SHORTAGES: A Time of Learning to Live with Less

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Heavy bunkering fuel for ships is rapidly evaporating, and the world's ocean-borne traffic is headed for trouble. There could well be severe delays in delivery of cargoes as diverse as phosphate, zinc, chemicals, wheat and coffee. Ships unable to get fuel are laid up in ports from Hamburg to Singapore. The shortages have developed because of the Arabs' reduction of oil shipments to Europe, where most of the "C" grade bunkering fuel is refined. On top of that, electrical generating companies, which use the same type of oil, have been stockpiling it as a hedge against shortages.

Most of the big oil companies stand to weather the crisis much better than their customers. The companies occupy a kind of no man's land between the Arabs and the oil consumers, and their interests are divided between preserving their sources of supply at all costs and at the same time profitably satisfying their customers' needs. All of the oil firms have an enormous stake in the cur rent crisis, particularly the international giants known as the Seven Sisters: Exxon, Royal Dutch/Shell, British Petroleum, Texaco, Mobil, Standard Oil of California (Chevron) and Gulf Oil.

Arab Takeovers. For years they were the absolute monarchs of the petroleum business, holding undisputed sway over their rich empires from Tex as to Abu Dhabi and tightly controlling every phase of their global operations from wellhead to gas pump. In recent years, however, many oil-rich Arab nations have grown increasingly sophisticated and have moved to get a bigger piece of the profits from their resources. They have taken over the decision making on how much oil will be pumped and how much it will cost. Some countries, like Algeria, Libya, Iraq and Iran, which is not part of the Arab bloc, have gained controlling interest in the local subsidiaries of foreign firms.

That trend was markedly accelerated last week when Saudi Arabia demanded immediate controlling interest of "more than" 51% in the mammoth Arabian American Oil Co. Aramco is owned jointly by Exxon (22.5%), Standard of California (22.5%), Texaco (22.5%), Mobil (7.5%), and the Saudi Arabian government, which only last January squeezed out 25% "participation" that it will pay for in cash.

Aramco is believed to have the high est profit margin of any oil firm in the world. Its known oil reserves of 90.1 billion bbl. are more than twice as large as those in the entire U.S. Before the Arab oil cutback, the company's wells pumped 8.3 million bbl. a day, a total unmatched by any other company. The Saudis are almost certain to offer a relatively low, take-it-or-leave-it price for their increased share of Aramco's billion-dollar holdings. Because they have no choice, the U.S. corporations are resigned to taking whatever they can get for their property. One all but inevitable consequence of the Saudis' action will be to prompt similar takeovers of Western oil companies in Kuwait, Abu Dhabi and Qatar.

Most oil companies will benefit from rocketing petroleum prices, which have greatly increased the value of their deposits outside the Arab world. Yet prospects for individual firms vary greatly.

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