Many years ago I read a book, at 881 pages a tome, called The Prize: The Epic Quest for Oil, Money and Power (1990), by Daniel Yergin, a high-powered author. I was very impressed by the book, which is why I have it sitting in front of me right now.
When I read The Prize, I was not aware that tracts like that are heavily censored – that is, it is the official history of the oil industry, not the real one, which is secret. Another book I still have on hand, Tragedy and Hope by Carroll Quigley, is similar in that we are told it is an uncensored history of Europe and the U.S. It was heavily censored, but allowed to go on sale behind the illusion that powerful people objected to it. That way, people are more inclined to believe in it.
This all came to mind as I was reading the history of the Standard Oil Company in Wikipedia, or Lies of Our Times (LOOT). The Prize is given a high profile. The key central “fact” about Standard Oil is a 1911 court case after which it “voluntarily” broke up into 34 separate and independent companies. Most of them have been forgotten, but the true legacy of the breakup was called the “Seven Sisters.”
[Note: If you are having trouble reading this chart, see the appendix below.]
As you can see, they are today reduced to four, of which ExxonMobil is by far the largest.
The problem I have with all of this is that I do not believe that power was ever decentralized or that any company split off from Standard Oil was ever truly independent. It was all done for public consumption. We live under corporate socialism, but fancy ourselves as “capitalist,” and trust-busting goes a along way to foster that illusion.
I doubt it is any different with the 1984 breakup of AT&T into the “baby bells”. The American way, if such a thing exists, is rule by cartels that pretend to be separate but act as one entity. They do not compete, but rather divvy up markets. All good capitalists know the adage of Duane Andreas of Archer Daniels Midland, “The customer is our enemy; the competitor is our friend.” If there is any competition at all among cartel members, it is of the type we now see in the airlines, the race to the bottom. If one airline reduces services, all the others follow. If one charges for baggage, so too do the others. All prices are uniform throughout the industry. That is competition, American style.
This all sparked with me not because of Yergin or Standard Oil, but rather because of another mask that the Seven Sisters, still with us, wear. It is called “OPEC.”
OPEC was founded in 1960 by Iran, Iraq, Kuwait, Saudi Arabia and Venezuela. As far as I know, that could well be a real story, as those five nations controlled most of the oil reserves at that time. But Yergin’s history shows us that some of the Seven Sisters were all over the Middle East during these times, as they possessed the expertise needed to develop the reserves of that area.The Seven Sisters were not charities.
The fiction that followed was that the Sisters meekly stepped aside when countries nationalized their oil reserves. Power does not operate like that. Power will go behind a curtain, but it will never just give up.
OPEC was not much a factor, not much in the news until 1973 when (so the story goes), in response to US involvement in the Yom Kippur War, they embargoed U.S. oil supplies. I got my first job in the oil business in 1974, and remember at that time the joy of my bosses seeing oil prices go from $3 to $10 a barrel. Later, in 1979-80, the Iranian Revolution and the Iran-Iraq War were said to be the culprits as oil surged to $40 a barrel.
Now picture this: A meeting behind closed doors between the heads of the world’s biggest oil companies and various heads of state of Middle Eastern countries said to be our enemies. They reached an understanding. It was time for a spike in oil prices, but there was some concern that such a bold move, if blamed on the oil companies, could lead to legislation and taxes. (In fact, there was such a tax, called the Windfall Profits Tax, levied in 1980 and repealed in 1988. I remember it having real teeth.)
OPEC leaders became scarecrows and villains, and the Seven Sisters slid down on the list of things that the American public loves to hate. I have to think that was the plan, to use OPEC as misdirection.
LOOT’s account of OPEC is silent about the Seven Sisters throughout except a couple of mentions. There is discussion of OPEC dislike of “moc’s”, or multinational oil companies, but the entry treats OPEC and its history at face, claiming all we see is real, that nothing and no one lurks in the shadows. I think the game is the same today as in 1911, power merely drawing the curtains.
This brought to mind a practice by Standard Oil of under-pricing competition, forcing them into bankruptcy. It was something the public enjoyed and competition disliked. These days it is Saudi Arabia that floods the market with crude on occasion, as in 1985 when the “bottom fell out” of the oil market. I was working for an offshoot of that same company I worked for in 1974, Fortin Enterprises, that year, when I got a phone call from a Florida attorney employed by the Fortin’s. He told me that The Fortin Enterprise properties were going to be gifted to the Mayo Clinic, like … tomorrow.
I and a coworker had to pull an all-nighter preparing assignments and getting them signed and notarized. It was an emergency. The reason it had to be done in such short order, I later learned, was that the oil market was going to crash, and the gift had to be made while prices were still high for maximum tax savings. The Florida attorney was a well-connected man who knew what was coming.
It is said that the crash of the oil market in 1985/86 had a large hand in the dissolution of the Soviet Union, heavily dependent on oil revenue. That may be so, but over the years I have learned that our friends are our enemies and our enemies are our friends, so I have to believe that the Soviets knew what was coming. Otherwise I am expected to believe, once more, that powerful totalitarian states like Russia, Czechoslovakia, and so many others, (Estonia), when faced with large and peaceful public gatherings, merely packed it in and went home. Power does not operate like that.
Speaking of under-pricing competition, it appears to me that the old Standard Oil gang was at it again in 2014. By that time there had been huge innovations in the oil industry, and fracking and directional drilling had opened up immense reserves in North America, making the U.S. energy independent. One of the biggest fields is known as “Bakken,” and it straddles North Dakota, Montana and Canada.
The problem with Bakken wells is that they are very expensive to drill and produce. That was dandy when oil prices were at $160 in 2008, but by 2015 $35 oil was causing a massive fallout, scores of bankruptcies, and companies selling out to competition right and left. The remaining five largest Bakken producers today are Continental Resources, Whiting Petroleum, Hess, ExxonMobil and EOG.
Continental Resources is run by Howard Hamm, a multi-billionaire. Whiting is a public company headquartered here in Denver – I know nothing of it. Hess Corporation (formerly Amerada Hess) is a combined company with a British unit founded by Weetman Dickinson Pearson, 1st Viscount Cowdray (Lord Cowdry) and Leon Hess, also owner of the New York Jets. ExxonMobil is what we know it is, and EOG is “Enron Oil and Gas” which was spun off from Enron prior to its collapse.
So the Bakken is back in the hands of some of the the most powerful families and companies in the country. I have to think this is no accident.
Why doesn’t someone do something about this horrible cartel? It seems within the power of the US Government to put an end to such behaviors in countries where we have such massive military presence as Saudi Arabia, Kuwait and Iraq, or where governments are under de facto US control, as in Venezuela. But we sit on our hands. Here’s an interesting passage from LOOT:
OPEC has not been involved in any disputes related to the competition rules of the World Trade Organization, even though the objectives, actions, and principles of the two organizations diverge considerably. A key US District Court decision held that OPEC consultations are protected as “governmental” acts of state by the Foreign Sovereign Immunities Act, and are therefore beyond the legal reach of US competition law governing “commercial” acts. Despite popular sentiment against OPEC, legislative proposals to limit the organization’s sovereign immunity, such as the NOPEC Act, have so far been unsuccessful.
It is hands-off. If my theory, that Standard Oil became the Seven Sisters became OPEC, is correct, then it makes perfect sense.
PS: Another passage from LOOT, just for shits and giggles, like, yeah baby, this really happened … I don’t know why, but I smell another public hoax:
On 21 December 1975, Saudi Arabia’s Ahmed Zaki Yamani, Iran’s Jamshid Amuzegar, and the other OPEC oil ministers were taken hostage at their semi-annual conference in Vienna, Austria. The attack, which killed three non-ministers, was orchestrated by a six-person team led by Venezuelan militant “Carlos the Jackal“, and which included Gabriele Kröcher-Tiedemann and Hans-Joachim Klein. The self-named “Arm of the Arab Revolution” group declared its goal to be the liberation of Palestine. Carlos planned to take over the conference by force and hold for ransom all eleven attending oil ministers, except for Yamani and Amuzegar who were to be executed.
Carlos arranged bus and plane travel for his team and 42 of the original 63 hostages, with stops in Algiers and Tripoli, planning to fly eventually to Baghdad, where Yamani and Amuzegar were to be killed. All 30 non-Arab hostages were released in Algiers, excluding Amuzegar. Additional hostages were released at another stop in Tripoli before returning to Algiers. With only 10 hostages remaining, Carlos held a phone conversation with Algerian President Houari Boumédienne, who informed Carlos that the oil ministers’ deaths would result in an attack on the plane. Boumédienne must also have offered Carlos asylum at this time and possibly financial compensation for failing to complete his assignment. Carlos expressed his regret at not being able to murder Yamani and Amuzegar, then he and his comrades left the plane. All the hostages and terrorists walked away from the situation, two days after it began.
Some time after the attack, Carlos’s accomplices revealed that the operation was commanded by Wadie Haddad, a founder of the Popular Front for the Liberation of Palestine. They also claimed that the idea and funding came from an Arab president, widely thought to be Muammar al-Gaddafi of Libya, itself an OPEC member. Fellow militants Bassam Abu Sharif and Klein claimed that Carlos received and kept a ransom between US$20 million and US$50 million from “an Arab president”. Carlos claimed that Saudi Arabia paid ransom on behalf of Iran, but that the money was “diverted en route and lost by the Revolution”. He was finally captured in 1994 and is serving life sentences for at least 16 other murders.
Appendix: The “Seven Sisters” reunited as follows into four companies:
- The Ohio Oil Company remained unchanged except in name, and is now Marathon Petroleum.
- The Standard Oil Company, also known as Sohio, merged with or acquired the Standard Oil Company of Indiana (Amoco), and is now known as BP, or British Petroleum.
- The Standard Oil Company of New Jersey became Esso, and along the way also Enco. (I know this because I spent a period of six months in 1973 traveling around Montana taking down Carter and Humble signs and replacing them with “Enco” signs.) Along the way to becoming Exxon it acquired Humble Oil Company. It merged with or acquired Mobil and is now ExxonMobil.
- Standard Oil Company of New York along the way to becoming Mobil acquired Vacuum Oil Company. It merged with or was acquired by Exxon and is now ExxonMobil.
- The Standard Oil Company of California became Chevron. Along the way it acquired Texaco, Unocal, and Standard Oil of Kentucky. .
- The Standard Oil Company of Indiana, mentioned above, is now merged or acquired by Standard Oil Company, and is now known as BP, or British Petroleum.
- Standard Oil of Kentucky was acquired by or merged with Chevron, noted above.
Go to this link for a better visual graph of the changes over the years, which differ somewhat from my description above. Left out of this discussion are two more companies that I know were part of Standard Oil, Conoco (now Conoco Phillips) and Arco, formerly Atlantic Richfield Company, now part of BP.
I have been unable to locate a full list of the 34 companies that came out of the 1911 court decision. Suffice it to say that like scattered magnets, they reassembled.
Two other subjects that are ripe for research are Ida Tarbull (“The Woman Who Took on Standard Oil”), and Teddy Roosevelt, “Trustbuster.”
Tarbull would have been squished like an ant but was allowed wide exposure instead. She was juiced, as I see it, controlled opposition.
Teddy Roosevelt is too well placed in the ruling families to be a real anti-corporate raider. He too was controlled opposition. Think about this: His “Bull Moose” run for presidency in 1912 had the effect of electing Woodrow Wilson. He had to have understood this, just as Ross Perot understood in 1992 and 1996 that his candidacy assured the election of Bill Clinton. Things are never as they appear.
PS: I have deliberately ignored numerical clues in this piece even as they have popped up now and then, especially with Carlos the Jackal, who hijacked eleven oil ministers. But I am perplexed that I cannot find a list of the 34 companies formed with the dissolution of Standard Oil in 1911. Every link leads to the Seven Sisters but not much more. It should be public knowledge and easily discovered. “34” means nothing to me, but from another angle perhaps it is a meaningful signal. Before the dissolution, there was one company. The dissolution left that company and 33 offspring.