Originally Posted by
Expat
There is no need to look for hidden conspiracies or cabals, much less those limited to single companies. Not one of those western oil companies, whether BP, Shell, Exxon or whoever, has the power to shape the oil price. That becomes clear if you just take a look at the percentage of the world's oil production and reserves that they control.
There is of course a cabal, or conspiracy, to manipulate the oil price and its name is OPEC. Of course the OPEC countries, and every other country/company that makes money selling oil, want to have its price as high as possible before it becomes counter-productive. Duh. And that is what happened in the oil shocks of 1973 and 1979, which happened much against the wishes of western countries (even if not against the wishes of western oil companies, but I don't buy the notion that they rule their own countries, since many other companies prefer to have the oil price down).
Now, if you look at any graph of the price of the oil in the last decades, you will see that the oil price dove sharply again around 1985. The main immediate reason was that Saudi Arabia flooded the market at the time, and they had their own reasons for that.
Essentially the continually high - and increasing - price in the period 1973-1984 led to changes in the world's economy, not only in measures to increase energy efficiency, but also increasing uses of things like nuclear power and, most importantly, it led to previously non-profitable oil fields as in the North Sea (Britain and Norway) become profitable, also in the former USSR, etc. And countries like South Africa and New Zealand actually were making synthetic oil (South Africa still is). The effect overall was to reduce the world's dependency on OPEC, which was itself breaking apart, with Saudi Arabia shouldering the burden for keeping the price high nearly single-handedly.
That is also, by the way, why Saudi Arabia listened to the Reagan administration's arguments for flooding the market with oil again: by keeping the oil price high by keeping down its own production levels, the House of Saud was in the final analysis helping the other OPEC countries more than itself, and helping the USSR as well, something not in the interests of the House of Saud, either. So, essentially, from 1985 on they started increasing their own production levels sharply, bringing the overall oil price down but making more money themselves (since their own market share rose even more sharply), and helping the overall Reagan strategy of ruining the economy of the Soviet Union.
Which is, by they way, essentially why the USSR, and later Russia, were pathetic in the Gorbachev and Yeltsin eras, and has become more cocky in the age of Putin: because oil was cheap then, and it's expensive now. That is a simplistic but not inaccurate explanation.
None of the above "rules" have changed, but the overall demand for oil has changed, with the increasing demand in China, India and other countries, so the OPEC can play the same game at a higher oil price.
There is no mystery to any of this, and I think it's foolish to think that any single company, or nation, or hidden conspiracy, has the power to steer the global oil price. Unless one believes in something like the Illuminatti.