Spencer Jakab of Dow Jones Newswires reports:

There are no two industries as co-dependent as oil and automobiles, but the relative fortunes of big three and big oil have been like day and night as the price of crude hovers near record levels.

This was highlighted recently when the market value of General Motors fell below the quarterly profit of oil giant Exxon Mobil. It was just 50 years ago that GM topped Exxon’s corporate predecessor in the Fortune 500 and it was 150 years ago that both got their start when the first oil well and the first modern internal combustion engine appeared on the scene.

“How the mighty have fallen,” said Professor Nelson Lichtenstein, a historian at the University of California, Santa Barbara who has written about the auto industry. “General Motors dominated (the Fortune 500) from the time it was founded. Oil and auto in America have been symbiotically linked.”

From the 1920s through the early 1970s, American oil and auto companies towered above their international peers. During their heyday in 1955, GM was the world’s largest and most profitable company, followed by Standard Oil of New Jersey, which became Exxon. GM’s domestic market share shrank from more than 50% as late as the early 1970s to less than a quarter of the market today, but, if anything, Exxon Mobil’s loss of share has been worse. Decades of nationalizations have left it with about 2% of global hydrocarbon reserves, or about a 10th of what Saudi Arabia’s national oil company, Saudi Aramco Mobil Refinery Co., has. Of course, prices have made up for much of the loss.

“The Detroit three would be fine if the average price of an automobile would go from $20,000 to $120,000,” quipped James Paulsen, investment strategist at Wells Capital Management.

Paulsen and Lichtenstein stress that the American auto industry’s woes far predate oil prices at over $130 a barrel, but record pump prices appear to be hastening the demise of GM, Ford Motor and Chrysler . as once-profitable trucks and SUVs become an albatross for them and as overall U.S. vehicle sales are seen sinking to the lowest level since 1995. Recent record prices for commodities and the need to sell cars at an effective loss highlights a trend unleashed by globalization: the marginal cost of labor inputs has fallen even as demand for finite raw materials has been driven higher by newly industrialized countries.

“In many ways, the onslaught of the emerging world is the catalyst affecting both,” said Paulsen. “They’ve certainly affected the fortunes of anyone connected to oil, but at the same time it’s affected the Detroit three … It’s emancipated blue collar relationships and the Detroit three are the last bastion of that old type of relationship that in many ways is the root of their problem.”

Lichtenstein says that most of the labor cost disparity between the U.S. and developed market competitors has disappeared, and Paulsen points out that Japanese manufacturer Toyota Motor feels the U.S. is a good place to build cars, as it is opening new plants here.

Still, legacy costs like retiree health care continue to weigh on U.S. manufacturers. Ultimately, GM and its domestic brethren are victims of their own managements’ failure to adapt to globalization, even as big oil was forced to learn to work in difficult foreign markets where most of the world’s oil production now resides and where most of the growth in demand will come.

“The sophistication of the oil companies is very high,” said Lichtenstein. “They’re genuinely global companies in a way that auto companies are not.”

The over-dependence of the big three auto makers on the U.S. economy even as they sell off foreign divisions to raise much-needed cash bodes poorly for them and has stoked fears of bankruptcy if there is a deep domestic recession or if the surge in oil prices continues. GM’s last big restructuring plan in 2005 assumed that U.S. vehicle sales would stay at around 17 million, while the figure is more likely to be about 15 million this year, according to J.D. Power & Associates.

GM’s recent share price was at a 26-year low, and it announced 19,000 more buyouts of worker contracts on Thursday, two years after nearly 35,000 workers left in the same way. Still a member of the prestigious Dow Industrials, as is Exxon Mobil, GM’s market value is only about 2% that of Exxon and about 6% of competitor Toyota, the largest car company by market value.

It isn’t the decline of GM that is so surprising, but how long it managed to stay on top given the quick pace of corporate evolution, says Lichtenstein. Even more remarkable is the fact that big American oil companies remain so dominant after more than a century. As fossil fuels dwindle and their price rises along with concern about their environmental impact — even as consumption shifts to the emerging markets — they may face challenges in coming decades that rival or exceed those that American car companies face today.

“Exxon Mobil is on top now, but one can predict that it’s unlikely they’ll enjoy such an advantage (forever),” said Lichtenstein. “There’s a fear they’ll be regulated like utilities. There’s a fear their profitability will become a subject of political scrutiny.”