Oil Power

In the brief period since the late summer of 1970, Tripoli, Caracas, Tehran and then Tripoli again have witnessed unprecedented demands upon the international oil industry by major oil-producing countries, dramatic confrontations with threats to withhold essential oil supplies, and far- reaching "settlements." As a result, the economic terms of the world trade in oil have been radically altered. The balance among oil-producing and exporting countries and oil-consuming and importing countries, and among oil companies themselves appears, at least as of now, to have shifted decisively in favor of the producing countries.

The winds of change for the oil industry that have been stirring throughout the decades since 1950 have now risen to hurricane proportions. The aim of major oil-producing countries in this vortex is clearly to maximize their governments' "take" out of the value of their oil production and to obtain increasing control over oil operations. To achieve this, these countries- already formally joined in the Organization of the Petroleum Exporting Countries (OPEC) since 1960-have now effectively combined to wield the economic and political power of an oil monopoly.

For their part, consuming countries are faced with appreciably higher prices for their oil imports, which for most constitute by far the major part of their total energy supplies and energy costs. Foreign exchange outlays are thus mounting rapidly. And the traumatic experience of confrontation between the industry and the producing governments raises new questions as to the security of essential oil flows against interruption. Clearly, a very real challenge to the historical structure and operation of the internationally integrated oil industry is emerging-at a time when demand for oil is increasing swiftly.