Big Oil now a small fry, Enormous Oil gaining power

19 Jun 2010

Big Oil isn’t such a big deal anymore, David Brooks says in the New York Times. With BP and Obama butting heads over who’s responsible for the Gulf oil spill, and how they’re going to deal with it, it might seem that few companies wield outsized power like BP do. They seem able to get their way with U.S. government, and have Congressmen apologizing to them—even when it seems there’s been gross negligence, and public opinion is against BP.

But in the scheme of things, BP and Obama are actually on the same side, David Brooks argues in the New York Times. The larger conflict, he says, is between “democratic capitalism”—the thing that people like to call “free market economics” even when there are big subsidies to companies, as there are with oil—and, on the other side, “state capitalism.”

“State energy companies have been absolutely crushing the private-sector energy companies,” Brooks writes.

He points out how “in America, we use the phrase Big Oil to describe Exxon Mobil, BP, Royal Dutch Shell and others. But that just shows how parochial we are.”

Their share of oil production dropped hugely in the period from the end of World War II and the 1970s, with colonies gaining independence and nationalizing their reserves. Today, “none of these private companies make it on a list of the world’s top 13 energy companies. A generation ago, the biggest multinationals produced well more than half of the world’s oil and gas. But now … they produce just 10 percent of the world’s oil and gas and hold only about 3 percent of the world’s reserves.”

I knew their share had dropped, but this sounded way too low to me. I looked it up, and—surprisingly—it does seem to be right.

But even if the Big Oil companies are now small fries on the world energy scene, it seems to me that they still wear pretty big britches. After a series of mergers in the 1990s and 2000s, those oil corporations grew even huger, so that now when you look at the ranking of the largest corporations in the world, most of the top 10 are oil companies. And it seems the only way any of them will lose their spots there is if they merge further.

Over the past decade, as gas prices have soared, they’ve made vast profits, which they’ve put to use with massive lobbying, as detailed in the recent book The Tyranny of Oil (buy it from Indiebound).

As long as they use this money to spread doubt about climate change, as they have… as long as they use this power to lobby against limits on carbon emissions, and otherwise help keep Americans addicted to fossil fuels… then they still count as Big Oil in my mind. They have a big influence on the biggest energy consumer in the world—and that’s a big deal.

Brooks argues that, to counter the big state-owned oil companies’ power, “we need healthy private energy companies. We also need to gradually move away from oil and gas.”

But these two are working at counter purposes. Big Oil—or, if you like, Corporate Oil—is out for a profit. As long as their reserves aren’t threatened with being nationalized, I don’t think they care about democratic capitalism. They don’t want us to move away from oil and gas. The only answer, it seems to me, is to somehow limit Corporate Oil’s power over politics.

This could happen through limits on how much corporations can spend on lobbying and elections. It could happen—I’m just throwing out ideas—by nationalizing oil supplies in the U.S., U.K., Canada, and other places where Corporate Oil holds reserves. There are ways we could limit Corporate Oil’s power, if we really wanted to.

But if the public really was able to shake off Big Oil—companies like Exxon, Shell, and BP—then maybe next they’d have to duke it out with the likes of Saudi Aramco—and then we’d have to come up with a new, catchy name for these state-owned behemoths. Huge Oil? Giant Oil? Or Ginormous Oil, or Hugonic Oil. In any case, I hope they’d have more trouble than Big Oil in sneaking into Congress and the White House through the back door.

Oops. Too late, as Think Progress reports: “‘Grassroots’ Opposition To Clean Energy Reform Bankrolled By Foreign Oil, Petro-Governments”.


books I've read on failure & grace

The World Without Us
The Last Oil Shock: A Survival Guide to the Imminent Extinction of Petroleum Man
A Paradise Built in Hell: The Extraordinary Communities That Arise in Disaster
Hell and High Water: Global Warming--the Solution and the Politics--and What We Should Do
The Worst Hard Time: The Untold Story of Those Who Survived the Great American Dust Bowl
The Tipping Point
Three Cups of Tea: One Man's Mission to Promote Peace... One School at a Time
The Upside of Down: Catastrophe, Creativity and the Renewal of Civilization
Out of Poverty: What Works When Traditional Approaches Fail
The Little Ice Age: How Climate Made History, 1300-1850
Confessions of an Eco-Sinner: Tracking Down the Sources of My Stuff
Deep Economy: The Wealth of Communities and the Durable Future
The Geography of Bliss: One Grump's Search for the Happiest Places in the World

Mason's favorite books »