The true influence of Big Oil

Yesterday I had a couple of lengthy conversations about the vagaries of the energy commodity markets, discussing with a couple of knowledgeable individuals what, as we learned later in the day, constituted the gist of Ursula von der Leyen’s speech, hinting at a possible reform of the TTF (Title Transfer Facility) market.

This has been on the table of the EU leaders for a few months, now, spear-headed by Italy’s Mario Draghi and supported by several other countries such as Spain, Portugal, Greece, France and Belgium. So far Germany sat on the fence and the Netherlands opposed any gas prices reform.

In my conversations yesterday we wondered why would the Dutch oppose what in a post I called “the reckless pillaging of Europe’s families and businesses by greedy Oil Barons” and I kept chewing on this question for the rest of the evening until this morning at breakfast, when this chart flashed in my mind:

What the chart says is that while there’s no doubt that any oil major is a formidable force and yields an immense amount of power within its country, the relative weights vary wildly.

We know that the Saudi economy depends on oil, as demonstrated by the chart where Saudi Aramco’s revenues are over half of Saudi Arabia’s GDP; we also know that the same is true for Russia, Canada and Norway for example, :its three big oil companies together account for about a quarter of Russian gross domestic product, and the share is lower but still significant in Canada or Norway.

What really surprised me is that the Netherlands’ GDP depends on oil even more than Russia’s: Shell’s 2021 revenues accounted for a whopping 29,12% of Dutch GDP!*

In other words, while we all know that Saudi Arabia and Russia are run by Oil Barons, I hadn’t realized until now that this is also true for the Netherlands.

When I look at this (dis)proportion, I think Holland must be extremely careful lest its Government policy (i.e. the interests of the Dutch nation) become a proxy for the interests of the Shell Oil company.

Or maybe they’ve given this up altogether.

Note (*) I know, I know, Shell is now headquartered in the UK, but since we are talking about influence and political clout, I think the reasoning is still valid…

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