. When OPEC ministers met in Jakarta, in November 1997, they were unable to get a commitment from member states to stick to the previously agreed quotas. So it was decided that, in order to maintain some cohesion within OPEC, the quotas of the offending countries would be increased to their actual production.

In 1998, oil prices carried on falling due to the reduced demand from south east Asia, which was by then deep into a recession caused by the financial crisis of the previous Summer. Twice, the OPEC council decided to reduce its members' quotas, well below their pre-1997 levels - hoping that less oil on the world market would stabilise world prices. But it did not work. And, as oil prices went on falling, a number of OPEC countries increased their production again to avoid bankruptcy.

Oil prices carried on falling until February 1999 when, suddenly, they started going up again - without OPEC having had anything to do with it. The following month, OPEC ministers decided to reduce their production once again in the hope that this would consolidate the new trend and push oil prices further up. But in May, prices started falling again, until August, when another period of rise began. The following twelve months saw a long series of hectic ups and downs, leading eventually to the present record price level - which has been more or less stable for over two months now.

Significantly, neither the decision made by OPEC, in March 2000, to decrease or increase production automatically whenever oil prices stayed below $22 or above $28 a barrel respectively for over 20 days, nor the four production increases decided by OPEC since, seem to have had the slightest influence on events.

The "majors" and the shortage of refined fuel in the US

If the the problem really was one of oil shortages in the West, it would be easy for the Western governments to find a solution. After all, four industrialised countries - the USA, Canada, Norway and Britain - produce between them 25% of the world's oil, as against just over one-third for the eleven OPEC countries. And while the OPEC countries do not always have the material means to increase production quickly, these four rich countries could have done it easily - if only by reactivating the many wells where production has been suspended, in the USA and the North Sea, when oil prices were low. So far, many of these wells are still idle.

In fact the only measure which was taken by these four countries' governments was Clinton's decision, announced at the end of September, to sell 330,000 barrels of oil a day for 90 days from the US Strategic Petroleum Reserves. But this amounts to only 9% of the daily production increase implemented by OPEC over the year, or 5% of US daily production.

To say the least, the Western governments and the "majors" display the same lack of conviction when it comes to countering the alleged "shortages" for which they blame OPEC so vocally.

While there has been no evidence so far of an actual shortage of oil supply on the world market, the fact is that the oil refinery companies have deliberately engineered a shortage of refined products, at least in the USA. And they did it through a policy of systematic concentration and cost-cutting over 1998-1999.

In the refining industry, the "majors" are the main players, either directly or through companies which they control more or less openly in order to dodge anti-trust regulations. Their policy has resulted in the closure of many refineries - something which was facilitated by Clinton's decision to impose new pollution standards for petrol. As only the larger companies could afford the cost of adapting their refineries to the new regulations, this decision went to their advantage while many of the smaller independent refineries were forced to close down.

At the same time, cost-cutting was implemented by means of a drastic stock reduction. Thus, by the end of 1999, total oil stocks in the US dropped to their lowest level for several decades - to the equivalent of 47 days consumption, compared with 56 in 1998 and an average of 67 over the 1970s and 80s. As a result, in January this year, some areas experienced shortages of heating fuel, which were immediately translated into rocketing prices. Then, from June onwards, there were reports of petrol shortages, to the point that in some cases - like in St Louis - the Federal authorities allowed the temporary suspension of anti-pollution regulations so that "dirty" petrol could be sold at the pump - probably they prefered to have a row with the Green lobby, rather than a confrontation with irate motorists, who were already incensed by rising petrol prices!

The role of speculation

Some oil market experts, although well-known for being supportive of the system, are saying today that the main cause of the present oil price hike may well have been this artificial shortage of refined products in the USA, combined with the refining industry's "just-in-time" policy, which reduces oil stocks to a bare minimum, and a shortage of oil tanker capacity worldwide - all these factors being the result of reduced investment. And they add that the mechanism which translated these imbalances into rising oil prices was financial speculation.

Thus, in a review of energy industries published in September this year, the Financial Times remarked: "Some traders say an unprecedented degree of irrationality has emerged which has made ordinary market analysis irrelevant. Traders in physical oil see no shortages as they assess the energy markets around the world, but on the oil futures market in London and New York, a psychologically-fuelled exuberance dominates the virtual world of paper trading."

Indeed, like any other commodity, oil is an object of speculation. This is nothing new. The fact that there were speculators who were prepared to risk funds in gambles over future changes in oil prices has provided traders in real oil with an insurance, to protect themselves against unexpected market tremors - for instance while a cargo of oil was being transported from one point of the globe to another. Given the unpredictable nature of the market, this "futures market" as it is called was a way of "oiling" the trade system by acting as a buffer against sudden price changes.

Until the 1980s, the role played by oil futures markets was mostly regional and for small traders. Most big international deals were made within the framework of long-term contracts, often directly between the producing countries' states and the "majors", which guaranteed the stability of prices over their lifespan. In addition many of these contracts provided - as it is still the case today with those made with Saudi Arabia, for instance - that the oil involved could only go to a named refiner and could not be resold to anybody else. As a result intermediate traders only dealt with a relatively small proportion of the world's total production. The London oil futures market was primarily used by traders operating in Europe from the oil terminal located in Rotterdam and its index, the so-called "Brent crude", was used as a benchmark for oil prices within Europe. Just as the "WTI crude" (West Texas Intermediate) was the benchmark set by the New York oil futures market, which was used by traders operating on the US market.

However, since then, many things have changed. As North Sea oil was bought and exported by traders to other parts of the world, the London oil futures market became an international market. The mushrooming of Third-World oil producing countries, which were too weak to impose any conditions on the "majors", allowed the latter to auction more oil to traders rather than deliver it to refiners. Overall the volume of oil traded outside long-term contracts increased considerably. Last, but not least, the rise of financial speculation in the 1990s resulted in the availability of massive amounts of floating capital ready to flow towards the oil futures markets, should they offer the prospect of making a quick buck - including the cash that "majors" themselves put into this game.

When oil prices began to react to the spells of increased tension between the USA and Iraq in the period following the Gulf War, this floating capital rushed to the oil futures market in order to benefit from new instability. From 1998, a speculative bubble began to develop on these markets. It is likely that, at the time, this bubble played a role in accelerating the fall in petrol prices and then, from March 1999, in accelerating their movement upwards, as speculators anticipated a rise in oil prices on which everybody wanted to gamble. And, at the beginning of this year, the shortages in US refined products brought this speculative anticipation to new heights. It came to the point where, as the chairman of the French oil companies' organisation explained in a recent interview, "today the market of paper-oil' is worth around $6,000bn, as opposed to $800bn for the physical oil' market" - as if, he added, "every oil cargo was traded eight times before it reached its destination." No wonder such a speculative wave should have generated such wild price fluctuations, regardless of the real situation of oil production.

The "majors" and the oil price explosion

Not only did the "majors" facilitate the present oil price hike, for instance by organising shortages of refined products in the US, they also prepared themselves to make the best of this hike.

But first, who are these "majors" today? There were seven of them in the 1970s; there are only five of them today: Exxon-Mobil, BP-Amoco-Arco, Shell, TotalFinaElf and Chevron- Texaco - with the latter still in the process of completing a merger. As their names indicate, all of them, with the exception of Shell, are the result of a series of mergers and acquisitions. In fact these five giants result from the regrouping of 17 large companies which were still independent at the beginning of 1998.

Indeed, 1998-99 saw a colossal wave of concentration in the oil industry. True, this was also the case in just about every other industry. But the fact that this affected oil as well was all the more remarkable, because this industry was already one of the most concentrated, with the last sizeable merger having taken place back in 1984, when Gulf Oil was absorbed by Chevron.

Almost as soon as the financial crisis broke out in south east Asia, the "majors'" investment programmes underwent a drastic review. From the end of 1997, exploration programmes were scaled down or cancelled, exploitation projects were postponed, particularly in high production costs areas - that is mostly in the industrialised countries - and the least profitable facilities were mothballed or closed down, particularly in the North Sea and the USA.

However, it was one thing for the "majors" to protect their profits against the fall of oil prices, but quite another to prepare themselves for a future rebound of oil prices. To this end they had to at least maintain, and if possible increase, the size of the oil reserves they controlled, but without devoting to this the large investment usually needed for exploration programmes. These requirements were the starting point of the wave of mergers and acquisitions which began in 1998, when BP became the leading partner in a merger with the US company Amoco. The same year Exxon followed suit by absorbing Mobil, thereby creating not just the largest oil company in the world, but the largest industrial company. These operations allowed economies of scale (mostly achieved by cutting the workforce) while creating industrial giants which were powerful enough to force a reshuffle of the existing hierarchy among the "majors". But above all, they allowed the predators to acquire the oil reserves of their prey without having to make any investment, since the ove-abundance of capital on financial markets made it possible to finance most of these deals just by issuing new shares - so that there was no need for the "majors" involved to use their war chests or reduce their future investment capacity.

Once started, this wave of concentration had a snowball effect, since none of the rival "majors" wanted to find itself relegated behind the others. So it went on long after oil prices had began to rise again, until the announcement of Texaco's absorption by Chevron in October. And it may even carry on further since Shell makes no mystery of its ambition to find partners in order to regain the ground it has lost to its arch-rival, BP.

This being said, the rise of oil prices, from March 1999 onwards, did not result in a resumption of investment by the "majors". There was just one exception to this, however, but a significant one - the "majors" resumed buying exploitation rights for proven oil reserves. But at the same time, they went on cutting productive investment, so that, by the end of 1999, the total number of active wells in the world dropped to 32,000, compared with 52,000 at the beginning of 1997. They also went on cutting investment in exploration, thereby failing to replace what was being extracted, so that in the OECD industrialised countries, proven oil reserves went down by 20% compared with the previous year, while there was an 11% drop in non-OPEC Third-World countries.

And yet, as early as 1999 all "majors" registered increased profits thanks to rising oil prices. And this trend was reinforced this year since in the first six months of 2000, Exxon- Mobil increased its profits by 116% compared with the first six months of 1999, BP-Amoco by 198%, Shell by 120%, TotalFinaElf by 165% and Chevron-Texaco by 120%.

Of course the "majors" make profits in every sphere of the oil industry - exploration, extraction, transportation, refining, production of oil derivatives and wholesale and retail sales. But it is worth noting that, despite the usual claim that oil prices only rise to satisfy the "greed" of Third World oil producing countries, the "majors'" own figures show that no less than 80% of their profits come from oil production and exploration, whereas these activities only represent 20% of their revenue. Although this figure of 80% may be slightly inflated for tax purposes (the "majors" prefer to pay low taxes to Third World regimes rather than higher taxes in the US, Britain or France), it certainly gives an idea of how they thrive on high oil prices.

However, despite these hugely increased profits, we are only beginning to see a very timid change in the investment policy of the "majors". In the US, many wells were reactivated once they became profitable again due to higher oil prices - but these required only small investments. At the same time, BP has just announced its intention to start developing the Clair oil field, Britain's largest undeveloped field in the North Sea, which was discovered 20 years ago but remained untapped due to the large investment it required. However, BP's announcement remains an exception. Exxon-Mobil, for instance, stated in April that it did not intend to invest more in 2000 than in the previous year.

And in any case, the "majors"' main field of investment remains that of buying proven reserves and oil fields which are already producing oil - either by buying shares in existing companies or by setting up joint ventures with them, as they do in China and in the countries which used to be part of the former USSR.

Obviously the "majors" are not keen to gamble on high oil prices remaining at the present high level nor on taking the risk of pushing these prices down through a significant increase in oil production. But this should not come as a surprise: after all, the fact that they have a de facto monopoly on the world market rests on their ability to maintain a certain level of shortages.

The "majors" tighten their grip on the poor countries

Despite scathing attacks against Third World oil- producing countries, the present oil crisis is being used by the "majors" to increase their plunder of the poor countries.

After World War II, it took over three decades for these countries to get the "majors" to give up the quasi-colonial control they had over their oil resources, their economies and, often, their governments. In the 1950s and 60s, in the Middle East, Northern Africa and south east Asia, the privileges of the "majors" were at the centre of many conflicts in which imperialism intervened, sometimes directly with the full might of its military machinery (like Britain in Palestine and Malaysia, and France in Algeria) and sometimes from behind the scenes (as in Iran and Iraq in the 1950s).

In most cases decolonisation and the military withdrawal of the former colonial masters did not change much to the situation inherited from the past. It was only in the 1970s that some countries, particularly in the Middle East, were able to gain some concessions from the "majors" - first by getting them to agree to pay taxes on the oil they produced, and then by bringing all oil production and reserves under the control of state- owned companies. When it came to the issue of compensation, the "majors" did some tough bargaining, but they did not object in principle - partly because the political instability in the Middle East excluded the option of resorting to military means, but mostly because the compensation they won ensured that their profits would be unharmed.

Not all oil-producing countries were able to gain such concessions or to really benefit from them. The poorest countries remained subjected to the overt dictatorship of the "majors", like Gabon, under the thumb of TotalFinaElf. Elsewhere, like Nigeria, the new state-owned companies played little role except that of a channel used by the "majors" to corrupt the ruling clique. However, in some oil-producing countries in the Middle East, south east Asia and south America, the nationalisation of oil allowed at least to contain the greed of the "majors" within certain limits and to provide these countries with a more significant share of the revenue generated by oil exports.

However, it is these limited gains which have been put into question by the "majors" since 1998, due to the impoverishment of most producing countries.

Indeed these countries are no longer the rich petro-dollar exporters they were portrayed in the 1970s and 80s. They have all been affected by the falling purchasing power of oil. It is estimated that in 1998-1999 alone, the OPEC countries lost $82bn compared with 1996-97. During the same period the economies of producing countries such as Indonesia, Brazil and Venezuela, were deeply shaken by the financial crisis in south east Asia. In the Middle East the bill presented by imperialism to the countries that had been drawn to its side in the Gulf War together with the rearmament policy forced on these countries by the USA, have crippled their budgets and increased their debt. Even Saudi Arabia, the world's largest oil producer, has now a debt estimated at $130bn, larger than its GDP.

For lack of finance, most Third World oil producing countries are no longer able to fund the huge investment required for exploring and developing new oil fields. Nor do they have the finance to buy the advanced technologies and expensive equipment required for offshore production. They can no longer afford to hire the services of the "majors". Worse, they need the "majors"' help to fund at least some of the necessary investment. So, production-sharing agreements, whereby the "majors" get a proportion of the oil produced as a payment for their services or investment - are beginning to reappear in countries where they had not been seen for a long time, such as Iran. Elsewhere, like in Saudi Arabia, the state companies are seeking ways of giving away some their property rights over oil reserves in exchange for the "majors" providing funding to develop new oil fields. And in several countries, the privatisation of the state oil companies has already began - like in Brazil, the United Arab Emirates and even Kuwait.

The capitalist crisis in general, and the present oil crisis in particular, are, therefore, in the process of dismantling, one after the other, the limited barriers which existed in these countries against looting by imperialist companies. But who actually cares? Certainly not the politicians and the media here, who will carry on accusing these same countries of "taking the world hostage"!

As to predicting today how the increased oil prices - assuming they remain at the present level - will affect the world economy, this is nigh impossible. Likewise, although it seems obvious that the present oil crisis is a manifestation of the general crisis of the capitalist system, it is impossible to say whether it reflects a deepening of this general crisis or which direction this deepening might take. Only the future will tell. What is clear, however, is that due to their growing monopoly and gigantism, the "majors" represent a growing, permanent threat for the world economy and for the populations subjected to their racket, in the poor countries as well as in the rich countries - a threat which will only disappear with the disappearance of the capitalist system itself.

4 November 2000