Charles Komanoff

 

THE PRIZE:

The Epic Quest for Oil, Money and Power

A review of the book by Daniel Yergin

Published in the NRDC quarterly journal, Amicus, in 1991

by Charles Komanoff

A dozen years ago, at the height of the Second Oil Shock following the 1978-79 Iranian Revolution, international energy consultant Daniel Yergin co-authored a book that concluded that increased efficiency in the use of energy held the key to reducing America's dependence on foreign oil. "Energy Future," based on research at the Harvard Business School, became a best-seller and helped launch a veritable burst of energy efficiency. From 1978 to 1986, U.S. energy consumption per unit of economic activity dropped by 20 percent, a savings almost five times as great as the energy value of the oil flowing through the Alaska pipeline.

Lightning has struck again. Mr. Yergin has a new book, bigger and better-selling than "Energy Future." "The Prize -- the Epic Quest for Oil, Money and Power," arrives in the wake of the Persian Gulf War, to deliver the message that governments and oil companies will do everything within their means to keep consumers plied with petroleum. Sadly, with the U.S. now holding enormous leverage over Saudi Arabia, and with a president in the thrall of both oil and military might, this message seems as relevant to the 1990s as the conservation message of "Energy Future" was to the late 1970s.

As a book, "The Prize" is as epic as its subject. Weighing in at 800 pages, it is nothing less than a history of the industrial world since 1859, when a lawyer, a chemist and a confidence man teamed up to drill the first producing well, at Titusville in western Pennsylvania. Within a century, Yergin writes, oil had become "the world's biggest and most pervasive business," and "The Prize" brilliantly chronicles this extraordinary growth. From John D. Rockefeller of Standard Oil to modern-day corporate raider T. Boone Pickens, Yergin weaves the methods and triumphs of the world's oil moguls into a remarkably entertaining tableau.

An historian by training, Yergin also recounts oil's central role in the geopolitics of foreign policy and war from the advent of gasoline-powered armored vehicles in World War I to Iraq's ill-fated annexation of Kuwait. In a revisionist tour de force, he recasts the actions of every major World War II leader -- Churchill, Roosevelt, Stalin, Hitler and Tojo -- as a product of his economy's or military's need for oil. "The Prize" also details the postwar struggles by former colonial states for control over their oil resources, beginning with Mossadegh's short-lived nationalization of Iran's oil industry in 1953 and culminating in the 1973 Arab oil embargo. This history is essential background for anyone concerned with the ongoing turmoil in the Middle East.

However, "The Prize" falls short in its treatment of the modern world's transformation into a "Hydrocarbon Society" whose life, work, landscape and pleasure are built around petroleum. To be sure, the statistics are laid out in full. None is more telling than the staggering increase in free-world crude production from 8.7 million barrels per day in 1948 to 42 million barrels in 1972 (a compound annual rate of almost 7 percent), with corresponding increases in the number of automobiles. But Yergin leaves unexamined the business and governmental policies that, particularly in the United States, have engendered profligacy in petroleum usage.

The well-documented collusion by General Motors, Firestone Tire and Standard Oil of California that substituted gasoline-powered buses for electric trolleys in New York, Los Angeles and other cities in the 1930s and 40s belongs in any history of the petroleum industry. Also not mentioned is the auto industry's bitter opposition to vehicle fuel-efficiency standards enacted by Congress in 1975, which by the late 80s were saving an estimated 2.5 million barrels of gasoline per day. Nor does "The Prize" address the huge fiscal support given to automobile use via road-building, tolerance of environmental damage, and a host of lesser-known subsidies such as tax deductibility for employer parking, that have helped make America the world's most car- and oil-dependent nation.

Similarly, "The Prize" touches only briefly on dramatic oil spills such as the Amoco Cadiz and the Exxon Valdez, and ignores efforts by environmental activists and labor unions to reduce vehicle and refinery pollution. Indeed, in emphasizing production and supply over consumption and emissions, "The Prize" mirrors a century of disregard for the end-use side of the energy equation.

One can also quibble with "The Prize" for its treatment of nuclear power, a would-be (and largely failed) alternative to oil. The 1986 nuclear accident at Chernobyl is described as a partial meltdown, when in fact it was a powerful steam explosion that demolished the reactor and spread up to half of its radioactive inventory in a deadly arc from the Ukraine to Wales. It was Three Mile Island that suffered a partial meltdown in 1979, and not the mere radioactive water leak that "The Prize" reports. But, while these errors are surprising for an energy expert of Mr. Yergin's stature, they in no way detract from his achievement in producing a history of the oil industry that is at once encyclopedic yet as lively and richly told as any Dickens novel.

Of the many individual stories in "The Prize," perhaps the most poignant is that of Juan Pablo Perez Alfonzo, the Venezuelan Oil Minister who helped found the Organization of Petroleum Exporting Countries (OPEC) in 1960. As a political exile in Washington in the early 50s, Perez Alfonzo studied how the Texas Railroad Commission regulated oil production to keep new discoveries from glutting the market and sinking the price. "To sell oil too cheaply," he concluded, "was bad for consumers," since this would exhaust a nonrenewable resource. Conservation of oil was vital to consumers and producers alike, Perez Alfonzo believed, since "neither the resource nor the wealth that flowed from it should be wasted."

When a change in government brought Perez Alfonzo back to Venezuela in 1958, his old cherished Singer motorcar got left behind on the docks, where it rusted beyond repair. Perez Alfonzo recovered the car and installed it in his garden "as a corroded, overgrown shrine and symbol of what he saw as the dangers of oil wealth for a nation -- laziness, the spirit of not caring, the commitment to buying and consuming and wasting." He died in 1979, cursing petroleum as "the excrement of the devil."

Though OPEC grew to fulfill Perez Alfonzo's dream of regulating international oil exports, it failed to slow the squandering of petroleum and its wealth. The legacy of the post-embargo petrodollars is largely the amassing of huge fortunes, rampant development and speculation, devastating wars, and the steady buildup of carbon dioxide in Earth's atmosphere. Yet any other outcome would have been surprising. "Oil is almost like money," Robert Anderson of Atlantic Richfield told Yergin, and history has few precedents for the wise use of windfall riches.

It is fortunate that Perez Alfonzo did not live to see the hundreds of oil wells now ablaze in Kuwait's giant Burgan field, where six million barrels of oil -- a tenth of world production -- burn each day. Endless columns of black smoke daily send up as much soot as all of America's coal-burning power plants emit in a month, yet in an area 500 times smaller, ruining lungs, drinking water and climate.

"Ours is a century in which every facet of our civilization has been transformed by the modern and mesmerizing alchemy of petroleum," Yergin writes at the conclusion of "The Prize." With petroleum fires transforming the skies above Kuwait into a literal hell, and earth's atmosphere undergoing a slower but no less perilous chemical change, one wonders when humankind will end the reign of oil and usher in energy sources and lifestyles that can sustain, not destroy, the world.

Charles Komanoff is a New York-based energy economist and president of Transportation Alternatives, a grassroots environmental transportation organization.

THE PRIZE: The Epic Quest for Oil, Money and Power By Daniel Yergin Published by Simon & Schuster ISBN 0-671-50248-4 $24.95 877 pages hardcover (cheaper in the paperback edition)