It is well known that five major oil companies, Socony-Miobil, Standard Oil of California, Texaco, Gulf Oil, and Stardard Oil of New Jersey have, since shortly after World War I been among the greatest beneficiaries of American foreign policy. Throughout the 1920's, for example, American diplomacy battled Great Britain, France, and the Netherlands to poen the oil-rich lands of the Middle-East to penetration by the American oil industry. By 1958, the five "majors" of the American oil industry held, under lease or concessions from foreign governments, more than one-half of the world's oil reserves outside of Russia. (for a capsule smnary of American oil diplomacy see Percy W. Bidwell, RAW MATERIALS; A STUDY OF AMERICAN POLICY, Council on Foreign Relations, 1958)
In 1960, in belated response to this cartelization of world oil, the governments of eight "producing" or "host" nations (which together account for at least three-quarters of the "free world's" crude oil production outside the U.S.) -Venezuela, Kuwait, Saudi Arabia, Iran, Iraq, Qatar, Libya, and Indonesia, banded together to form the Organization of Petroleum Fxporting Countries (OPEC). The idea of OPEC was to regulate production so as to maintain high oil prices and to give member governments a degree of leverage against the oil companies when negotiating for their share of the profits. Much to the annoyance of the oil companies, OPEC has achieved limited success. Moreover, the demonstrated viability of OPEC has touched off still more nationalist resistance to the oil companies. In the past year alone the oil cartels have also run into problems in Mexico, Venezuela, Syria, Iran and Iraq.
U.S. oil companies are beginning to get apprehensive at the growth of Petroleos Mexicanos (Pemex), the government-owned concern which has operated the Mexican oil industry since Mexico expropriated foreign-owned petroleum properiteies in 1938. Pemex, according to The Wall Street Journal, "snubs profits, winks at featherbedding on its huge/and knowingly invests in money-losing ventures. Its crews, when they aren't drilling oil wells, are busy paving roads, building schools and putting in water systems for rural villages." Yet in spite of its tendency to do things without regard for profit, Pemex has succeeded in expanding both its business and its productivity to the extent that it has become a model for government oil companies of Brazil, Indonesia, France and Italy. Thus, private oil company executives are worried about the impact Pemex might have on private oil operations in the rest of Latin America and in the Mideast. "As a successful government venture, Pemex is the model for other countries wanting to nationalize their oil," says an apprehensive U.S. oil man. ( see James C. Tanner, "model Monopoly: Nationalized Oil Agency in Mexico So Successful it Worries the Industry," The UL.ll Street Journal, April 7, 1967)
In Venezuela, the Creole Petroleum Corp., a subsidiary o the Rockefeller's Standard Oil of New Jersey, suffered a big setback when the Venezuelan government set up a schedule of higher tax payments and forced it to pay 685 million for all tax claims for the years prior to 1966. Meanwhile, the Iran Petroleum Co. was curbed by the Syriran government which went so far as to seize the company's pipeline facilities for a short time and eventually succeeded in raising its transit terminal fees by 50%. The bruised oil company is jointly owned by the British Petroluem Co., Compagnie Francaise des Petroles, the Royal Dutch-Shell Group, Mobil Oil Corporation and Standard Oil of New Jersey. And finally, as if to pour chile sauce on the peptic ulcers of private oil company executives, the Sixth Arab Petroleum Congress (which met in Iraq in March) passed a series of resolutions urging increased control of oil operations by Arab governments with the ultimate goal of "Arabization" of Middle East oil.
With harbingers such as these turning up nearly every month now, it is understandable that the American oil industry is once again resorting to tactics that recall nothing so much as its conquest of the oil lands of Pennsylvania, Ohio and Indiana.
The target this time is the 1,380 sqaure mile Piceance Basin on the western slopes of the Rockies in Colorado. Beneath this vast expanse of severely beautiful virgin territory rests a type of rock called oil shale. It is impregnated with an estimated 2 trillion barrels of crude oil, or five times the world's known supply of conventional liquid petroleum. Ironically enough this territory, with its immense mineral wealth and precious beauty is still owned by the US government in the name of the people. The self-appointed task of the oil companies, which are accustomed to possessing all profitable oil properties, is to reverse that state of affairs.
The oil companies have been working quietly on this for some years now. Most visible has been a drive to force the government to virtually give away the nationally owned shale oil land. The tactics they have employed, which have included misrepresentation, the buying of dishonest politicians and public officials and the harassment and even attempted murder of honest ones, are vividly described by Adam Hochschil in the May issue of Ramparts magazine.
And just as the State Derartment obligingly serviced oil company acquisitiveness abroad, it is the Interior Department and the Atomic Energy Commission which are turning over to the oil industry the publicly developed technology that makes extraction of oil from shale practical. According to oil industry economist Susan Gildersleeve (see "Near and Far Term Shale Oil Outlook," The Commerical and Financial Chronicle, Feb. 5, 1967) it was "under industry prodding" that the Government "reactivated the old Bureau of Nines shale facility at Anvil Points, leasing it to the Colorado School of Mines Research Foundation which in turn, contracted to work for Mobil Oil, Standard Oil of New Jersey, Standard Oil of Indiana, Phillips Petroleum, Sinclair, and Continental Oil... Similarly, starting in July, Interior Department research also shifted direction; shale work for the first time taking precedence over crude." And then there is the "A-bomb fever" which has seized hold of the industry.
As Gildersleeve puts it: "Under the leadership of Geonuclear Corp. -- a Continental Oil, Edgerton, Germeshausen & Grier joint venture-and the Bureau of Mines, twenty-four eager oil and mining companies have now banded together to map out plans for the first atomic test shot aimed at wresting the oil from the rock. Hopefully this spectacular experiment can be kicked off early in 1968. If successful, it would turn out oil at a price fully competitive in domestic AND foreign markets, literally blasting a commercial shale oil industry into being."
Gildersleeve aptly sums up the significance of the oil companies' desperate grab for oil shale: "Shale oil... could give beleagured international petroleum 'giants' such as Standard Oil of New Jersey a powerful bargaining tool which they do not now possess. Backed by an abundant, secure domestic supply, no longer would these corporations have to kow-tow to greedy sheikdoms grabbing for an ever bigger bite of the profits as they have so effectively been doing through OPEC... Inject shale oil into the picture and immunity from this unceasing sort of blackmail might well be achieved."
