BIG OIL AND WORLD ENERGY ISSUES BIG OIL is the perceived embodiment of worlds largest oil companies

holding sway on world oil supplies and prices. Although the controlling power has swung from oil producing nations to oil corporate world and then from oil corporate world t o the infamous band of traders and speculators known to have mastered the art of price and supply squeezes. The oil corporate world is still held in reverence b y those who know how the oil majors influence the world supply and prices by und er-investing in oil as well as by killing competition through mergers and acquis itions; these mergers and acquisitions often described in idiomatic terms as big fish swallowing the smaller ones. The dirty oil business is often blamed for much of the economic, social and environmental degradation of the world, particularly the Third World. Tom Bower writes in the preface to his book OIL: Oil provokes irreconcilable emotions. Moralizing sermons about oil have never sto pped, but since Sampsons and Yergins books, some issues have been changed. Destitu tion in the Niger Delta, the contamination of Alaskas pristine wilderness, the de struction of Canadas forests and spreading corruption across Africa are all blame d on oil companies...The riddle is whether, in pursuing their priority of caring for their shareholders and their customers, the oil majors should refrain from interfering in the internal affairs of Third World countries, or accept a duty t o prevent the institutionalized pillage of impoverished populations and to oversee the fate of their nations oil wealth. The mere mention of Big Oil may bring to some minds the hugeness of oil reserves the top oil companies are holding to influence supply and prices. The fact is j ust the opposite; the big reserve-holders are the national oil companies of petr o-states. A September 2010 Forbes article by Christopher Helman reveals: What spr ings to mind when you think of the Worlds Biggest Oil Companies? BP probably, bec ause these days you couldnt get BP out of your head if you tried. Exxon Mobil, d efinitely, because for so many years before the Deepwater Horizon blowout Exxon was (rightly or wrongly) the embodiment of Big Oil. Yet you might be surprised that in a list of the top 10 oil producers, none of the other usual suspects mad e the cut. Publicly traded giants like Royal Dutch Shell, Chevron, Conoco Philli ps and Total may be Big Oil, but they are not Biggest Oil. The moniker goes to t he state-owned national oil companies. NOCs for short, that sit on 77% of the wo rlds oil-accumulations so big they make even Exxons 12 billion barrels of proven o il reserves look meager. How these so-called oil juggernauts manage to influence world oil markets holdin g just a fraction of world reserves. The answer lies in the intricacies of finan cial systems and effectiveness of collective corporate power. Oil prices on trad ing exchanges are manipulated through the dealer-operations. Exxon, BP, Shell an d others are known to have separate divisions whose job it is to enter into deal er operations with the help of insider information ranging from own and rival co mpanies inventory position and storage capacity to the infrastructural edge and l ocation advantage. Tom Bower, in the wake of BP takeover of Amoco, writes: BPs senior trader understo od the companys remarkable inheritance from Amoco better than others. BP had beco me the dominant owner of oil storage tanks in Cushing, the epicenter of pricing WTI oil on the New York Mercantile Exchange. In theory, with 20 percent of the s torage, BPs power to influence Nymexs prices by choking or flooding the market had become overwhelmingBy owning the physical infrastructure at Cushing, and produci ng crude oil and oil products, while trading crudes and derivatives on Nymex and OTCs, BPs rivals suspected the corporation of manipulation of WTIs prices. So, in the energy-wealth-accumulation list, Big Oil is allowed entry after the t op 15-20 positions that are occupied by the national companies of the world petr o states. It is the corporate dominance and the modern day financial engineering that has presented us with the blow-up of Big Oil. On the world corporate scene , energy companies occupy the top slots with Royal Dutch Shell having recently p ushed Wall Mart down to occupy the number one position. In the modern day corporate structure, the actions of the CEOs are biased more in favor of increasing their shareholders wealth and by that measure their person

al wealth too - than anything else. They can go any length to achieve this objec tive. Their actions may include savage cost cutting resulting in huge lay-offs, putting on hold investment plans to manage rich dividend payouts, and indulging in activities that do not fall within the ambit of their core business; for exam ple, Big Oil involvement in dealer operations, ill-planned and uncalled for merg ers and acquisitions etc. The world energy situation is disturbing, if not outri ght alarming. This investment-strapped sector needs loads of fresh investment t o ensure future survival - $1.5 trillion every year up till 2035, according to I EA. Both petro states and Big Oil need to invest more in exploration to jack up the existing energy reserves. The IEA chief economist Fatih Birol once warned in a gathering of energy ministers and industry bosses, in Paris: If we dont find th at money, the production will not grow as much as it needs to grow, with the re sult (that) one can see much higher prices than one can see today. Ironically, th e warning instead of panicking, might well have pleased a section of the audienc e as prospects of higher oil prices is what they relish most! SHAMSUL GHANI