ON THE surface, things look pretty good for the big, listed oil companies. The world wants more of what they produce than ever before. The price it sells for is high and the profits are rolling in. Exxon Mobil, with a market capitalisation of $417 billion, vies with Apple as the world’s most valuable listed company. Royal Dutch Shell is the most valuable firm on the London Stock Exchange. Chevron employs 62,000 people; Total operates in more than 130 countries. In BP’s case the big numbers are more calamitous—it may end up paying out $90 billion in fines and compensation stemming from the Deepwater Horizon disaster. But its ability to do so and stay standing is a perverse sign of the company’s underlying strength.
In the 1990s, when the oil price dipped, a round of mergers turned the “seven sisters” of the 1950s—BP, Esso, Gulf Oil, Mobil, Royal Dutch Shell, SoCal and Texaco—their descendants and some smaller fry into this new set of “supermajors”. Soon afterwards global economic expansion further increased the demand for oil that had grown for a century, and set its price soaring (see chart 1). Things looked good for the new giants. But the rapid growth of emerging markets also exacerbated a half-century-long trend for power over that oil to shift to the countries where it is found.
In the 1950s the seven sisters controlled some 85% of global reserves. Today