OPEG'S RUNNING DOGS From an article by Jon Kimche, editor of “Arab-Asian Affairs” magazine, London, England. Reprinted in “The Province,’ Jan. 7, 1980. The international oil companies pay an interesting role in this operation. They act the part of what the late Chairman Mao would have called ‘“‘the running dogs” of the OPEC producers. Every time the oil producers increase their price up go the oil revenues and this last year, when it could no longer be altogether hidden in other figures,up went also the declared profits. For example, let us take the biggest of them all, Exxon. Compared with 1973, Exxon’s production of crude oil dropped from 5.5 million barrels a day to a mere 2.5 MED. Refined products sold also declined during this period by 13 per cent. But now comes the interesting feature. Receipts from all operations were up in 1978 compared with 1973 from $28 billion to $65 billion, an increase of 182 per cent. Taxation was up from $11 billion to $17 billion an increase of 55 per cent. And profits remained surprisingly constant at around $2.5 billion to $2.7 billion in the six years from 1973 to 1978. But there was another figure in Exxon’s accounts — and those of ail other major oil companies that is wreathed in a good deal of fog and calls for closer scrutiny. Exxon reported that between 1973 and 1978 its costs and other deductions had increased from $15 billion to $45 billion — a leap of 300 per cent. Curiously, every year the increase under this heading is just enough to syphon off all the extra revenue derived from the arbitrary increase in the price decided upon by the OPEC countries. Sheer coincidence, of course. British petroleum went one better than Exxon. Their costs and other deductions increased by 500 per cent; Texaco’s by 350 per cent, Mobil by 400 per cent, Shell by 300 per cent and Gulf Oil by 250 per cent. The story is the same but for 1979 and presuma- bly 1980 profits have been so high that they had to be noted. Thus the major American oil companies reported a net profit after making allowan- ces for costs and other deductions on an almost astronomic scale, of $15 billion compared to $9 billion in 1978. The really fruity last quarter results were still to come. An interesting aside in the accounts was the emphasis that 90 per cent of the increased profits of the American major oil companies was derived from their “foreign” operations which include Canada. Whichever way we look at the oil story, we come back to the basic question: What justification is there for holding the world to ransom and for the continuing increase in the price of oil to the point where both the Western world and the developing nations are threatened with economic unrest and social difficulties? There is no shortage of oil. There was never any shortage of oil. OPEC production is higher than ever. So isnon-OPEC produc- tion in the Free World. Stocks have never been so high. And demand is falling. There is already a glut of oil. There will be a major glut early next year as even Sheik Yamani has warned the oil producers. There is no need for Western panic buying but there is time now for the consumer countries to seriously consider as a first stage a direct confrontation with producer countries on price and supplies. For virtually all the producer countries have so mishandled their own economies that even with the vast wealth at their “THE REASON HE'S NOT HUNTING IS BECAUSE WE HAVEN'T BEEN FEEDING HiM ENOUGH Herblock in The Washington Post - disposal they cannot afford to cut back production. This is the time for someone to call a halt. To produce an orderly arrangement for the oil industry and the consumers. What prevails now is sheer anarchy with a few rich men and the producing countries reaping the benefit and with some hangers- on in the West trying to share it. What we have to guard against is the danger coming from some of the latter who act as advisers to the oil producing states. There is a small number of them wielding considerable influence with the oil sheiks. Foremost among them is the former U.S. ambassador to Saudi Arabia and one-time oil controller in the state department, James Akins. They are trying to persuade the oil produc- ers to hold down production so as to keep a tight market which will enable the oil price to be continuously increased. The real fact is that there is no tight market. There are ample supplies and ample reserves of oil for the next hundred years and there is no justification for using oil supplies to increase the price or to compel political concessions from Washinton and other Western countries. That is why, amidst all the tumult over Afghanistan, the OPEC threat is far more serious and calls for consideration of an altogether more forceful nature than the Western countries have attempted so far. 1980 may well be the last opportunity to do Alberta's bonanza As we mention elsewhere in this issue, money is being poured into Alberta at an incredible rate. Following is a quotation from Peter Foster’s ‘““The Blue Eyed Sheiks” Revenues from oil and gas are flowing into provincial coffers at the astonishing rate of more than $6,000 a minute. More individual multi-millionaires have been created by Alberta’s oil boom than at any time or in any place in Canadian history. But the truly astonishing fact is that the boom in the 1980’s promises, or more appropriately threatens, to be even bigger.” “In terms of Alberta’s wealth, even a hundred million dollars seems like nothing. Alberta’s oil revenues are accumulating at the rate of more than $3 billion a year. That works out at around $7.64 million a day, or $6,000 a minute, or $100 a second. To attempt to give these numbers some perspec- tive, they mean that the Albertans would theoretically be able to buy: e One ton of gold (based on a price of U.S. $300 an ounce) every 31 hours, 22 minutes. e Assets of General Motors of Canada (Canadals largest company by sales) in 188 ays. @ All the shares of Imperial Oil (Canada’s largest oil company) in one year, 156 days. e La Communiante, by James Morrice (The most expensive Canadian painting ever sold at auction) in 16 minutes, 20 seconds. e The Bank of Nova Scotia in 116 days, 23 hours. e All the teams in the Canadian Football League in three days, three hours. e Rembrandt’s portrait of his son Titus in five hours, 54 minutes. e Affirmed, the horse thatin 1978 won the Triple Crown, in 40 hours. ° Toronto’s Eaton Centre (the largest shopping complex in the world) in 29 days. e The Montreal Canadiens in two days 16 hours. e The 35 largest publicly-owned oil com- panies in Canada (based on December 31, 1978 share prices) in five years, 211 days.”