Royal Dutch/Shell Oil Company: The Management of Crisis An overview of the oil industry After years with a low profile, thanks to stable prices and ample supply, the oil industry-along with the rest of the energy business-is back in the spotlight. The United State these days feels as if it has been transported back in time to the 1970s, when rising energy prices helped to push the economy into a recession and to generate a national dissatisfaction. A year ago, oil prices surpassed $30 a barrel for the first time since 1991. Last summer (2000) gasoline prices shot up, exceeding $2 a gallon in parts of the Midwest. This past winter natural gas prices went through the roof. At the same time, utility deregulation has created an electricity supply problem in California, resulting in periodic blackouts in the nation's largest state. The experts professto be baffles by the soaring prices. Many blamed the natural gas problem on the cold weather; others say consumers went overboard in switching from oil to natural gas. Yet others charge that the federal government and environmentalists discouraged exploration in the 1990s. Rising oil prices were attributed to miscalculations on the part of OPEC planners and domestic refiners. Some fingers were pointed at the U.S. penchant for gas-guzzling SUVs.Mainstream analysts avoid another, more compelling explanation: that the increasing concentration of ownership in the energy industry is reducing competition and thus contributing to price inflation. The petroleum industry has seen a remarkable wave of mergers in the past few years. Exxon took over Mobile. British petroleum swallowed Amoco and the Atlantic Richfield. Chevron recently acquired Texaco. Phillips Petroleum took over Tosco Corp., creating the second largest refining operation in the country, after that of Exxon Mobile. What were once known as the seven sisters-the world's largest integrated oil and gas producers-were reduced...
