MAKING DEMOCRACY SAFE FOR OIL: Oilmen and the Islamic East by Christopher T. Rand

MAKING DEMOCRACY SAFE FOR OIL: Oilmen and the Islamic East

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It is unfortunate but true,"" a Standard of California executive recently beefed, ""that most of the public has very little, if any, understanding of the role of earnings and reinvestment in our economy."" Christopher Rand thinks that, crocodile tears notwithstanding, the major oil companies have every intention of keeping it that way. So Byzantine is the compartmentalizing of information within the petroleum industry that in 1974 the Aramco treasurer told a Senate Foreign Relations subcommittee that he had never seen the planning departments' annual forecasts of the consortium's parent companies. Surveying the track record of oil interests in the Middle East, Rand documents the abuses that resulted from Western consortiums' control over production in the host countries. Perceiving the problem as one of keeping crude oil supplies down (so as to maintain prices), they have hung onto the leases of dormant wells and juggled their offtakes from different countries in line with profit rather than consumer need. The major companies all deliberately maintain money-losing as well as money-making subsidiaries among their stables of multinational operations, and thus can select their profit-loss statistics at will. Although Rand has little love for the Arabs, he views Gaddafi's 1970 showdown with the Libyan concessionaires as the outgrowth of the oil-producing countries' prolonged helplessness to control foreign exploitation of their most precious resource. He sees OPEC not as a monolithic cartel but as a confederation of divergent interests which could easily have been played off against each other if the oil industry had not decided to turn Middle Eastern events to its own advantage. In Rand's opinion, prices would probably drop if the majors were broken up into smaller firms, the Arab countries gained greater control over the circumstances of production, and Western interests showed more diplomatic initiative in recognizing inter-Arab conflicts and appealing to their individual needs. Expect no startling political or ecological insights; Rand isn't concerned with CIA exposes, and is perfectly content with the assumption that the consumer is entitled to consume. His forte is sharp analysis of hard (and soft) statistics; in successfully attacking the industry on its own terms he has performed a considerable service.

Pub Date: July 15th, 1975
Publisher: Atlantic/Little, Brown