In the late 1940s, seven large oil companies controlled over 90 percent of oil reserves outside North America and the Communist countries. They accounted for almost 90 percent of world (as defined above) oil production, owned almost 75 percent of world oil-refining capacity, and provided about 90 percent of the oil traded in international markets. Known as the Seven Sisters because of their close ties and multiple joint ventures, they included five US companies - Standard Oil of New Jersey (Exxon), Socony-Vacuum (Mobil), Standard Oil of California (Chevron), the Texas Company (Texaco), and Gulf - as well as the British-owned Anglo-Iranian Oil Company (British Petroleum)as well as and the Royal Dutch/Shell group, a 60 percent Dutch and 40 percent British partnership. The Seven Sisters, in cooperation with state regulatory authorities in the United States, were able to exercise informal control over the world oil economy, matching supply with demand and maintaining prices at highly profitable levels. 761
The main oil-producing areas outside the United States and the Soviet Union were Venezuela and the Middle East. In 1945, Venezuela was the second-leading producer in the world and the leading exporter. Standard Oil of NewJersey, Shell, and Gulf dominated the Venezuelan oil industry, and US military power assured access to its reserves. During World War II, the US government played a key role in facilitating a settlement between the major oil companies and the Venezuelan government. The agreement resulted in a fifty-fifty profit-sharing agreement and confirmed the companies’ existing concessions, their extension for forty years, and the opening of new areas for exploration. Between 1945 and 1960, annual Venezuelan oil production increased from 323 million barrels to over i billion barrels. Venezuela was the world’s second-largest oil producer until i960, a leading exporter, and supplied more than half of US oil imports for most of the i950s.
Following the lead of the major oil companies, the United States cooperated with both democratic and undemocratic Venezuelan governments as long as they did not challenge corporate control of the oil industry and Western access to Venezuela’s oil. Between 1945 and 1948, American officials accepted demands by reformist governments to share profits more equally and to raise wages for oil workers. They did so because they viewed the social democratic Accion Democratica (AD) party as a bulwark against Communism. As the Cold War intensified, however, US Army officials became concerned about the AD government’s ability to ensure the security of oil installations against sabotage and attack, and warned that the AD’s nationalism represented a threat to US interests. Scholars have found no evidence that the US government was involved in the military coup that ousted the AD in November 1948, though the United States did little to prevent it and provided increased assistance and training to the Venezuelan military afterwards.
The new government repressed the AD and the oil workers’ union, worked with US officials to strengthen plans to protect oil installations, and opened new areas to the oil companies. The military dictatorship increasingly lost support during the 1950s. After it fell to a popular revolution in January 1958, the United States recognized the new government once the main parties in the revolutionary coalition had pledged to respect US investments. Later in the year, American officials supported the election of AD leader Romulo Betancourt - even though he promised to raise taxes, restrict production, establish a national oil company, and ban new concessions. They believed that the AD provided a better barrier to Communism than the other possibilities.
Mexico also possessed large oil reserves and had been a leading exporter in the years around World War I. Production and exports began to decline in the i920s, and in i938 Mexico nationalized its oil industry. Although development of Mexico’s nearby reserves could have enhanced US security, US policymakers feared that assistance to the Mexican state oil company, Petroleos
Mexicanos (Pemex), would encourage other nations to take over their oil industries. Therefore, the United States tried to convince Mexico to reverse nationalization and open its oil sector to foreign companies. These efforts were unsuccessful, but the United States maintained its policy of providing no assistance to Pemex. Mexican oil production expanded gradually after World War II, but during most of the period 1945-60 consumption outpaced production, forcing Mexico to import oil to meet domestic demand.
At the end of World War II, Canada produced only enough oil to meet 10 percent of its domestic demand and had to import most of its oil requirements. Following the discovery of a major oil field in Alberta in 1947 and subsequent important discoveries, annual Canadian oil production rose fTom 8.4 million barrels in 1945 to 129.4 million barrels in 1955 and 292.5 million barrels in 1965. Over 20 percent of production in 1960 was exported, mainly to the United States. By 1965, Canada was supplying almost a quarter of US oil imports.
World History
