Thread: You should all feel sorry for Caltex AU

Go easy on Caltex, they pay my bills

What needs to be remembered is that Caltex is an oil importer, refiner, and distributor/retailer. Originally a partnership between the Californian Oil Company and Texaco it is now (and has been for years) an Australian listed company.

A lot people seem to think that the oil industry is made up of a few major companies that are vertically integrated from production to retail sales. This was a reasonable view of the industry prior to the 1970s when the industry was dominated by the "Seven Sisters" or "Majors", but even then it was not accurate, with a dozen or so "large independents" and thousands of small oil companies, plus a few government oil companies such as CFP and Pemex. Most of the world's oil production was owned by the

By the end of the seventies the scenery had changed dramatically, with most of the world's production owned by governments, and the government take dramatically increased even where the government did not own the production (e.g. Australian ORRs up from 5% to over 30%) and OPEC control of production resulting in a dramatic price increase.

Then in the eighties the price of oil, with production increases (resulting from new discoveries prompted by the increased price) oil prices dropped to just about the lowest (in real prices) ever, resulting in mergers throughout the oil industry, and a massive slowdown in exploration, setting the scene for the present situation.

There are now a few major companies, such as Exxon-Mobil and Shell, but the only company even slightly resembling the majors of the pre-OPEC era is Shell, and collectively they represent a far smaller proportion of the industry than they ever have. There are far more "large small" oil companies than ever, many of which are not traditional oil companies, and most of which are only explorers/producers. Most oil is shipped by independent traders, and as has been the case since the 1970s, to the extent anyone "controls" the industry, it is the government oil companies in the major producing countries. Few of these new players have seen any incentive to get into refining, and most refineries are the same ones that were producing in the 1960s, either still owned by the same majors or their successors or which have been sold.


John