European Oil Assault

In recent weeks, the flow of imported oil to Western Europe has picked up so smartly that the threat of winter shortages has all but vanished, and those nations that had begun gasoline rationing have abandoned it. Yet in country after country, the multinational oil companies are coming under a raking fire of criticism strikingly similar to the attacks made on them in the U.S., where shortages are severe. They are being accused of taking advantage of the oil crisis to force up prices and force out independent competitors. As a result, the majors are being reviled in the press, investigated by European governments, even hauled into court. A roundup of the situation in four countries where the controversy is hottest:

ITALY is in the midst of an oil-tainted political scandal that has grown into what the local press calls "our Watergate." A special parliamentary committee is looking into charges by a Nader-like group of magistrates in Genoa and Rome that politicians passed legislation favorable to the oil interests, in return for which oil companies contributed millions of dollars to the major political parties. In total, Unione Petrolifera, the association representing all private oil companies in Italy, allegedly paid out some $20 million over the past four years to top political figures.

The key problem is not the size of the oil contributions--corporate contributions are still legal and a major source of political parties' funds--but rather the favors the oilmen allegedly got for them. Whether the companies can clear themselves depends largely on the eventual testimony of Industrialist Vincenzo Cazzaniga, who until two years ago headed both Unione Petrolifera and Exxon's local subsidiary Esso Italiana. A warrant for his arrest has been issued, but he is now on a business trip abroad. Cazzaniga is specifically charged with having distributed about $2 million to politicians in 1972 to make sure that the state electric company would keep using oil-fired generating plants rather than nuclear facilities. The next steps are up to a very embarrassed Parliament.

FRANCE has not one but two oil scandals. The first goes back to 1971, when an independent oil distributor charged that the multinationals were trying to squeeze him out of business by not selling him supplies. Last week the government handed down indictments against 15 oil-company executives, including top figures at Mobil, Shell, Esso and Total. The decision fuels the other scandal, in which the same companies have been accused by Finance Minister Valery Giscard D'Estaing of playing favorites during the Arab oil crunch. They are charged with supplying longtime independent clients while cutting off some newer firms.

To top off the multinationals' tank of trouble, the Finance Ministry has just published a new "code of good conduct" to define how oil companies should operate in "critical situations." Though the code is by no means restrictive, it clearly indicates that the government feels that oil policy has become too important to be left solely to the oil firms.

WEST GERMANY has long feared the predominant market power of the multinationals. Even before the Yom Kippur War, the Bonn government planned to create a state-owned oil company to compete with the majors. After fighting began in the Middle East, gasoline prices in West Germany zoomed. But Willy Brandt's administration did not take countervailing action for fear that the big oil firms would sell their products elsewhere. The Economics Ministry did, however, investigate the way that the multinationals were doing business.

Early last month, an eight-page letter from the Ministry to the European Commission of the Common Market was leaked to the press. It alleges that Shell, BP, Chevron, Mobil and Esso conspired to drive out independent oil marketers, juggled their books to avoid paying West Germany's high taxes and engaged in price fixing. The oil firms deny all the charges, and the government refuses to comment on the letter. Relations between both sides have never been worse.

BELGIUM is the only Common Market nation that has not raised retail oil prices of gasoline since the producing countries doubled the price of crude in January. Understandably, British Petroleum, Texaco, Esso Belgium and other oil companies now say that they cannot buy oil at pre-January prices. Their request for a 90% boost in prices, however, has been refused, at least until Belgians elect a new government next week. Rather than continue to operate in the red most of the multinationals have banned further shipments of oil into Belgium. As a result, Belgium could become the first European country to experience U.S.-style gasoline lines.

To most Belgians, the oil companies' action smacks of blackmail. Businesswoman and Oil-Company Critic Simone Descamps complains: "In the U.S., the oil companies explain that their high profits last year are due to the rise of prices in Europe. Here the information they give is very vague." Such views are only being strengthened by the continuing parade of glowing oil-company profit reports, like one from Royal Dutch/Shell that raised eyebrows all over Europe last week. The company, second biggest in the world industry, announced that its 1973 earnings rose 159% over the year before.

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