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All of them, looking beyond the present glut, are well aware that oil's future is even fatter than its current surpluses. The free world's oil consumption last year jumped by 1,000,000 bbl. a day, is growing at the rate of about 7% a year. In the long view of oilmen, the U.S. restrictions on imports must eventually be relaxed; within 25 years the U.S. will probably have to import about half its oil. To supply the needs of the billion more people who will inhabit the earth by 1980. the supply of energy will have to double — and oil is expected to do most of the job.
Horrible Prospect? Wherever there is hope or promise of oil, the big majors are forced to drill — even when they already have enough oil — in order to protect their huge markets and investments. Since every country wants to use its own oil, saving its foreign currency, each new discovery means the loss of traditional markets for imported oil. France, for example, is already working on favored treatment for its Sahara oil. Though the Group strongly opposes the plan, it is ready for it: it has a 35% interest in France's Compagnie de Recherches et d'Exploitation de Pétrole, now producing in the Sahara.
The closing of the Suez Canal in 1956 gave the oil-burning world a fright, and the air was filled with dire warnings. But the ultimate consequences have given the Arabs something equally frightening to ponder: Nasser's actions spurred drilling west of Suez. While Arab oil is still the world's cheapest and most plentiful (60% of known reserves), many Arabs fear that all the new discoveries threaten to cut their $1 billion-a-year oil income. Beirut's daily newspaper Al-Hayat concluded that production in the Arab East will fall by 25% or 30% in the next three or four years — "a horrible prospect."
For the Group and the other major oil companies, the prospect is anything but horrible. It greatly improves their bargaining position. When independent companies first breached the traditional fifty-fifty split with oil-bearing countries three years ago, oil-rich nations — notably Saudi Arabia and Venezuela — took a tougher line with the oil companies on profits. They wanted more controls and hinted at nationalization.
But the oversupply of oil has drowned out such talk. Concessions given up by Aramco in Saudi Arabia have found few other takers; Venezuela faces a 7% drop in oil income this year because private oil companies, hit by a boost in taxes, have cut back their drilling. Fortnight ago, Venezuela set up a new state-owned oil company to drill in areas not yet touched by private firms. But President Rómulo Betancourt emphasized that there is no thought of nationalization. Oil-rich nations have learned a stern economic lesson: it is not enough just to have oil; it must also be marketed.