BP Could Be Worse

BP Has Been Less Bad

I admit an offense: I like the big oil companies (Exxon Mobil, Shell, Chevron, BP and Total).

It’s not that I like them for what they are. I like them because of the alternative: An alternative formed by businesses that are much bigger, much more corrupt, that aren’t subject to anything but the control of the dictator in turn, and that often serve to finance corrupt states (and I believe that in Spain we have an excellent example of what happens when a business is too closely linked to political power, as the savings banks have made clear).

Those monsters are the Venezuelan PDVSA, the Mexican Pemex, the Russian Lukoil, the Chinese CNOOC and the Saudi ARAMCO.

In reality, the petroleum business is not a triumph — or an aberration — of capitalism. On the contrary, it is a triumph — or an aberration — of statism. Eighty-eight percent of global petroleum reserves and 52 percent of oil production is in the hands of public companies. Only Saudi ARAMCO has eight times more crude oil reserves than Exxon Mobil, BP and Chevron combined, according to this study (SEE HERE), although it is possible that the recent boom in Canadian oil reserves has barely tied the Saudi capacity.

In fact, two-thirds of the reserves and one-third of the global production of petroleum are controlled by a cartel: OPEC, formed by 12 states, of which only one — Ecuador — is fully democratic. In spite of the fact that those 12 countries have been trying to push for higher crude oil prices for the last four decades, not one of them has come out of underdevelopment.

Evidently, not all state-owned businesses are the same. The national oil companies with operational and strategic autonomy, like the Norwegian Statoil or Brazilian Petrobras, although public, follow private management models. That is not the case with “national oil companies” like PDVSA, Pemex or Saudi ARAMCO, which function, in practice, like their countries’ gigantic cash dispensers. Nor is it the case with the CNOOC, which by virtue of China’s legislation has the right to keep 51 percent of any oil findings made by foreign companies in the South China Sea. (SEE HERE)

I don’t even want to think about what will become of the above-mentioned South China Sea in a few years.

In this context, monstrous amateurs like BP almost inspire compassion. Can anyone imagine what would have happened if the Macondo well (yes, like the name of the town from “One Hundred Years of Solitude”) at Deepwater Horizon were the property of a state-owned company of a country that wasn’t the U.S.? In that case, without a doubt, the incident would have turned into a diplomatic problem, especially if the company at fault were property of some “anti-imperialist” government. We would be facing boycotts against U.S. products, threats of tax increases or God knows what.

At least large oil companies have to fight with shareholders, ecological groups, regulators and politicians. On the other hand, it is certain, they have the economic power to lobby the whole world. But compared to state oil companies, their margin of maneuver is much smaller at all levels.

Therefore, paradoxically, what has happened with Deepwater Horizon is the least bad thing that could happen, because it affects one of the less bad companies in one of the less bad countries (in spite of the power oil companies have in the U.S.).