Seven sisters rich but powerless

Press, 26 February 1977, Page 15

Seven sisters rich but powerless

The Seven Sisters: The Great Oil Companies and the World They Made. By Anthony Sampson. 318 pp. $13.10.

(Reviewed by R. N. Kennaway)

Since the oil crisis of October, 1973, oil has assumed overwhelming importance in the economic and social life of the modern world. In the last 3( years it has taken over from coal as the major energy source in every Western developed country. It has provided governments in the consuming countries with a major share of their tax revenue. It has had a major impact on social life by vastly increasing the possibilities for individual mobility and independence. It has had, and continues to have, a major impact on international politics. Anthony Sampson has shown in earlier books, notably “The New Europeans” and “The Sovereign State: the Secret History of ITT,” that he is a perceptive and stimulating writer who combines significant economic and social commentary with a concern for “human interest” detail. In “The Seven Sisters” he has found a topic for which his technique is particularly well-suited, because the topic is of such great intrinsic importance, and because the “human interest” element is particularly colourful. The story of oil, as Sampson tells it, always seems to have had particularly dramatic qualities. To some extent these qualities have been inherent in the nature of the resource. “In its murky trail,” Sampson -writes, “from the hills of Pennsylvania to tse flatlands of Texas' to the oil compounds of Saudi Arabia, the black stuff had always seemed to be spurting up in the most, impossible places, one moment in excessive quantities, the .next moment threatening a terrifying shortage, as if to exasperate its millions of dependents.” Partly, too, the drama has been intensified by the special fascination which the industry has held for a wide variety of strange and eccentric characters (to many of whom Sampson does full justice). "Many of them, of course, from John D. Rockefeller to Gulbenkian and Paul Getty and the oil sheikhs have amassed huge fortunes. Others, like Frank Holmes, the littleknown New Zealander, who in the 19205, played a crucial role in getting the rather reluctant oil companies interested first in the fabulously wealthy concessions in Saudi Arabia and Kuwait, made comparatively little personal gain. Others, like Sir Henri Deterding, the main architect of the Royal Dutch-Shell group in the twenties and thirties, ended their careers ignominiously — in Deterding’s case after flirting with Naziism and tending to paranoia.

Sampson gives quite a comprehensive account of the major developments in the industry from the earliest beginnings in Pennsylvania in the 1860 s, to the major discoveries in Texas and the Middle East, in Nigeria, and the North Sea and Alaska. Always he concentrates on the role of the major companies, the “Seven Sisters” of his title — five American (Exxon, Gulf, Texaco, Mobil and Socal). one British (8.P.) and one Anglo-Dutch (Shell). He concentrates on their complex relations with each other and with the governments in both the producing and consuming countries, and gives a graphic picture of the power of the companies in their heyday. “For decades,” he writes, “the companies seemed possessed of a special mystique . . . Their supranational expertise was beyond the ability of most national governments. Their incomes were greater than those of most countries where they operated, their fleets of tankers had more tonnage than any navy, they owned and administered whole cities in the desert.” In short, as he quotes ,from company sources, “Exxon was a multi-national corporation at least 50 years before that term was commonly used.” But naturally he also gives a great deal of attention to the major shift in the balance of power in the industry that has taken place over the last few years, when the focus of attention has moved from the decisions of the oil companies to those of the governments in the producing states, whether taken jointly in the Organisation of Petroleum Exporting Countries or individually by Saudi Arabia or Iran or Kuwait. In his view, the shift in power has been a real one (and this opinion seems unlikely to be altered by the recent difficulties in O.P.E.C. at its meeting in Qatar). Sampson gives a good analysis of the strange combination of circumstances which brought about the shift, including such disparate factors as the emergence of the United States as a major net importer of oil, the common interest of a major section of the oil producers in the Arab-Israeli conflict, and the experience of President Gadaffi of Libya in showing that the Western oil companies (and governments) could no longer bring pressure on the producers by “blacking” nationalised oil as they did in the early 1950 s in their confrontation with Dr Mossadeq in Iran. (It is, of course, an ironic twist that the present Shah of Iran was to some extent a beneficiary of that confrontation).

The companies did not suffer financially, in the short term anyway, from the" 1973 crisis. Indeed, Sampson points out that the rise in the value of

oil enabled Exxon to overtake General Motors as the largest multinational corporation. But they are unlikely to recapture their former power.

There are some weaknesses in the book. It could have included, in an appendix if necessary, a statistical section. It could be argued that this would be inappropriate in a book for the general reader, but many readers would have found it helpful in coming to grips with the dimensions of the problems discussed. The concluding section on the role of the companies is a weak one. Sampson discusses the causes of the shift in power to the producing governments, and then proceeds to deplore the consequences of the shift. He suggests that “it will remain unacceptable that the price of oil should be fixed in Teheran or Riyadh, and that the only long-term political justification for the role of the companies is to make them the visible representatives of the consumers’ interests. Otherwise, he suggests, there is a real danger that the Western countries will become “crippled by their indebtedness to this one seductive and fickle source of energy .” Granted the danger exists. But his own previous arguments seem to demonstrate fairly clearly that a role solely oriented to consumer interests would hardly be feasible for the companies at this stage. _ ___