Franz J.T. Lee, November, 2007

Why is Petroleos de Venezuela going up, and Exxon Mobil going down?

A year ago, on Monday, August 07, 2006, in an article published by, I was explaining to our readers how easy it is for oil moguls like Exxon Mobil 'to make a $1 billion profit a week.'

In fact, this is what capitalism is all about, anywhere on the globe.

If we really want to realize the exact opposite of capitalism, then we have to introduce its dialectical negation in Venezuela, that is, socialism based on a non-capitalist project. Only in this way we could still escape the military pangs and ideological fangs of the imperialist quagmire which permanently is sustaining all the mighty oil giants.

The titanic battle between PDVSA ... the economic heart beat of Venezuela based on the new Bank of the South ... and Exxon Mobil ... which represents the agony of a moribund petro-dollar based on a bankrupt International Monetary Fund and World Bank ... will decide the future of Venezuela, will decide to launch either socialism or barbarism in the Americas.

In the above mentioned editorial, I underlined that a sine qua non for this armed assault on the 'wealth of nations' is to be sponsored and defended by a fascist governing military clique of coupsters, who as we know, by means of a double electoral fraud undemocratically has usurped State power and therewith world hegemony. All this is being done in the name of 'democracy,' of fighting 'international terrorism,' by using an arsenal of fatal weapons of mass destruction.

In a nut-shell, for multinationals like Exxon Mobil to possess 'private property,' to gain billions of dollars per week, permanently hundred thousands of innocent, poor, starving Arab (also other) men, women and children in the Mideast (and elsewhere) have to be maimed for life, be murdered by the stroke of a pen, be intoxicated by low intensity atomic warfare, be blown to pieces by the 'mother of all bombs' and to be massacred like flies, like recently in Afghanistan, Iraq and Palestine.

And why?

* Because Big Brother needs their oil,
* because he has an energy crisis,
* because he needs about $4 billion foreign petro-dollars a day to survive,
* to outlive his trillions of dollars of fiscal deficit and internal and external debts.

Petro-dollars are getting more and more scarce by the day, the world looks for capitalist light at the end of the Chinese tunnel. Once upon a time, 'western' socialists and communists were fascinated by the revolutionary ex oriente lux of Lenin, Mao Tse-Tung and Ho Chi Minh, now it is the turn of the capitalists. Their insatiable hungry gaze is directed towards the land of the rising sun, towards China.

However, the very same globalized disappointment is awaiting eastern foreign investors: divine ominous news from the mouth of Bush about a possible global nuclear war is already written on the Great Wall of China. The eastern peoples still suffer from the United States atomic crimes of Hiroshima and Nagasaki. Also present events in Pakistan, a nuclear power, are not improving the heated political situation. The time for huge capitalist profits is running out at the speed of scalar waves. This affects companies like Exxon Mobil, but also Petrobras and PDVSA.

Concerning the wars in the Mideast which are related to the construction of strategic pipelines for oil, gas and water, I stated:

"What is happening in the Mideast is not a simple isolated political vendetta, it concerns carefully planned military strategies, that were developed by Israel and the USA over decades and which concern oil, gas and water pipe lines, also power struggles to check-mate future competitors, by cutting off their energetic supplies in time." (ibid.)

While the above is taking shape, Israel and the USA are flirting with India (Pakistan is the 'bad guy'), in reality, the potential enemies are not Iran or Venezuela (their 'bad luck' is that they swim in oil), it is China. Surely, all this has very little to do with producing future atomic weapons, mini-varieties can be purchased anytime on the Eastern European and Asian black markets for weapons of all genres.

All over the globe, for the sake of accumulation, profits and power, it is obvious that capitalists would sell their very mothers to the highest bidder. In fact, should it become necessary for their global survival. they would sell the very ropes on which they will be hanging themselves in the Far East. If they do not do this, then, by definition they are not capitalists. Capitalists are not mystical entities, they are the bosses and shareholders of Exxon Mobil. The United States government protects and guarantees their class interests, private property of oil wells and profits. Their very master-slave existence is to buy and sell, to sell and buy. Currently, for the sake of global hegemony the big powers are even playing Russian roulette with life itself on planet earth.

Let us now look at the mammoth profits of Exxon Mobil and its shareholders. Of course, what follows is also valid for other global oil giants like Royal Dutch, Chevron, Conoco-Phillips, British Petroleum, Total and ENI.

A year ago, Paul Sheehan of the Sydney Morning Herald told us that "the world's biggest oil company, Exxon Mobil, made a profit of $A13.6 billion last quarter. That works out at $54 billion a year, or $1 billion profit a week.

Last week, all five global oil giants reported their quarterly results and all told the same story: Royal Dutch $9.5 billion profit (up 40%); BP $9.5 billion (up 30%); ConocoPhillips, $6.8 billion (up 65%); and Chevron, $5.7 billion (up 19%). That's a collective quarterly profit of $45 billion -- almost $3.5 billion a week."

Last year we were informed by Michel Chossudovsky that there was a direct relation between the bombing of Lebanon and the inauguration of the Ceyhan-Tblisi-Baku (BTC) oil pipeline, which links the Caspian sea to the Eastern Mediterranean. "This largest strategic pipeline in the world will pump more than a million barrels of oil to metropolitan markets."

He explained the international imperialist, corporate conspiracy, the intimate relation of the oil giants to the North American-European-Israeli War in the Mideast:

"One day before the Israeli air strikes, the main partners and shareholders of the BTC pipeline project, including several heads of State and oil company executives were in attendance at the port of Ceyhan. They were then rushed off for an inauguration reception in Istanbul, hosted by Turkey's President Ahmet Necdet Sezer in the plush surroundings of the Çýraðan Palace. Also in attendance was British Petroleum's (BP) CEO, Lord Browne together with senior government officials from Britain, the US and Israel. BP leads the BTC pipeline consortium. Other major Western shareholders include Chevron, Conoco-Phillips, France's Total and Italy's ENI. " (ibid.)

Now, a year later, the Associated Press correspondent John Porretto, in an article informs us that the profits of Exxon Mobil, the world's biggest publicly traded oil company, are down, while its oil sales are at record. This seems to be absurd. What is happening?

According to Parretto, Exxon Mobil's "profit fell 10% in the third quarter as higher crude prices failed to offset lower natural gas prices and refining and chemical margins. The profit decline came even as Exxon Mobil set a US record for quarterly revenue. But the earnings figure was below expectations of Wall Street analysts, and the energy company's shares fell 2.2% in afternoon trading."

Worse even, in the epoch of globalization, of the realization of world capitalism, the net income of the world's biggest oil company, Exxon Mobil, is declining.

"Exxon Mobil said net income declined to $9.41 billion, or $1.70 per share, in the July-September period from $10.49 billion, or $1.77 per share, a year ago. Its profit in the third quarter of 2006 was the second-largest ever recorded by a publicly traded U.S. company" (ibid.).

However, compared to the meager budgets and the miserable income of all African states, let us look at the real mammoth income figures of Exxon Mobil, to note the level of global capitalist exploitation, and to see on what totally absurd degree global corporations could worry and become bankrupt:

"For the first nine months of 2007, Exxon Mobil reported net income of $28.95 billion, or $5.15 a share, compared with income of $29.25 billion, or $4.86 a share, in the year-ago period. Revenue was up slightly to $287.9 billion from $287.6 billion." (ibid.)

How will Exxon Mobil solve its huge problem? By 'aggressively exploring and tapping new sources of hydrocarbons.' And, where?

In 'regions such as the Middle East, Europe and Africa ... as the Gulf of Mexico':

"Despite Exxon Mobil's lower year-over-year profit, Vice President of Investor Relations Henry Hubble said the company's fundamentals remain strong, and it continues to aggressively explore and tap new sources of hydrocarbons. He said the company has launched six major oil and gas projects since the start of the year, in regions such as the Middle East, Europe and Africa. During the quarter, Exxon Mobil also was the high bidder for Gulf of Mexico leases totaling more than 70,000 acres." (ibid.)
* Why not Venezuela?
* What happened with the exploration of oil and gas in the Orinoco Basin?
* Did Venezuela cause that the income and profits of Exxon Mobil are diminishing?

Historically, within the context of the oil plan 'Apertura,' during the second government of Rafael Caldera, under very favorable conditions various transnational corporations, among them, Exxon Mobil, were allowed till very recently directly to exploit oil in the Orinoco Delta. They paid a negligible amount of taxes to the Venezuelan State, and hence made super profits. The Bolivarian government of President Hugo Chavez Frias stopped this huge exploitation of Venezuelan energy resources, by legally declaring the past imperialist petroleum contracts null and void.

In return, it suggested the formation of joint ventures with the State oil company, Petroleos de Venezuela (PDVSA), in which the government would possess the majority of the oil shares.

Some companies like Chevron and Texaco accepted the new deal of mixed exploration; others like Exxon Mobil and Conoco-Phillips (which internationally claim to have been harmed economically, and that their rights have been forfeited) decided to stop production and to leave Venezuela.

In the meantime, the latter, of course, major oil companies of the United State of America, now, in November 2007, are filing claims in an international tribunal.

As a result of this revolutionary move, Venezuela at last gained economic control over its oil and gas production in the Orinoco Delta, by having captured politically and legally 80% of all the joint shares. Together with PDVSA, a number of corporations, mainly from China, Russia, India, Italy, France, Britain and Brazil, have commenced with the joint oil exploration and exploitation of the Orinoco Delta.

Whether all this will contribute economically towards the benefit of international revolutionary solidarity, and towards the fomenting of real, true socialism in Venezuela and the Americas, only the future will tell.

But, why is PDVSA going up, and Exxon Mobil going down?

Answering this central question would necessitate a thorough Marxist study of contemporary political economy in the final stage of capitalism, of Globalization.

Here it is sufficient to quote a question posed to me by our VHeadline Spanish editor, Jesus Nery Barrios, and my respective brief reply to his query.

He asked: Oil is currently selling at almost $100 a barrel, why is 'Big Oil' losing capital and profits? What is going on?

In my specific Rembrandt-esque dialectical way I simply replied:

"What is going on is what scientifically and philosophically the erudite economists and theoreticians of capitalism and globalization have predicted more than 150 years ago in the 'Manifesto of the Communist Party' and more precisely in CAPITAL (also their scholarly proletarian followers, like Lenin, Trotsky, Rudolf Hilferding, Rosa Luxemburg, Ernest Mandel and others): concentration, monopolization, dangerous organic composition of global capital, as a result of mortal technology, driving physical (and intellectual) human labor forces out of centralized production, precisely still the only producer of real surplus value, of real capital for Exxon Mobil and others, and by replacing it with machines, robots and computers, which do not consume, do not realize capital. Hence on a world scale, as the 'obsolete' Marx has predicted, we can now witness the falling of the average rate of profits, leading to chronic over-production crisis, to global recession and depression. If not stopped very soon by scientific world proletarian socialism, then the whole process could end up in global barbarism."

Because of the Bolivarian Revolution, of favorable oil prices and revenue, PDVSA can still march forward, shielded by the global winds of change, however, soon it has to decide whether to step into the global capitalist morass of private property or to cross the global Rubicon towards human creativity, creation and emancipation.

Exxon Mobil and consorts are already feeling the icy imperialist tornadoes coming from the melting icebergs of the coming Chinese winter of despair.

Really, cum grano salis, only Marxists can seriously explain this global capitalist contradiction, can unravel this absurd corporate dilemma of gaining and losing capital and profits at the same time; it reflects the decadent obsolescence of the whole capitalist world order.