OPEC, OF COURSE, is not a cartel. It can't carve up output among its member countries - often split among themselves - and thus is impotent to fix the overall level of oil supply. These homely chores are performed for OPEC by the real cartel, the incestuous Seven Sisters, five U.S., one British and one Dutch-British global firms. They determine whether the oil tap is opened or closed, country by country, and thereby validate OPEC's price pronouncements.

These elementary facts are well known in the trade, but have somehow escaped the attention of most western officials and popular newspapers. Even the recent and notorious price quarrel between the Saudis and other oil nations left popular commentators believing that the quarrel would be settled by governments rather than companies, the ultimate decision makers. It is one of the many merits of the late John Blair's indispensable study that the real relationships are made transparently clear.

With a demand more or less insensitive to changes in price, a calibrated control of supply is even more important. In oil, an abundant resource (global reserves are adequate for another century at least), this notion has long been recognized by the men who make fortunes in the stuff.

A century ago, John D. Rockefeller, confronted with undisciplined wildcatters, saw the point and played the game a little differently. He gobbled up first refining and then transport to seize a strangehold on the flow of oil products to the market. His heirs and assigns simply moved control up stream when cheap Middle East oil began oozing out of the sands. Aided by some remarkable tax arrangements, they made the big profits - and carefully controlled the producing end of the business.

Until recently, the Seven Sisters enjoyed more or less complete control over the supply of foreign oil. Control over the domestic U.S. flow was assured by complaisant state and federal "regulatory" legislation, ostensibly aimed at conservation and really designed to prop the price.

The Sisters are Exxcon, Mobil, Standard of California or SoCal, Gulf, Texaco, BP and Shell. Exxon and Mobil used to carry the name "Standard" in their title too - like Socal, they derive from Rockefeller's original trust - but they changed their names to disguise their origins.

Even today, as Blair relates in loving detail, combinations of the Seven are intimately linked as producer-buyers of most OPEC oil (ARAMCO, the Saudi "offtaker," is Exxon, Mobil, SoCal and Texaco, as joint operators of pipelines). They join hands to explore the North Sea in common consortia; they meet each other as directors of the same banks. Two centuries ago Adam Smith told us what happens when nominally competing businessmen forgather. In some or all of these media, the oil managers settle how much can be "offtaken" or produced to prop a predetermined price. Once upon a time, they wrote it all down on a piece of paper, the Achnacarry Agreement. Nowadays, that sort of behavior is frowned upon and besides, Blair observes, it is unnecessary.

OPEC has affected the style but not the substance of this happy game. Its first great contribution came from that radical Marxist, Colonel Qaddafi of Libya. As Blair recalls, some oil got away from the Seven in 1970 and was flowing to independent refiners who sold to independent filling stations and actually cut the price of gasoline. That had to stop. So Qaddafi, as interested as the Sisters in high prices, took over the independents and slashed more than one million barrels daily from his nation's output. That restored the oil price for the real cartel.

It was this action and not the nonexistent Arab "boycott" (a temporary cut in Arab output in the fourth quarter of 1973 to balance the over-large production of the first nine months) that set the stage for what Blair calls the great "price explosion."

It would be wrong to suggest - and Blair does not - that OPEC is no more than a price-announcing combine. It is true that the announced price could not be sustained without the will and consent of the Sisters. But OPEC has transformed them, inciting a change in the locus of their profits.

The Sisters now own only some, not all of the oil extracted in Opecia. Thus, they no longer have the same vested interest in maxmizing profits on crude. So they used the price explosion as a mask to shift profits down-stream, to make their big money at the refineries that cook the stuff into gasoline, home heating oil and fuel for electric utilities. John D., wherever he is, must be nodding sagely. One of Blair's may telling calculations makes the point: between 1972 and the end of 1974, crude went up 96 per cent but residual oil for utilities skyrocketed 224 per cent. In an elegant refinement, Blair discovers that the companies shrewdly shifted the bulk of the refinery increase to the customers who could best pass it on, the "regulated" electric utilities.

While they were at it, the tough new managers of the five U.S. Sisters and their larger domestic cousins raised their profit goals about 25 per cent. Their target rates of return on investment after taxes were lifted from about 12.5 to 16 per cent.

The new breed of managers for the Rockefeller interests are clearly making their mark. (Ownership data unhappily has not been gathered since 1938 but unless the family was badly advised, there is no reason to think the Rockefellers and their trusts have lost working control of Exxon, Mobil, Socal and the other chips off John D.s Standard block.)

There is no better guide to this piquant tale than John Blair. Author of the Federal Trade Commission's classic study of the oil cartel, he later served as chief economist for the Senate Antitrust and Monopoly subcommitte. Under Estes Kefauver, Blair's inquireis into administered prices make perhaps the single best study of the workings of the American economy. Blair was teaching at the University of South Florida until his untimely death just before Christmas.

But where does this leave the rest of us? The Rockefellers and those with more modest holdings in the great oil concerns can view the prospect with equanimity. A string of savage oriental despots from Tripoli to Teheran can indulge their fantasies on an undreamed of scale. Purveyors of computerized engines of destruction have fallen into a lovely new market.

The Third World, of course, is bankrupt. It would be ironic if its bad debt brought down the mismanaged Chase Bank, chosen instrument of the Rockefellers and oil. The rich West has had to shake off a steeper inflation and deeper slump than it otherwise would have suffered.

Until the industry's heavy hand can be loosened from the huge resources of shale-producing oil, until cars are wrapped in fiberglass and powered with fuel cells, until new technology taps energy from wind, wave and sun, what is to be done?

Blair suggests two courses: one is to put the U.S. companies under utility-type regulation, diminishing at least in theory their appetite for ever-higher profit rates norished by ever-higher product prices. But the history of regulation is not encouraging, least of all in oil, If the great majors can convert state departments under conservative presidents like Eisenhower and radicals like Kennedy, Johnson and Nixon into errand boys performing such parochial tasks as driving out independents and torpedoing antitrust suits, what hope has an obscure regulatory commission?

A better answer, Blair thinks, is a renewed try with antitrust. At the producing level the majors would be found guilty of "conscious parallelism" and ordered to yield some of their oil to price-cutting independents. The big integrated concerns would be broken up, split into separate companies that produce oil, refine it, move it and market it. This time, Blair hopes we have learned from the 1911 suit that did not break up John D.'s empire. A new order would bar sizeable shareholders in one disintegrated concern from receiving shares in another.

The long history of oil and antitrust does not entitle Blair to optimism. The Senate, however, appears to have found a way around a reluctant executive, trust-busting by legislative fiat. This idea is so promising that it genuinely frightens the industry. Blair's book should powerfully concentrate the minds of legislators who are still dubious.

No need to sell Exxon shares at once, however. The great oil companies have more often used than been abused by legislators all over the globe. Their ability to buy or rent governments is matched only by the aerospace industry.

Thanks to Blair, however, no one can plead ignorance any longer. In rich detail, he has laid out with remarkable clarity what and how the Sisters and their Epigoni are doing to us all.