TABLE OF CONTENTS In 1950, world oil production stood at 10 million barrels a day (Mb/d), but within twenty years it had risen to 45 Mb/d, a staggering near five-fold increase. I call it the Growth Epoch. At first sight, you would be forgiven for thinking that this must have been a golden age for oil. But in fact there were darkening shadows, and the rapid growth was in a sense a reaction to a new uncertainty and insecurity. The companies had no intrinsic reason to flood the world with cheap oil, which, had they been assured of their future, would have been contrary to their long term interests. There are several reasons why they began to dig into capital, which I will explore in this chapter.
As was noted in the last chapter, the Soviet Union had formally expropriated the foreign owners of its oil in 1928, and Mexico did the same ten years later. They were ripples on the pond compared with the waves that enveloped the industry only one year into the Growth Epoch.
For several years prior to 1950, BP had been in dispute with Iran over the level of government take. The Iranians found it inequitable that they should receive royalties of 90 million while the Company registered a profit of 250 million, half of which went to the British government, holding fifty-one percent of the shares. The well-worn cries of foreign exploitation rang in the Iranian Parliament and in the streets. The most outspoken and...
