50 SOCIAL SCIENTIST
bauxite, iron ore., and even jute and tea—to undertake similar actions. The objectives of this article are threefold: to examine the implications of the recent changes in the pattern and structure of the world oil industry for (a) the multinational oil companies who until recently had been its dominating force, (b) the oil producing countries themselves, and (c) the poor oil consuming countries like India.
MULTINATIONAL OIL COMPANIES
The four major features of these entities are their (a) vast size (b) multinational character (c) vertically integrated organization and (d) oligopolistic relationship with one another. The vast size and financial resources of the majors enable them to enter into costly, high risk, capital intensive ventures like finding oil in Alaska or the North Sea. Their massive investment in research and development helps to maintain their technological superiority over rivals. Very few countries of the world possess the resources, skilled manpower, and intimate knowledge of the industry and the world market to bargain on equal terms with these mammoth entities. One should recall that it was not until the early sixties that the Indian government became aware of the intricacies of the vertically integrated nature of the operations of the multinational oil corporations. The superior bargaining position of the multinationals was felt during the early fifties when they stopped the Indian government from buying oil from the nationalized undertaking of the Iranian government led by Mossadeq. Whereas the oil companies would want to maximize the aggregate profit over all its operations in all the countries in which their affiliates and associates are functioning, the governments of oil producing countries are interested in increasing their own revenue from oil exports. Because these firms are multinational, their activities often give rise to serious conflicts between their global objectives and the national objectives of the host governments.
In the Indian context a good example of this type of conflict would be the dispute over the feedstock for the proposed Madras fertilizer plant to be operated by American International Oil Company during the sixties. Whereas the multinational company was interested in using liquid ammonia from East Asia where it was produced at a small marginal cost as a by-product of oil and gas production, the Indian government was keen to use surplus naphtha which emerged as one of the joint products of the refinery operation in the country and for which at that time there was no local or international market. One implication of this multinational character is that conflicts between the national governments and the oil companies often become matters of international diplomacy and involve the foreign offices of their mother countries. An example is the stoppage of US aid to Ceylon after the nationalization of the marketing companies owned by US firms.
The vertically integrated nature of their operations—participation