Oil majors not so major nowadays

The share of the world's oil reserves controlled by the big Western oil companies, such as BP, Shell and ExxonMobil, has fallen to less than 10%, compared with 70% in 1978. The world's reserves are dominated increasingly by government-controlled national oil companies in big producer countries such as Saudi Arabia, Russia, Iran and Venezuela. These groups control about 90%, according to a book due to be published this year.

"In 1978, these companies together held roughly 70% of world reserves," Wajid Rasheed, the author of The Hydrocarbon Highway, says. "Today, there are 'five sisters': ExxonMobil, Shell, BP, ChevronTexaco and Total and their reserves amount to approximately 10% of world reserves." Reserves in countries such as the United States and Britain have been sharply depleted while "resource nationalism" has led national governments in other producer regions to nationalise their oil assets, to adopt new sharing agreements or to eject Western companies altogether.

- Last I heard about this, a few months back, the ratio was at 15% for the international oil companies (IOC's), versus 85% for the national oil companies (NOC's). Looks like that balance has shifted more and more towards NOC's like Saudi Aramco and Petrobas, and further and further away from the Exxon-Mobil's and Shell's of the world.

Hence, if you are long on any of the so-called oil majors, you have to be aware of this. Even if you were to buy into XLE, the Energy Select Sector ETF, be aware that you are only buying into a 10% and rapidly dwindling share of a rapidly dwindling world reserve of oil. Tactically, however, it still makes for a great trading vehicle, has very respectable daily volume, and still gives you a pretty good correlation with the crude oil price, if that is what you are looking for.

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