Word: texaco
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...production cutbacks to create a shortage the end of which no one can foresee. Politically, governments in the Middle East, Africa, Asia and Latin America are asserting ownership rights to more and more of the petroleum pumped out by the "seven sisters" of world oil: Exxon, Royal Dutch/Shell, Texaco, Mobil, Gulf, Standard of California and British Petroleum. By the 1980s, the international oil companies could become mere contractors in much of the world, pumping oil that host-country governments will own and selling exactly as much as those governments direct, to the customers and at the prices the governments select...
...These people are like animals foraging for food," says Don Jacobson, who runs an Amoco station in Miami. "If you can't sell them gas, they'll threaten to beat you up, wreck your station, run over you with a car." Laments Bob Graves, a Lexington, Mass., Texaco dealer: "They've broken my pump handles and smashed the glass on the pumps, and tried to start fights when we close. We're all so busy at the pumps that somebody walked in and stole my adding machine and the leukemia-fund...
Harder Line. Lately the companies have been taking a harder line against criticism. Last month Texaco headlined full-page newspaper ads: "We're not holding back anything." The ad said that Texaco was supplying comprehensive statistics to federal officials that proved there was a genuine shortage of fuel. Mobil warned in newspapers: "Don't read these ads if you've made up your mind about oil profits." Justifying the corporation's 47% earnings increase in 1973, the ad said: "A company cannot continue for many years to make new investments unless it earns a satisfactory rate...
Despite their rich profits last year, the oilmen contend that their earnings have been modest over a longer period. "In seven of the last ten years," says Texaco Senior Vice President Annon Card, "the rate of return on investment in the petroleum industry was below that of all manufacturing companies." In 1972, Card notes, the oil companies' rate of return on investment was only 10.8%, compared with a 12.1% average for all manufacturing concerns. But if the profits are computed as a proportion of sales, the oil industry ranks far above the average for all U.S. manufacturing industries...
...deeper into debt. A top Manhattan banker reports that 37 of the largest U.S.-owned oil companies have been forced to finance an increasing portion of their capital expansions by going into long-term debt because of difficulty in raising funds through the preferred method of selling common stock. Texaco's Card estimates that, to get financing for its heavy capital needs between now and 1985, "the industry would have to achieve an annual growth rate in net earnings of 18%" -double the annual growth rate of the past decade...