Thin Oil

Antitrust case dropped

Treason, said Talleyrand, is only a matter of timing. So is being a big bad oil jompany. Six years ago when gasoline prices were heading skyward, the Justice Department started an investigation of oil companies for alleged price rigging of Persian Gulf crude flowing into the U.S. Later the case was narrowed to the four U.S. majors who owned and operated Aramco, the Arabian American Oil Co., which pumps Saudi Arabian oil. Last week the Government dropped the case, saying that the firms, Exxon, Mobil, Texaco and Standard Oil Co. of California, no longer had a major influence on the world price of oil. Yawned an Exxon aide: "We'd almost forgotten about it."

Indeed almost everything has changed about the oil business since the case began in the tumult of the mid-1970s. Then, in the face of severe energy shortages during the vicious winter of 1976-77 and huge oil company profits, politicians called for crackdowns on oil companies and demanded that they be split up.

Today the world is awash in oil. Prices have been falling, and OPEC ministers meeting in Geneva last week refused to accede to Iran's demands for price increases. Aramco now buys its oil from the Saudis and does little more than manage the oilfields for the kingdom of Saudi Arabia. U.S. oil consumption has not been as ravenous as it once was, dampened by three years of recession, a genuine concern for conservation and an ever larger fleet of fuel-efficient cars.

Assistant Attorney General William Baxter said of the case against the companies, "There just wasn't anything there." The Government's case seemed to weaken with time. The Saudis refused to allow the four oil companies to disclose information about Saudi oil production. For another, the companies after 1973 increasingly took their production orders from the Saudis. In fact, 1977 was possibly the last year that the oil companies could have influenced the price of oil by regulating the Saudi supply. In any case, Baxter noted that Saudi oil production has fallen to 5 million bbl. daily from its peak of 10 million, so that "control over Saudi production alone may no longer be sufficient to affect the price of oil."

Dropping the case was one of the last official acts of Baxter, 54, who resigned his post the next day to resume his teaching position at Stanford. During nearly three years as head of the Justice Department's antitrust division, Baxter had dropped the Government's 13-year-old suit against IBM and generally made life easier for big companies with an urge to merge. Ironically, it was under Baxter, reluctant trustbuster at best, that the biggest breakup of all was achieved: that of American Telephone & Telegraph. This file is automatically generated by a robot program, so viewer discretion is required.