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What is Big Oil?

Mary McMahon
Updated May 17, 2024
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The term “Big Oil” is used to refer to major oil companies such as British Petroleum, Shell, ExxonMobil, and Chevron. These companies control a large share of the market for oil and petroleum products. The 16% of the world's oil which is available to private corporations is dominated by these companies, which have immense collective economic, social, and political power, especially in industrialized nations which rely heavily on the products of crude oil.

National governments of oil producing nations constitute “Really Big Oil”, which controls 84% of the available global oil supplies. National oil companies are often criticized for being poorly managed and sluggish, which results in disruptions in oil supplies globally. These countries banded together in 1960 to form an Organization of the Petroleum Exporting Countries (OPEC), which coordinates oil production and sets global prices per barrel. In theory, OPEC is supposed to control oil reserves to ensure a steady supply of oil to companies which process it for sale around the world, but in actuality, OPEC dominates the global oil market, wielding a considerable amount of political and economic clout.

In addition to pumping their own oil, Big Oil companies purchase oil from OPEC member nations and export it to processing plants and refineries which can be found all over the world. Using existing data on supply and demand, the oil is refined to yield products such as gasoline and natural gas. In some nations, Big Oil has been accused of manipulating available supplies and prices to turn a profit. Especially in nations where the majority of citizens are forced to drive to commute, fluctuations in gas prices can be frustrating and incomprehensible.

Because Big Oil has limited access to global oil supplies, it works hard to extract oil from sites it is permitted to access. As a result, oil supplies are being rapidly depleted in areas managed by Big Oil, which has also developed techniques for extracting oil from sand, shale, and other materials which harbor trace amounts of the precious resource. The vast reserves held by OPEC members are a source of frustration to Big Oil, because they are being managed inefficiently, and could have much higher yields. Fluctuating oil prices as a result are also difficult to explain to consumers, especially when most Big Oil companies manage to turn a very large profit globally.

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Mary McMahon
By Mary McMahon

Ever since she began contributing to the site several years ago, Mary has embraced the exciting challenge of being a About Mechanics researcher and writer. Mary has a liberal arts degree from Goddard College and spends her free time reading, cooking, and exploring the great outdoors.

Discussion Comments
By anon338514 — On Jun 14, 2013

What country is the biggest supplier of oil to the US?

By anon338513 — On Jun 14, 2013

When was the term "Big Oil" first used in the US?

By ysmina — On Jun 05, 2011

I generally don't hear very good things about Big Oil. But I read recently about a great program that some of the Big Oil companies have sponsored in Chad. It's an oil project in Chad and Cameroon where some of the profits will go to the locals and their development. I think the World Bank is in on it along with several Big Oil companies.

They're going to build oil wells and pipelines in Chad and the revenues from the oil are going to be given to the poor. It's also going to be used toward supporting the environment.

I think this is a great idea. They Big Oil companies could have just bought the oil from the government of Chad. But who knows what the government would spend that money on. This way, the money is going to go directly to the people and environment.

We know that Big Oil makes a lot of money. If they sponsored a project like this every couple of years in a poor developing nation, it would help so much.

By discographer — On Jun 04, 2011

Of course big oil is not happy with OPEC, it not only controls most of the world's crude oil but it also controls international oil prices. Before 1960 when OPEC was created, big oil controlled everything and determined price. Plus, all of the big oil companies are from the West, they are either European or American.

I think their decisions promote their personal interest and than the interests of their nations. The ones who actually own and provide the oil to the big oil companies, have no say in what they do. That's why OPEC was created, to try and create more balance in the international oil industry. This is why big oil is not happy about it and it never will be.

By serenesurface — On Jun 03, 2011

My friend from the Middle East said that although many Middle Eastern nations have oil, they don't really make very much money off of it if they don't have their own refineries. He says that crude oil is really not usable, so big oil companies buy the oil from these countries, send it to refineries and sell it to different countries. Does this mean that big oil companies actually make more profit than OPEC?

And when the price of gas goes up, should we blame OPEC because they are not organizing oil supplies well? Do the big oil companies have any role it? If they buy crude oil for a higher price, don't the big oil companies reflect that on the consumer by increasing the price of gas?

I guess I'm still a little confused about where the influence of the big oil companies start and stop and where OPEC stands in relation to it.

Mary McMahon
Mary McMahon

Ever since she began contributing to the site several years ago, Mary has embraced the exciting challenge of being a...

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