The oil business

Big Oil’s bigger brothers

A high oil price is great for oil companies, but it also attracts competitors

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Readers' comments



This is truly the time when oil is needed to supply most of the world's energy to provide for anything mankind wants. Since the demand is high the supply is just about right to keep prices high. With such a weak economy around the developed countries, the price of oil is going to be the biggest money-maker. Also, Oil has been the biggest market since the industrial revolution and this backward energy is still our biggest supply. If we aren't past the reliance of oil in the next 50 years then the burden of the massive energy source will cause the setback of the powerful countries in the world. But I highly doubt we will continue to relay on oil a lot in the future. Especially, since that with revolutionize solar power being drawn from satellites directed towards solar power plants on earth is being experimented. In no time, oil is not going to be a big concern for developed countries.


Supermajors present a real interesting case of non state actors whose economic policies and decisions have massive implications. Shell's floating mining facility is one such example. This fact was seen when United Fruit Company in Central America had massive implications for the way the governments grew. In a lot of states where oil and other natural resources are being exploited today, the majority of cases involve weak governments, like what happened in Central America. Supermajors may seem like a worthy alternative to government control, but they also present a unique threat to a lot of states.

Sense Seeker

An article about the oil market and not a word about climate change and the need to reduce CO2 emissions.

There is still a huge disconnect between discussions of the oil market and what must be done to avert potentially catastrophic climate change and achieve the stated goal of limiting the warming to 2°C or less.

Does that mean the markets are confident that effective action to reduce CO2 emissions can be avoided? I hope they are wrong. Runaway global warming is a high price to pay for short-term prosperity. Nice legacy we will leave.

The climate of oil markets for private companies definitely has a large role in oil prices. Companies risk a lot of money when their investment might not pay off or could end up being nationalized. Governments may be asking firms to compete for contracts but they need to provide some assurance to these oil companies that their investments will be safe.


America needs to stop! I believe that our addiction to foreign oil is leading to global turmoil. Even if we ignore the harmful affects on the environment, oil is a disaster. Oil is definitely contributing to our trade deficit and struggling economy. How can the life line that our country run's on be distributed by the dangerous Middle East!


In times when the economy is not very good at all I don't understand how companies can earn billions of dollars?? I know oil is a huge commodity and not only used for gasoline in cars but also used in plastics and asphalts and many other things. But as reserves are starting to dwindling and new ones are harder to extract do you think its time to find some new technology that requires less use of oil before the prices get so high that nobody will be able to afford to do anything.

The United States needs oil. I do not see why everyone acts like it is some big secret why they have certain military endeavors. If a country needs oil, why not employ the means necessary to obtain it.

The Wall

The big oil companies have dominated the trade for decades and their future could come to an end. It will not be anytime soon because their technology far out does the technology of the oil rich countries. This has made these countries very poor because especially in the Middle East this would be their main export. This could increase the quality of life overall because the sum of money oil is making is ridiculous. That is why these big oil companies are hated by the countries. They basically rip the countries off and make a huge amount of money off of the oil. Once these countries obtain the necessary tools and equipment they will become much richer and the big oil companies will lose all their power. This would not be good for the United States since we are heavily dependent on this oil. Without these big companies we would not be able to afford it.


While ExxonMobil isn't state owned they still benefit from a lot of Federal money and tax breaks. (That's the "good" kind of socialism.)


I think it's good that countries with large reserves of oil are no longer allowing more developed countries to take advantage of them. Many of these countries do not have much else going for them and the oil production is their way of increasing the standard of living in their countries. Of course, in many of these states the wealth distribution is extremely uneven and so the ones benefiting are typically the super rich who run the country. However, with the recent trends in countries such as Libya, it is likely that we will see a more even wealth distribution in these countries throughout the coming years.


I can imagine a sneer from the author of this article, with a dodgy tone of sympathy for the big oil companies... Corporate social responsibility, anyone?

USS Geometer

"On October 25th BP announced quarterly profits of $5.1 billion. Two days later Shell reported profits of $7 billion and Exxon Mobil of $10.3 billion."

MY RESPONSE: Good to know the Republicans fought tooth and nail to continue U.S. taxpayer subsidies to these guys. How ever would they have made it without them?


This seems like a win win situation at the moment. The interaction may change instantly but as of now its working quite well in favor of both. The oil companies are in high demand at the moment and it seems that the countires have much to give to these oil companies for help in return. Now, dealing with big players, in their own country could obviouly mean they can change their mind. This needs to be monitored by a larger organization so neiter party gets skrewed over. If watched, this interaction will be a great thing for both sides.

Risk Manager

also, a chart of reserves discovered would reveal 90% of reserves are found by super-giants and others, virtually nothing by state companies, although some are getting better where they have democratic oversight, or even better (Norway) exposure to competition "at home" for reserves

Risk Manager

It is odd how intelligent people can write about oil, OPEC and the state oil giants without ever pointing out the various elephants in the room.

The chart of reserves is indeed revealing. But in a discussion of state giants vs. super-majors (i.e tiddlers) the real story is the volume of production these reserves produce.

If you look at that we can see that state giants massively under produce their reserves compared to super-majors. In fact for the last 40 years the worlds 20% of non-OPEC reserves (mainly super-majors) have produced 60% of global output and state giants with 80% of global reserves have produced 40% of global output from 80% of reserves. This has been going on for four decades!

But its worse that that even, the reserves are lies. There is much more. Amazingly (not) a cartel has lied about how much it has and fooled fools into thinking they have very little, really very little at all!

The chart shows Iraq's state giants (unusually three, divide and rule presumably) with just under 100 bn bbls from Iraqs "official" reserves of 115 bn bbls. Yet today after a simple application of super-major normal business practice actual reserves are claimed by Iraqs govt at 185 bn bbls. They are, from existing known fields only. When the country is actually explored (nothing since 1970's) informed people expect actual reserves to be 300 bn bbls. Exploration contracts are being negotiated at the moment, production from existing fields is contracted and planned to increase 400% in the next six years adding 10% of global consumption at $2 a bll well head cost for light high quality crude

Similarly in Libya the majority of the country has never been properly explored or explored at all. Reserves are likely much higher. Production will double at least. Iran could do the same, or much more. Who knows, it was 1979 when anyone last looked.

All this reserve finding is the result of democracy and rulers who need to deliver wealth to get re elected. There is an Arab Spring that will not stop.

OPEC is a dictators life support system, free OPEC states will not obey quotas. Everything is changing, yet most people watch with absolutely no idea what is really happening at all as their heads are full of a lifetime of shallow media drivel. Worse than that G W Bush (thicky) understood all this long ago.

Cheap low cost oil is plentiful. Free people are about to reveal this truth, and get rich while doing it even as consumers finally get a fairer price after 4 decades of abuse by the OPEC cartel of dictators and dysfunctional governments.

p.s. since 2008 the "abused oil consumer" has been, in majority, the poorest half of the world. Shame, isn't it. those poor (proper poor, not "relative" excuses for poor) people wanting a tiny bit of what you take for granted and then have to pay a dictator or despot a tithe on top so they may oppress their own people in turn?

p.p.s. shale gas and oil and other unconventional hydrocarbons are even more abundant than the abundant conventional oil. They will be produced between price crashes. An oi, price crash is coming. 1 to 4 years time. Think about whats happening to supply (free OPEC) and demand (global depression)


@benwardsbr: Looking at the wikipedia page for Saudi Aramco I see it has some 50,000 employees and around $400 billion in revenue. That's more revenue that ExxonMobil with fewer employees. The numbers for the Iranian national oil company aren't too bad either. So where is this over staffing you talk about? Sounds like they run a pretty lean operation.


In our present and past world oil has been a major source of fuel for everybody in the world. Although as we have noticed alternative fuel sources are being built up now and soon we might not even have the use for oil anymore. Even the countries with huge oil reserves won't be the same true they will still be making a good amount of income but their power will eventually keep decreasing. Oil's importance and use will seemingly decrease as the future approaches due to new fuel sources. That will possibly make things semi-easier for our country since a huge numbers of our expenditures go towards oil.

Connect The Dots

God loves the Arabs......He gave them all the Oil.

God hates the Arabs......He a gave them all the Oil.

Fabulous wealth is ultimately a mixed blessing. Happiness far from being assured, may be even further beyond reach.

Oil has brought the Muslim world more misery than anything else in the past millennium.

Arabs have both Gold and Nihilism.


It would only make sense that the two group of people, would work together to make better business moves. I think there is a win win situation. In the fact that governments can help with the hard to drill places and oil companies can maximize profits for both parties by having fair trades practices;.



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