Nationalize 'Big Oil'? Are You Crazy?

Steven F. Hayward29 Jun, 2022 4 Min Read

Since the Biden regime is busy reviving every bad idea from the late 1970s such as stagflation, the energy crisis, price controls, and weak foreign policy, it was inevitable that one of the worst ideas from that era is also trying to make a comeback: nationalizing “big oil.”

Back in the 1970s the proposal to nationalize the oil industry found support from some otherwise sober-minded figures such as Sen. Henry “Scoop” Jackson, while today the idea is being flogged mostly by predictably radical figures such as Bernie Sanders and Elizabeth Warren, and deep green climate alarmists, such as William S. Becker. But with President Joe Biden, surrounded in the White House by true believers in the climate mania, menacing the oil industry with demagogic charges of “profiteering,” it is not hard to see the idea gaining traction with the progressive left desperate to avoid electoral disaster in November.

And help us freeze to death.

Back in the 1970s, the premise behind nationalizing “big oil” was that the federal government could manage oil production better than private industry in the interest of consumers by stopping “profiteering” and smoothing out production epicycles. The proposal never got very far for the simple reason that most Americans didn’t think the same people who run the Post Office monopoly would be competent at running the oil industry. The record of foreign nations that have government-owned and run oil industries is pathetic. Consider for example the 75 percent decline of Venezuela’s oil production since Hugo Chavez expropriated private and foreign oil companies. The steady decline in production of Mexico’s ample oil reserves under Pemex finally prompted Mexico to open its oil industry to foreign private companies.

It is an unappreciated fact that over 90 percent of the world’s oil reserves are government-owned, rather than privately owned, and this contributes to instability in the long-wave oil price cycles. It is not the oil majors that manipulate oil for political reasons; it is governments. The world and the oil market would be better off if it privatized oil resources.

The argument today is quite different. Writing in The Hill, Becker deserves credit for being explicit: his purpose is nationalizing oil companies is to put them out of business: nationalizing the oil industry “would allow the government to manage the industry’s drawdown, a process the private sector is ignoring... The federal government typically nationalizes companies to save them. In this case, it must nationalize Big Oil to save us all from a future we don’t want.” Translation: the oil industry isn’t committing suicide fast enough to suit the environmental fundamentalists.

Windfall profits? What windfall profits?

To be sure, the major oil companies invited some of this with their ill-considered pledges to be “carbon-neutral” by 2050, no doubt thinking that the latest climate policy euphemism for “we don’t really mean it”—“net-zero emissions”—leaves plenty of wiggle room for creative emissions accounting. Rather than thinking they could appease the climate campaign with these virtue signals, they’d be better off straightforwardly defending their industry in the manner of Chris Wright, CEO of Liberty Oilfield Services. Wright argues: “If you look at the bigger picture, our industry causes a dime of damage to the world and a dollar of benefit. The benefits versus the costs are enormously larger.” Or the oil industry could simply cite all of the official international government forecasts that conclude that the planet will still depend substantially on oil, natural gas, and coal in 2050.

The plight of Europe since the outbreak of the Ukraine War shows the folly of suppressing our own oil and gas sector and making ourselves wholly dependent again on foreign suppliers to fill the gap when “green” energy inevitably falls short of its extravagant (and extravagantly expensive) promises. Europe is already looking for face-saving ways to back away from its sanctions against Russian oil and gas while cranking up coal power, the most hated energy source. Germany faces a non-trivial possibility of running out of natural gas next winter. Meanwhile President Biden is groveling cap-in-hand before the oil sheiks of the Middle East, who may be no more inclined than Putin to help out the person who the day before, in the case of Saudi Arabia, labeled them human rights monsters. It doesn’t take much imagination to realize how much worse off the U.S. would be if we forcibly shut down our own oil companies.

"Fracking Damages Our Beer." OK, then!

To the contrary of claims that the oil industry is reaping “obscene” profits, we should entertain the proposition that the industry needs much bigger profits. It is tedious, but necessary for the slow learners on the left, to repeat some elementary facts about the oil industry. Its profit margin is close to the average for all manufacturing companies (and less than half the profit margin for tech companies like Apple), and often sees its profit margin collapse in the regular epicycles of global oil prices. Given that the Biden Administration and woke Wall Street have been constricting the oil industry’s access to capital, the industry is more reliant than ever on generating internal capital—not only for continued exploration and production, but for the investment necessary to develop new technologies that actually mitigates emissions, such as carbon sequestration or carbon air capture.

The oil majors, especially ExxonMobil and Chevron, did push back politely against Biden’s oil demagoguery. Chevron was the most candid: “Unfortunately, what we have seen since January 2021 are policies that send a message that the Administration aims to impose obstacles to our industry delivering energy resources the world needs.” If they really want to make progressive heads explode, they should follow up with the argument that they need larger profits.

Steven F. Hayward is a resident scholar at the Institute of Governmental Studies at UC Berkeley, and lecturer at Berkeley Law. His most recent book is "M. Stanton Evans: Conservative Wit, Apostle of Freedom." He writes daily at


See All

12 comments on “Nationalize 'Big Oil'? Are You Crazy?”

  1. Wasn't one of the reasons for Venezuela's pariah status that they had nationalized the assets of the sacred private oil companies?

  2. From their most recent 10-K statements:

    2021. 2021. 2021
    Revenues. Net Income. Margin
    Alphabet. $161,857. $34,343. 21.22%
    Apple. $365,817. $94,680. 25.88%
    Meta. $117,929. $39,370. 33.38%
    ExxonMobil. $285,640. $23,040. 8.07%

    Who’s gouging?

  3. NickSJ, The earth is CO2 starved at present, even with man’s contribution lately.

    Most plants and their ancestors developed under conditions of higher CO2.
    We were headed toward mass plant die-off from CO2 starvation since the sun and the plant world co-operate to slowly, and nearly irreversibly, to convert atmospheric carbon dioxide, through photosynthesis, into hydrocarbons and carbonates. Natural processes were not keeping up with the carbon sequestration and all plant life was doomed to slow extinction from lack of CO2 and animal life would consequently starve.
    That carbon is lost to the cycle of life until volcanic action and weathering can return that carbon to the atmosphere which happens to be unsustainable.
    Alternatively Gaia has created the miracle, man, to return some of the hydrocarbons to the atmosphere and the life cycle.
    Man is the hero here and our returning carbon to the life cycle is a miracle for the ages.
    Thank Gaia, or whoever.
    It is a stunning and serendipitous role we play.
    Credit please, or give the plants the vote. They’d vote green for sure to every last bit of plankton.
    So much for reparations and the loons at Extinction Rebellion!
    This Massive social delusion is exactly backwards.
    Madness, madness of this green crowd
    When will we ever learn?

  4. SteveS, don’t forget that food production is highly dependent on petroleum energy to make fertilizer enabling the whole farming gamble to be worth throwing the dice over.
    Nature ultimately controls agriculture but without hydrocarbons the effort to farm would fail repeatedly and tragically.

  5. Biden needs to reverse course on oil production interference. His Green New Deal can't even be built and ready for prime time before the Earth ends due to a climate catastrophe predicted in 9 years and a few months from now.

  6. Virtually 100% of our food is grown with equipment powered by internal combustion engines. At this time there is no such thing as an electric tractor or combine . The agricultural products are delivered to processing with machines powered by internal combustion engines. The foodstuffs produced are transported using machines powered by internal combustion engines. A Prius or Tesla sedan is not going to accomplish any of these tasks. Or is the ultimate objective to return to 1850’s agriculture and food transport?

  7. United States was energy energy independent and an energy exporter when Biden took office. He and his hidden green energy cabal turned the USA into a beggar nation for energy in less than a year. Only a return to Trump's energy policies will save us. However it did not mean that all crude oil processed in the USA was from American wells, some was imported from Canada and Middle East.Price is a factor and oil companies need the flexibility to obtain the lowest cost crude oil to provide lower cost gasoline, diesel, jet fuel, home heating oil,asphalt for road building, etc and the myriad of raw materials used in many other industries petrochemicals, rubber,cosmetics, plastics et al. How many of these industries do the greenies intend to shut down for lack of hydrocarbon feed stocks?

  8. Worse than sheer incompetence by is malevolent,, etc. sabotaging the development and production of petroleum.

  9. Most people have no idea how little CO2 is in the atmosphere, or what the actual temperature trends are. 400ppm of CO2 is one molecule in 2,500 molecules of air. The total increase in CO2 since the beginning of significant human emissions is one CO2 per about 8,000 molecules of air. According to the standard global temperature databases the temperature increase for the past 7 years has been zero.

  10. My new favorite publication with my two favorite writers, Steven F. Hayward, and Michael Walsh! Its pretty clear that the FJB Regime is working out the kinks in their plan to strangle the oil industry without getting blamed for the fallout. They are failing miserably at not getting blame, while being wildly successful in their other goal. There are three things that need to happen to reverse our course: 1) cut government spending; 2) cut taxes; 3 pump and refine oil. Since none of these will happen anytime soon, its pretty easy to see the cliff we are headed for...

  11. Well he has a point. Post WWII United Kingdom nationalized its automobile manufacturing industry. That's why there is no longer a UK automobile manufacturing industry,

  12. There is a lot of energy in the Universe and my prediction since long ago is that Man will not ultimately use all of it.

Leave a Reply

Your email address will not be published. Required fields are marked *