The Prize: The Epic Quest for Oil, Money, and Power

by Daniel Yergin

Now, as the Jersey board debated cutting the posted price, Page argued against it. Jersey would be cutting the countries’ national revenues. Consult with the governments, he said, compromise with them, but don’t do anything unilateral. Page made a motion that a cut be made, but that it be effected only after some discussion and agreement with the governments. The other directors backed the motion. Jack Rathbone did not, and he was the chairman. He privately dismissed Page as “a know-it-all.” He decided that Jersey would go ahead and cut the price, and that the company would do it the way he wanted it done, which was without first consulting any governments or anyone else. That was that. On August 9, 1960, with no direct warning to the exporters, Jersey announced cuts of up to fourteen cents a barrel in the posted prices of Middle Eastern crudes—about a 7 percent reduction. The other companies followed suit, though without any enthusiasm and, in some cases, with a good deal of alarm. To John Loudon of Shell, it was “the fatal move. You can’t just be guided by market forces in an industry so essential to various governments. You had to take these other things into consideration. You had to be so terribly careful.” BP, which had learned its lesson when it cut the posted price in 1959, complained that it “heard the news with regret.”