There is usually a strong negative correlation between a country’s dependence on mineral exports such as oil

There is usually a strong negative correlation between a country’s dependence on mineral exports such as oil, and their GDP. Resource rich nations, despite having the potential to capitalize on their respective resource markets, often suffer from high rates of poverty, malnutrition, corruption, and civil war. Natural resource wealth does not always equal national prosperity. Although one might think the nations with the most oil would be the most economically productive, the so called “Paradox of Plenty” often plagues resource-rich nations, and its residents are those who suffer the most. Big oil companies are to blame for the poverty and environmental pollution faced in oil-rich nations. The historic influence of these big corporations through ancient cartels like the Seven Sisters provides a strong modern basis for continued exploitation of land and resources of oil-rich nations, further fueling the greed and power of current day oil companies. These companies, unlike resource-rich governments, hold no legal obligations to citizens, and it is evident that their moral and ethical obligations are nowhere close to the monetary, capitalist interests they hold.
To understand the current power held by modern oil companies, it is crucial understand the power imbedded in the former oil companies that once dominated the business of oil extraction and production. In order to keep prices stable and maximize profits, the most powerful oil companies in the world circa the 1940s: Exxon, Mobile, Chevron, British Petroleum, Royal Dutch/Shell, Gulf, and Texaco, banded together and created an alliance. Known as the Seven Sisters, this cartel of the seven major, multinational oil companies, was “aimed at restricting production, stabilizing their respective market shares, and setting prices.” (Lecture 3, slide 27) In 1947, this cartel was just shy of controlling 100% of international oil production, and continued to have a substantial role in crude production through the 1960s.
Despite competition across the individual corporations, the Seven Sisters Cartel thrived by diminishing the power of anyone else who challenged them in the business. They held reliable sources of oil, and their prices were unmatched my competitors. The Seven Sisters held such a disproportionate advantage in terms of legal and political connections that oil-rich countries who tried to nationalize their oil couldn’t stand a chance – they simply couldn’t market their oil successfully enough, while the Seven Sisters continued to profit and gain power.
The relations between the Seven Sisters and oil producing governments during this time period also contributed to the success of these corporations, and the failures of countries attempting to nationalize their oil. “Because they were well-funded and organized and operated effectively as an economic cartel, these Seven Sisters managed to exercise great power over the resources, markets, and politics of the Third World oil producers.” (What are the Seven Sisters Oil Companies?) Governments were not as effective – there was such uncertainty and inexperience among them relating to extraction, production, and marketing of oil, that they easily succumbed to the demands of the oil companies, to the point where these companies seemingly had some power within the state.
During the Seven Sisters reign, major concessions were granted by governments to the foreign oil companies: agreements for the exploration, development, exportation, and essentially exploitation of a country’s oil resources and land were signed for long periods of time. Via these contracts, governments never profited as much as the oil companies, and the residents of the nation rarely reaped the small proportion of monetary benefits a government received. These residents however, suffered and continue to suffer from the economic and environmental consequences of the oil industry.
Eventually, the Seven Sisters dissipated due to shortfalls in oil production, the rise of OPEC, and successful nationalist revolutions. However, mirroring the past, many governments of oil-rich nations maintain connections to powerful oil corporations. The governments of oil-rich nations tend to be weak, and susceptible to corruption. This is the perfect political atmosphere that allows oil companies to come and take advantage of these nations and their resources.