The publication of the ECE report on oil prices in Western Europe happened just as, in Italy, the bitter controversy over oil, which, as is well known, has been discovered in Sicily and Abruzzo, was becoming more and more intense. It is worth reporting the findings, as far as possible, because one cannot understand the struggle currently unfolding in Italy over the oil wells without having a general picture of the all-powerful international organisation that controls the world market for this precious liquid.

The capitalist exploitation of the oil industry is a matter of the utmost importance for those who, like us, are concerned daily, not with finding confirmation of the theoretical and political positions of Marxism, which has already garnered more than enough, but rather with demonstrating how no contingent event proves impossible to fit into the scenarios predicted by Marxism a century ago. Now, whilst it is absolutely irrelevant whether or not they suspected as much, the senior officials of the United Nations Economic Commission for Europe (ECE), based in Geneva, have, in drawing up the aforementioned report, provided yet further proof that the economic and political mechanism of capitalism does not escape the laws that Marx discovered long before the present phase, which Lenin defined as ‘imperialist’, was even a potential reality.

The ECE report has ‘revealed’ the mechanism through which the international oil cartel manages to realise immense superprofits from Middle Eastern oil, by imposing a single market price equivalent to the price of production of the lowest-yield wells. It has also ‘revealed’ that the trade in mineral oils, especially in the Middle East, is monopolistically controlled by eight major companies backed by US, British, Dutch, and French capital. The result is that Western Europe pays for the oil it imports from the Middle East at six times its price of production. But are not the British, Dutch, and French, whom we have seen identified as members of the gigantic international oil consortium, themselves part of Western Europe?

The left-wing press, which has for some time framed the issue of the management of Italian oil wells in nationalistic terms, has presented the findings of the ECE report in such a way as to make the excessive exploitation carried out by the gigantic oil cartel appear to stem from the deprivation of independence and sovereignty inflicted upon smaller states by the giants of imperialism. Such a one-sided interpretation fits well with the positions of blatant economic nationalism adopted by the so-called proletarian parties on the subject of oil. Certainly, the material power of States, that is, political force, is an element that cannot be separated, in the struggle for the capitalist appropriation of oil, from economic and financial power. But the fixing of the selling price of oil controlled by the international cartel, which is the starting point for the realisation of enormous superprofits, obeys an essentially economic law that Marx set out a century ago in his theory of rent. We must therefore wage a serious struggle against its social effects, not by calling for impossible self-restraint on the part of the major imperialisms, but, on the contrary, by waging a revolutionary struggle against the historical foundations of capitalism.

Has the ECE report proven that Western Europe is subject to exploitation by the four-party cartel? Certainly. But, let us repeat, at least three of the very nations whose capital and flags feature in the oil trust are part of Western Europe. The problem, then, cannot be posed in terms of nations, but rather in terms of classes. This becomes clear as soon as it is noticed that a different policy on the part of the consortium is impossible, because, so long as the laws of the mercantile and monetary economy remain intact, it would spell ruin for the oil industry, from which there would follow a death threat to the very preservation of the bourgeois class.

The ECE report has come to adduce yet further proof, if ever there were need of it, that oil, like other articles of monopoly, for so long as it remains a commodity exchangeable for money, that is, so long as capitalism exists, will be sold under the noose-conditions imposed by the international cartel. The laws of the market prohibit the same monopoly commodity from being sold at different prices, even if certain economic conditions allow it to be produced at different costs. Oil, due to the differing degree of efficiency of wells according to the geological configuration of the field and the age of its exploitation, is produced at different costs. Certain wells nearing depletion have a very low yield and therefore produce at high costs; others, recently drilled or benefiting from natural factors, such as, for example, the aid of natural underground gas pressure, which renders pump-installation expenses unnecessary, register a very high degree of productivity, and therefore lower production costs. Things being as they are, it is easily understood that, if the selling price of oil were matched to the price of production of crude extracted from high-yield wells, a certain death sentence would hang over low-output wells. But as total production is limited, low-yield wells must also be kept operational, and this means that the total product of the entire chain of firms, controlled by the consortium, is tied to a single price, which is ultimately the price of production of the least profitable wells.

Why is oil from the Middle East, which registers the lowest production costs, sold at a market price six times higher? The United States commands the highest crude oil production in the world. Out of a total of 613 million tonnes produced, in order of magnitude by Venezuela, Kuwait, Saudi Arabia, Iraq, Iran, Indonesia, and other Middle Eastern countries, the production of the United States alone accounts for a full 312 million tonnes, or precisely 50 per cent of global crude oil production, excluding the oil powers of the Russian bloc (USSR: 58 million tonnes and Romania: 10 million tonnes).

However, the quantitative superiority of American production is not matched by an equivalent lead in terms of yield. Indeed, it is gathered from the ECE report that daily output of US wells stands at 31 barrels of mineral oil, whilst Venezuela’s production records 200 barrels per day, which in turn is outstripped by an enormous margin by the wells of the Middle East (5,000 barrels per day). Kuwait, moreover, holds the absolute world record for productivity, reaching as high as 9,000 barrels a day! How can the low yield of US wells be explained? We have already said it: it is explained by the intensive exploitation of the deposits, which now show signs of depletion. The United States manages to maintain crude oil production at its present extremely high quantitative levels by continuously drilling new wells. According to a statistic compiled by a well-known weekly, American oil magnates are said to have drilled an average of 28,000 wells a year in the decade 1937–1947. This figure is said to have risen to 33,000 in 1947, and to 40,000 in 1948. In almost a hundred years, the wells drilled by US oil companies, again according to the weekly in question, would amount to something like one million. It is clear that the low average yield of wells, resulting from the gradual depletion of natural reserves and the enormous costs of exploring for and drilling new wells, (it is estimated that a well costs between 36 million and 800 million lire) have a significant impact on crude oil production costs, which does not occur, relatively speaking, in the case of the ‘young’ oil-producing regions of the Middle East.

To bridge precisely the wide cost gap between US oil and those of the Middle East, the economic law that Marx described in his theory of rent comes into play. Since the selling prices of American oil cannot be lowered, under penalty of the economic bankruptcy of the firms concerned, a single price is therefore imposed on the oil controlled by the international cartel across various regions of the world, a price, precisely, that safeguards the profit derived from high-cost oil. As a consequence, the international cartel comes to realise, in addition to normal profit, enormous surplus profits (Marx’s differential rent), which are precisely given by the difference between production costs (for Marx, the price of production includes the equivalent of constant capital, variable capital, and profit) and the market price.

Given the particular socio-historical and constitutional conditions of the countries of the Middle East, gigantic oil producers but not managers of the wells, which local governments and semi-absolutist monarchies grant in concession to the international cartel, it would seem that they alone could be described as the primary targets of the exploitation carried out by the oil cartel. The truth, however, is that it is precisely the powerful and proud states of civilised Europe that make themselves docile instruments of the stifling policy of oppression of the cartelised oil magnates. By this we do not in the slightest intend to concede to the ideological aberrations of the pseudo-Marxist parties, for whom it is an everyday matter to isolate from the unitary body of the ruling class a ‘national’, democratic, and patriotic bourgeoisie (Togliatti’s ‘honest capitalists’) and absurdly set it in opposition to the imperialist powers. It is not Europe, a term that says nothing socially, but the working masses of Europe who, in the final analysis, pay the immense superprofits of the oil cartel. On the contrary, the local bourgeoisies participate, directly or indirectly, in the gigantic banquet of profits, not excluding the Italian capitalists who, through joint interests in the refineries on the peninsula and through shipping freights for the transport of crude oil, gobble up large slices of profit.

Europe imports almost all of its mineral oil requirements from the Middle East. In 1952, out of a total of 69.5 million tonnes of crude oil imported, Western Europe sourced 64.8 million tonnes from the Middle East alone, equivalent to over 90 per cent of the total. The importing countries do not consume all the crude oil they import, as they are able, due to the growth undergone by the refining industry, to process an amount of crude oil exceeding domestic demand. Indeed, in July 1954, European crude oil imports approached 97 million tonnes, whilst consumption did not exceed 75 million tonnes per year. There is, therefore, a significant margin between imports and consumption, which is re-exported in the form of refined products. And this proves, to the chagrin of L’Unità, how derelict Europe, that is, the European capitalists, efficiently traffic the precious liquid extracted from the bowels of the Arabian Peninsula or the plains of Mesopotamia and Iran.

The annual value of production of Western Europe’s refineries, which process crude oil into petrol, naphtha, kerosene, bitumen, etc., stands at around 2.2 billion dollars. But the companies that run the refineries get only a small slice of such a substantial pie, and this enrages the social-communist press, which sees this situation the proof that poor Europe languishes, as a poor, exploited victim, in the clutches of the international cartel and, by extension, of the United States. There is no disputing the fact that, as shown by the ECE report, the international oil trust pockets over 75 per cent of the value of Western Europe’s refined oil production, firstly because the price of crude oil accounts for almost half of it, and secondly because transport costs (shipping freights) absorb another quarter. In other words, out of a total value of 2.2 billion dollars, Western Europe’s refineries must make do with around 25 per cent, amounting to 550 million dollars, from which they must cover processing costs (working capital and wages) and corporate profit. But who controls the refineries?

Faced with such ‘injustice’, the social-communist press, which is nationalist in fact and communist in name, has a ready-made solution: the dissolution of the international cartel, freedom for Europe (read: for European capitalists) to import crude oil from the Middle East without having to pass under the yoke of the American-Anglo-French-Dutch cartel. Aside from the fact that the dismantling of the cartel would cause a tremendous upheaval in the oil industry, such as to jeopardise the economic, and hence social and political, stability of the world’s leading capitalist states, who know this all too well and have no intention whatsoever of committing suicide; aside from that, one must ask who would benefit from a reduction in the price of crude oil. Is there really any need to ask? The European refining capitalists! But the dividing line separating European companies from the international oil cartel exists only in the demagogic inventions of reactionary nationalists disguised as socialists and communists. And proof of this lies not only in the fact that the international cartel includes, as we have said, oil companies from Great Britain (Anglo-Iranian), Holland (Shell), and France (Compagnie Française des Pétroles), which also control vast and dominant sectors of refining, but also in the no less important fact that considerable local capital (L’Unità would say: national or nationalised capital, if one were discussing, for example, Eni) is invested in the refining industry in joint ventures with foreign capital.

In fact, to stay within the context of Italy, there are refineries directly managed by oil companies controlled by the international oil trust. Examples: Inpet, which is based in La Spezia but is a subsidiary of the Anglo-Dutch Shell group; Esso-Standard in Trieste and Socony-Vacuum in Naples, whose corporate dependence is openly disclosed. But is this the case for all the other refineries in Italy? Let us answer with what we read in L’Unita of 5 March 1955, namely the following passage: ‘Foreign capital is not always alone (in the crude oil refining branch). Frequent is the system of “sharecropping”, of the partnership between American, British, and Italian capitalist companies and even (listen! listen!) between foreign private companies and Italian state-owned groups. This is the case with Sarpom in Trecate (Novara), financed in equal parts by the Mexican company Caltex and by Fiat; with Irom in Porto Marghera (Venice), which belongs to Agip (51 per cent of shares) and to Anglo-Iranian; Stanic, which has plants in Livorno and Bari, whose capital (14 billion) is 50 per cent Standard and 50 per cent Anic; then there is the case of Anic itself, 48.5 per cent of which is owned by Eni, whilst the remainder is held by numerous shareholders, including, at least until two years ago, Montecatini, an ally, let us not forget, of Gulf; finally, there is the case of Purfina, which owns four refineries (including the famous Permolio in Rome) financed (70 per cent) by the Belgian company Petrofina, which claims not to be part, at least officially, of the international cartel, but which manages oil wells in Canada’. Here is who controls the refineries!

After having read this well-documented article from L’Unità (at Via Botteghe Oscure there is certainly no lack of information resources!), one becomes even more convinced of just how much falsehood and demagoguery are packed into the conclusions that, politically, are drawn by that same party newspaper. Selling Persian oil in Europe at six times less – as a headline of L’Unità screamed in a tone of caution – would certainly benefit Italian refineries, which would no longer have to pay, for just the crude oil and the shipping costs for its transport, almost three-quarters of the total production value. They would end up paying a figure six times smaller. Consequently, petrol and diesel prices would fall, the costs of the mechanical industries would fall accordingly, and the Fiat 600 would be affordable for everyone... and to achieve this, in the meantime, vote for the PCI and PSI lists, which are surely digging a grave for the international trust! As if our inveterate businessmen were unaware of these things!

Much to the chagrin of the social-communist reformers of capitalism, cost reduction and increased sales volume have, ever since the first bourgeois capitalists appeared in the world, constituted the number one commandment of their practical economic activity. If Western European refineries associate themselves closely, through direct or indirect coalitions, with the member-companies of the international cartel that monopolises the crude oil trade; and if they follow its pricing policy rather than opposing it, this fact is explained by a vital necessity so unavoidable that it must override and silence the sectional and particular interests (oil producers, refiners, maritime shippers, etc.) that clash within the world of oil magnates. This supreme necessity can be none other than the preservation of class rule.

In order to keep the stronghold of capitalism and global counter-revolution (the United States) afloat, which would be severely undermined by a possible collapse of the oil industry, the selling price of crude oil that the international cartel imposes must remain at a level reached by the high production costs of American wells. For this sacrosanct class reason, Middle Eastern oil, which could be sold for almost thirty cents of a dollar, instead comes to cost one dollar and seventy-five cents a barrel. If such an exorbitant price were to undergo reductions, the economic viability of exploiting the high-cost deposits in the United States would be lost: the uncontrollable competition from Middle Eastern oil would make it necessary to close many American wells. But whom would a disaster in the American oil industry benefit? Certainly not the European members of the international cartel, who share fabulous superprofits with their transatlantic partners, a share of which goes to companies with mixed foreign and national capital. Perhaps it would benefit the oil exporters of the Russian-Eastern bloc, who, it is true, charge lower prices than those of the international cartel, but do not possess the financial and military power that stands behind the four-party monopoly of the Western bloc.

The difference between the price of production (to use Marxist terminology, which defines this term as the value resulting from the sum of the three parts of constant capital, variable capital, and profit) and the market price of the oil controlled by the trust is derived from a calculation established by the compilers of the ECE report. These people have established, based on the amount of royalties paid to Saudi Arabia, that on 300 million barrels of crude oil, Aramco, a US company linked to the international trust, has made a profit of 425 million dollars last year, i.e. a profit of $1.40 per barrel. Subtracting this figure from the market price of $1.45 per barrel, it follows that the price of production (still per barrel) of the oil extracted by Aramco comes to precisely around thirty cents of a dollar.

Who pays for this enormous surplus profit, this boundless differential rent? The answer given by the social-communist press is as idiotic as it is defeatist: Western Europe! But the old continent is home to a class society which, if it were not already proven that these classes have opposing interests, could easily be proven now by seeing in what position the European bourgeoisies stand vis-à-vis the oil cartel. We have said it before and we repeat it: the European bourgeoisies are themselves contracting parties of the international consortium, or have immense interests indirectly linked to its policies (production and sale of refined products, transport of crude oil, etc.). If, therefore, European capitalism partakes in the gargantuan banquet of oil superprofits, it is clear that these must come from the labour and blood of the European working masses. That is why we said earlier that the main object of exploitation and the richest colony of the oil trust are, far more than the thin indigenous wage-earning stratum working in the wells of the Middle East, the wage-earning masses of Western Europe. What, then, will become of the foolish and counter-revolutionary social-communist positions that claim to reconcile the class interests within the national sphere and to oppose such an absurd bloc of force against the encroachment of ‘foreign capital’? The capital managed by the oil trust, if one has understood what has been set out so far, is, strictly speaking, neither American nor British nor French nor Dutch; it is, on the contrary, a power without a name and without an international bourgeoisie, of the entire camp of capitalist reaction.

How, then, without resorting to the kind of vote-factory demagoguery suited to snatching electoral votes from the foolishly patriotic masses of the petty bourgeoisie, can one hope for a united front of the classes, a union sacrée of the nation, against the international oil cartel? Not to mention the immediate interests and direct financial benefits that the local bourgeoisies derive from the oil trade, other powerful reasons lead the governments of Western Europe, especially those with low economic potential, to preserve for themselves the favour of the Genghis Khans of oil. These are, first and foremost, the ever-growing indebtedness of governments to the imperialist centre and the chronic imbalance in the balance of payments, which compels governments to secure export markets, a goal that can only be achieved through customs and trade concessions from the major economies. Such is particularly the case for Italy, for which the rumours of ongoing negotiations between Washington and Rome, under which the United States would finance the Vanoni Plan, obtaining the green light in the race for the oil of Sicily and Abruzzo, cannot be without foundation. Secondly, a no less decisive reason preventing European governments from antagonising the oil cartel is the fact that behind the eight major companies monopolising world production (except for the share held by the Russian-Eastern bloc) stands Anglo-American military power. If Persian oil is sold, as L’Unità laments, at six times its price of production, this is also due to the ability of the governments in Washington and London to hire counter-revolutionary movements (as the overthrow of the Mossaddegh regime in Persia demonstrates) and to their stockpiles of hydrogen bombs.

In conclusion, oil can be wrested from the clutches of the monopolistic octopus only on the condition that the H-bomb is wrested from the hands of the Washington government; that is, on the condition that the power of intimidation and terrible retaliation wielded by the greatest capitalist power is destroyed. But such a colossal undertaking, destined to usher in the era of the greatest revolution in history, cannot be carried out by inviting the proletariat to collude with its own bourgeoisie against ‘foreign capital’. Imperialism can be fought and destroyed only on the condition of uniting the world proletariat into a single revolutionary camp against the bourgeoisie and capitalism, striking the first blows directly against the domestic bourgeoisie. But such an immense struggle can only be the titanic task of the ‘invincible world revolution’.