Business: The Seven Sisters Still Rule

• Share

Five years after the crunch, most oil firms are as robust as ever

There's no business like oil business.

—C.C. Pocock, chairman of Shell

A few years ago, such Ethel Mermanesque exuberance would have sounded strange coming from the chief of one of world oil's fabled Seven Sisters—Exxon, Shell, Mobil, Texaco, British Petroleum, Standard Oil of California and Gulf.* Though the sorocracy had ruled the international oil trade since it began, the upheaval in the business that started with the Arab embargo of 1973 threatened to end this reign. Flushed with their success in quintupling the price of petroleum, the OPEC countries were about to nationalize their oilfields, which would strip the Sisters of ownership of much of their crude reserves. Some governments talked aggressively of also muscling in on the companies' "downstream" refining and marketing operations. In the consuming countries, meanwhile, the Sisters faced painful marketing adjustments brought on by high prices and, in the U.S., a strong congressional drive to bust the oil majors into many smaller pieces. Worst of all, the companies seemed trapped in an over-the-hill business: all sorts of "experts" were saying that world oil production would peak as soon as the early 1980s, then start on an irreversible decline.

Instead, five years after the energy crisis hit, the Sisters' power seems unshaken. Politically their clout is reviving: President Carter, who denounced Big Oil on TV only last fall, is now making an all-out effort to sell natural gas legislation that would allow the companies to raise prices and profits. Economically, in the first three months of this year, the Sisters sold 38% of all the oil moving in world trade, about as large a proportion as ever. Rising output from Alaska, the North Sea and the Gulf of Mexico, where they dominate drilling, might even increase their future share. The new production, combined with a slowdown in consumption, has put off the day when the world will start running out of oil to the 1990s, or the early 21st century. Far from being menaced by scarcity, the companies just now must cope with a global glut.

Financially the picture is more mixed. World opinion tends to view them as a monolith, but the companies are quite independent and sharply competitive with each other—although they cooperate in all sorts of joint ventures. They have personalities about as varied as those of seven real-life sisters, and their performance differs too. Right now Texaco and Gulf are suffering through slumps that will be difficult to reverse. Some of the other companies' profits are being held down by a number of factors. Among them: lower sales in Europe and bookkeeping losses incurred by translating foreign-currency accounts into weakening dollars (if and when the dollar steadies, the Sisters' profits will rise).