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Chris Saliba reviews Crude World: The Violent Twilight of Oil, by Peter Maass
Crude World: The Violent Twilight of Oil, by Peter Maass (Published by Penguin Australia)
reviewed by Chris Saliba
‘It’s the devil’s excrement’, according to former Venezuelan oil minister Perez Alfonzo. Why? Oil acted like a dangerous, addictive drug on the Venezuelan economy. It gave a fantastic rush of money when oil prices were high, prompting profligate spending. Yet when prices dipped, there would always be the morning after.
In this wide ranging book journalist Peter Maass (he contributes regularly to The New York Times Magazine and New Yorker) looks at all the ill effects oil has on individuals and countries alike. As you’d expect, Crude World is a depressing tale of extreme fear and greed.
The main thesis of the book is that oil creates volatility and havoc at all levels. For poor African nations like Nigeria and Equatorial Guinea, plundering US oil concerns are happy to work with dictators and strongmen. The money that should go to the impoverished people of these countries is funnelled back to corrupt leaders who lead the sort of lavish lifestyles that would make Marie Antoinette blush.
Other countries, like Ecuador, find their environment despoiled by marauding oil companies. The unhappy histories of the Middle East are well known. War in Iraq and Kuwait, US meddling in Iran. Saudi Arabia is an unusual case all of its own. Its massive oil endowment has created a lopsided economy, completely captive to the vicissitudes of the global oil market. (90 per cent of the country's exports are oil, bringing in 75 per cent of the country’s revenues.)
Saudi Arabia has high unemployment, a large foreign workforce of professionals and an indolent class of royalty who all live on a stipend. Oil has allowed the population to explode, but reduced the pay checks of royal princes. A lot of young people (the Kingdom has a high youth population) have nothing to do, living off a virtual mono-economy that doesn't provide career paths.
Maass summarises nicely the ill effects oil can have on an economy (the Sydney Morning Herald’s Peter Hartcher made a similar argument recently, with regards to Australia’s export of coal):
“We’ve seen this before: as the oil sector grows, farming and manufacturing contract, unemployment expands, inflation rises due to the influx of revenues from oil sales, and the gap between rich and poor widens.”
While we in the West can hold our nose when we read about these terrible troubles in the rest of the world, the reality is that our oil dependence means we help contribute to this ugly reality. Our leaders cheerfully extol the virtues of globalisation, but don't like to talk about the money that Saudi Arabia funnels into supporting fundamentalist causes.
Maass also gives an eye opening look from the business end of oil. How ironic, he notes, that we easily recall the names of superstar CEOs from the world of business. Yet the oil industry’s superstar CEO, Lee Raymond of ExxonMobil, is a complete unknown to us. The author gives an almost Dickensian description of the corpulent Lee Raymond. He is more medieval king that CEO.
Raymond fascinated me. Despite his stature and power, he was nearly unknown outside the environmental lobby, which despised him, the financial industry, which swooned over him; and the oil industry, which feared him. (Exxon’s executive suite was known as “the God Pod”.) Think of the tycoons who are part of the contemporary lexicon – Gates, Murdoch, Buffett, Jobs, Branson – and realise that absent from their ranks is the long time leader of one of the most profitable multinationals of the twentieth century. Raymond was smart enough and secure enough to neither crave nor need publicity, which he knew would invite unfriendly questions. He did what he had to do, meeting financial journalists to announce earnings, but little more. He turned down my requests to interview him.
A lot of the territory that Peter Maass covers in Crude Oil has been well documented elsewhere. What makes this book attractive is the extensive first hand reportage. Maass has access to a lot of good interview subjects, both high level political and business players, down to activists and the ordinary people affected by oil. This he mixes with an engaging and cheerful style. Maass has the novelist's gift for drawing lively portraits and is never at a loss for an evocative metaphor. It's these qualities that really made Crude Oil a very enjoyable book.
So often we are immersed in 'facts' on these economic and political questions. How refreshing it is to get a first hand description of real people rather than just the general sweep of events.
Crude Oil, despite its gloomy and depressing subject matter, ends in a rather upbeat tone. The problems of our oil dependence can be fixed by enthusiastically taking up the existing renewable technologies, we are assured. All we need is the will. This optimistic ending didn't work for me though, especially after wading through so much depressing reality. Peter Maass makes for a brilliant observer, but it seems obvious he hasn’t thought through very deeply the question of how we will segue from the oil economy to the new renewable economy.
And that day is coming sooner than later. In all likelihood we have used up half the world’s oil endowment. We’re quickly on our way to consuming the last half.
Crude Oil opens with an interview with Matthew Simmons, author of the influential Twilight in the Desert. Simmons is an investment banker, and a former energy advisor to George W. Bush. He has studied in depth the technical papers of the Society of Petroleum Engineers on Saudi Oil. What he found was that the Saudi authorities have vastly overstated the capacity of their reserves. He also found serious mismanagement resulting in damaged oil fields: all of the remaining oil may not be recoverable. He believes we could be in for serious trouble unless we can come up with an alternative energy source.
Even more pessimistic is James Howard Kunstler. In his book The Long Emergency, Kunstler provides some unpalatable statistics for the reader to digest. The world's total oil endowment is some 2 trillion barrels. We have made our way through 1 trillion barrels so far, most in the last 50 years. At our current rate of consumption, we will empty out every last drop in 37 years. That does not take into account any growth in the Chinese and Indian economies - or any other economy for that matter. Nor does it factor in the difficulties in extracting the last half of our global oil endowment. All of the remaining oil will not be recovered. (There is a range of technologies used currently to extract oil out of the ground, like injecting water into oil fields. They all use rising levels of energy, thus diminishing the value of the oil recovered.)
Babies born today will not be driving cars run on petrol when they hit their thirties. How will they drive their cars? How will food be transported? What will happen to all the new outer suburbs that are currently totally dependent on cars? Why aren’t governments planning for this?
Kunstler says the economy built by oil has been nothing more than a 100 year bubble – and it’s about to burst.
Can a new energy source ‘come online’ that has the value of the one trillion barrels of oil we’ve used so far, keeping us living a lifestyle we see as normal? Peter Maass thinks that if we work for it such a reality will come, yet the bulk of his book – the ugly politics, violence and money – speak of a troubling future.
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Silence of the lambs
Anthony Nolan "I'd like to second Stuart's assessment of Paul Morella. It is my experience that his dogmatic posts have frequently disrupted what otherwise might have been fruitful discussion of significant issues. As it is, time after time, good spirited respondents have taken the time and patience to pull apart his rantings with the consequence that, time after time, threads are hijacked".
I bring some market analysis to the table - that is after-all the system we currently have operating. The system we're all a part of like it or not. Many an Internet site may have a hybrid cross between the The Killing Fields and The Road Warrior world, however we aint there yet. Facts enough for you?
On another thread I (and only the author) gave my truthful research concerning a product. And my unequivocal and very simple summary of that data - not the first time mind (and God only knows why). This places me in a position without a get out clause - a position most don't have the courage or personal confidence to place themselves in (except the author). There's absolutely no financial or any other incentive for me to do any of this - in fact only abuse is what I see.
Perhaps you should take the time to read my analysis - carefully. Then perhaps you should back test it. Then perhaps you might consider shutting the fuck up - though I doubt that's advice you've ever taken on board.
Seeing the light or seeing the G-men cummin ta gitcha?
Yes, we’re both writing about markets. The key difference is that I am writing based on observations and empirical evidence, whereas you are writing based on the ideological dogma of discredited school of economic theory that is divorced from the laws of physics. I have cited numerous sources for my arguments. You have cited not a single piece of evidence or research, only slogans.
Correct. This is already happening. The ‘price signal’ was called the ‘global recession’. Even Douglas-Westwood and Macquarie Bank analysts have recognized this. These are hardly communist front groups. Also see Michael Lardelli’s overview in today’s Online Opinion. In response to this ‘price signal’, governments have spent $trillions to ‘stimulate’ the economy right back towards the next oil shock. Well done.
This is a straw-man argument that has been well and truly debunked in previous posts. The ‘peak’ in ‘peak oil’ means maximum, not ‘running out’. The significance of ‘maximum’ is the decline on the other side. My primary school age kids get this. If it’s no concern to you, why do you bother contributing to this forum?
Another straw-man. Where did I suggest that we should become likeAnother hyberbolic straw-man. Of the two of us, you are the only one who has an obsession with taxpayer funds and alternative energy. I am not an alternative energy investor or advocate. On the contrary, I have referred to carbon trading as a “Ponzi scheme” elsewhere on this forum, and I believe there will be a bubble and a crash in alternative energy regardless of any climate change policy responses.
I actually agree with this. But this is where your hypocrisy becomes evident. Previously you have advocated the continuation of existing perverse multi billion dollar government subsidies for fossil fuel use. Subsidising the increased use of a finite and rapidly depleting resource is about as foolish as you can get. Where do you really stand in relation to ‘free’ markets Paul? Pro or anti subsidy? Should oil subsidies be removed? How about these subsidies?
I don’t have a clue what the relevance of your property dealings are to this thread. More hyperbole.
So, to summarise your views: 1) we should wait for markets to give us ‘price signals’ but then we should ignore them; 2) governments are incompetent, but they should remain incompetent by ignoring objective data that invalidates current policies; 3) government subsidies are bad, but government subsidies are good. Psychologists call this cognitive dissonance.
Having gone through your post like this Paul, it dawns on me that you are probably experiencing paranoid delusions of the "guvmint is cummin ta get me" variety which make it impossible for you to make a logical argument. You obviously need help.
Seconded.
I'd like to second Stuart's assessment of Paul Morella. It is my experience that his dogmatic posts have frequently disrupted what otherwise might have been fruitful discussion of significant issues. As it is, time after time, good spirited respondents have taken the time and patience to pull apart his rantings with the consequence that, time after time, threads are hijacked.
At the level of political philsophy: one of the requirements of discursive democratic dialogue is rationality. Morella fails this test because, as he noted on another thread, he thinks that what one believes is a matter of freedom of choice. It is not. Rational discussion is bounded by acceptance of provable facts as facts. Another requirement of discursive democracy is respectful attention to what the other is saying followed by a reply where necessary. By my count he has had very great respectful attention from others and accords none of the same to others.
In short, I'm jack of it.
Richard: Sigh. At various times it has been suggested by Webdiary moderators that if you don't like the way someone is commenting then it's your right to ignore them and continue the debate with others on the thread. You've got to admit, Anthony, it would be boring if we all thought the same way... we'd be sitting around agreeing on the weather..
without fear or favour.
Richard, you are offering an adventurous broadsheet ambit.
But if you follow this policy strictly, you will have to be very tolerant likewise of all others, who post controversial or aggressively expressed viewpoints, to remain consistent .
Trolls out to disrupt serious threads with foul language and abuse, of course, remain fair game, rather than sincere and even informative stuff (clumsily?) presented in good faith?
Can be clumsy meself, so above makes me edgy.
Richard: Paul, I've always considered Webdiary as a forum where honest debate can get a bit rough-and-tumble at times, and would like people to feel free to respond spiritedly so long as it's in good spirit. Playing the ball and not the man has always been the go here, and critques of argumentative techniques have always been a part of the process. Trolling and personal attacks, though, still aren't appropriate. Paul Morella has always struck me as "coming from a good place", and more than capable of defending questions of his approach. "Without fear or favour" sounds fine, and very much along the lines of Margo's orginal guidelines.
value meaning purpose intent.
Paul Morella, you are quite right: we really do have "reality" and "existence".
Humanity does have up and running a system, the question Stuart McCarthy is actually asking is, should even this system not be totally successful in its goal of distribution of and access to, reasonable human living, is,
"Is the system working well and if not, what we can we do about it"?
You are dead right as to us Westerners having a great life and needing to be humble and greatful for it- I think a lot of our problem is that we are so well-off that we no longer empathise with the experiences of the global poor, refugees, etc for lack of a personal experience of profound poverty disease etc.
Why do I say the above at a thread designated for peak oil?
Because oil is precisely the sort of resource that can be a blessing or boon to humanity, depending on how it's managed.
But it has come to the attention of some us that we have this relatively good life at the expense of others without our fortune or the the options for life choices we have.
I don't exactly like being complicit with this system if it is actually giving me an easy ride at the expense of other, more deserving specimens of humanity. And I can't accept that the rest of humanity should just be abandoned for my comfort. Thinking of my late mother, I think, where would I be had mum adopted such a "bugger you jack" toward me?!
Should we go back to Kant and suggest that if the life we are comfortable is ok it should be accessible to other people, too, or if the life of third world people is ok for them, it should be ok for us?
Do you really think that the current system allows for optimum distribution of scarce resources for the benefit of all people, for that level playing field we all await?
If so, read no more.
If you are like Stuart Mcarthy, you will wonder at outcomes and wonder at how to refine the system; even if it is apparently already perfect.
I've seen the light
Stuart McCarthy: "Whether nationalisation is "wise" or not could be debated here for years without resolution".
Only if debated with a person without an ounce of business acumen.
I own some commercial property. I have a thing called tenets. I enter a thing called a lease agreement. I don't even get a slice of their profits (called taxes). Yet I should march on down and take over all the businesses for my self? Why didn't I ever think of that before? I must have been living in a daze.
Let's forget the fact I know fuck all about the businesses I'll soon be operating. Lets embrace the fact I'll be taking money from things I do know about and have responsibilities over, and placing it in things I know fuck all about. Let's not even consider I don't have the ability (we all have our special gifts in life) not only not to make a profit from any of these businesses but probably take on substancial losses.
No, you're right, only an ideological raver would even consider such questions. What the hell have I been thinking?
Yep, the road to a trouble free, carefree existence I'll be soon traveling.
Hey, at least if it all goes wrong (how could it) I'll be a shoo-in for a political career.
Please, turn the light off...
Paul, you are as silly as ever. I've missed you, in an odd sort of way. Here's a couple of tips on spelling:
tenets (tenants)
fuck all (nothing)
substancial (substantial)
Try to be good... I know it's hard...
You think you're logical?
Stuart McCarthy "Paul, the post was poking fun at your very predictable ideological ravings. Basically every one of your contributions begins with an ideological premise then attempts to alter objective facts to reinforce same premise, often resulting in at least one howler of a factual and/or logical error".
Absolute bullshit. The only ideological gibber is from you. Just keep saying the same thing long enough and one day you might be right. Up to today you haven't been much right about anything.
I'm writing about a market and how it operates in this world. The same world you live in (maybe not in soul) - in between your very own fantasy land.
Oil being a commodity like any other commodity will give price signals as it becomes a rarity. Things may change in the future because of this, I don't know, I do know that humans will adapt, they always do. At present I don't see oil running out anytime soon, so it's not a great concern to me.
Both China and Russia have near on a century put generations of their people through a living hell. That's why their growing at the moment. There has been a distinct lack of growth for that period of time. They're not what are called mature markets.
I don't think this so called victory was worth it - and I wasn't the one paying the price. I know I certainly wouldn't be willing to pay the cost.
Seems to me Mr Invisible Hand hasn't given you such a bad life. Perhaps that's the problem? Perhaps Mr Invisible Hand has been too easy. You seem to be impressed by the tougher regimes, so maybe Mr Invisible Hand should have beat you down every now and then. You might have even enjoyed it.
Actually, if you've been investing in "alternatives" you would be getting the shit kicked out of you by Mr Invisible Hand. It's called counter-trending (most professionals avoid picking tops and bottoms to avoid the very thing).
It's what your asking the government to do with tax payer funds. If your silly enough to do this with your own money, that's your problem. Society doesn't and shouldn't be made to lose along with you.
If alternatives have a future they'll make it without the government.
Know they neighbor
Stuart McCarthy "The amusing thing about your post, Paul, is that the government owned national oil companies(possibly what you would call 'socialist'?) completely dwarf the international oil companies(Exxon et al) in both production and reserves. To use your term, "it's simple mathematics." Alternatively, it's simple reading".
I don't really know what this is meant to mean? If you think for example nationalization of the resource industry is wise, I'm sorry to write that it's the biggest mistake any government could make.
I'll keep it simple: Jed Clampett moved to Beverly Hills and lived his days off royalties. And they was good days. And he was hillbilly.
Governments have three major advantages, they make the law, they control the police and military, and their royalties are called taxes - absolutely discretionary and only limited to the imagination.
I could spend my life doing things a. I don't like, b. I'm not all that good at. I'm an [outsourcer] you could say when it comes to this. The thing known as the opportunity cost is the most misunderstood of all costs. A cost I've never misunderstood.
There isn't any advantage in the long-term of a government operating a resource business, none at all, and none that aren't covered by the three advantages I listed. Game theory has proved time and time again that at lest six, possibly eight of every ten people will not only decline a costless advantage, they'll take a personal loss if it means their neighbor isn't advantaged any more than them. Totally irrational and extremely self defeating. Emotionally this would be called a suicidal tendency. And there's a lot of it about.
Meaning
Paul, the post was poking fun at your very predictable ideological ravings. Basically every one of your contributions begins with an ideological premise then attempts to alter objective facts to reinforce same premise, often resulting in at least one howler of a factual and/or logical error.
Whether nationalisation is "wise" or not could be debated here for years without resolution. But the fact is that most of the world's oil production and reserves are controlled by national oil companies. That is just a simple fact. Exxon et al aren't "big oil" any longer. More like "shrinking oil."
From a strategic standpoint, oil importing countries (including the OECD, Australia etc) have been outplayed in a long term game of geopolitical chess by the likes of China and Russia while frittering away much of their own resource base at the whim of the invisible hand. In our (Australia's) case, we are entering the era of declining global oil supplies, and in all likelihood a series of oil shocks, already 3/4 dependent on imported oil and refined fuel, without so much as a strategic petroleum reserve, and a transport system that is utterly dependent on growing supplies of cheap petroleum. Well done Mr Invisible Hand. Good luck in your upcoming grudge-match against Mr Reality.
Yes, Paul Morella.
Yes, Paul Morella.
Human being are funny (and complex) buggers, aren't they? I don't reject your scepticism, when I'm greatful for my own nous, which keeps me out of strife when I heed it, also.
A winning industry
A Nigerian oil worker earns much more than he/she would in any other occupation - except the top echelons of government (surprise, surprise). Exxon operates its business much better than any government operates theirs. That's why unlike governments, they're successful, and enjoy all that comes with that.
This notion of wealth sharing amongst all is free-loader socialism - claim the gains and pass the loses. It ignores the history of mining and the history of a miners life. The mining industry is more than making up for the terrible inequalities of the past, directed squarely at its own employees. One may need land to grow wheat, yet someone must still grow wheat - and it aint city slicker socialist Joe and Joanne.
Lee Raymond was and indeed probably still is very powerful. I doubt any would seek him as an enemy. He is powerful because unlike government, Exxon makes money - one reason government free-loaders are able to free-load - taxes (you only pay them on profits) and all that brings. Miners fought for mine worker rights - nobody else's.
Oil stands on its own when it comes to profit. Alternative energy at the moment needs taxpayer help. No profit, no taxes. No taxes, no help. That in a nutshell is the power of Exxon. That's simple mathematics.
Nancy Pelosi (amongst many) (has the use of a private jet), should be down on her knees thanking the likes of Lee Raymond for every pampered moment of her undeserved prosperity. And no doubt one on one she (and others) do. Nobody ever accused a politician of not knowing where their bread is buttered.
Ideological ravings, again
The amusing thing about your post, Paul, is that the government owned national oil companies (possibly what you would call 'socialist'?) completely dwarf the international oil companies (Exxon et al) in both production and reserves. To use your term, "it's simple mathematics." Alternatively, it's simple reading.
A sobering review from Chris
A sobering review from Chris Saliba.
The world is trying to come to terms with, for want of a better expression, "modernism", as illustrated in our latest agonisings over refugee flows here in Australia. World wide, this time of soul-searching is imposed by the failures of environmental policy, neo con so-called foreign policy and casino capitalism. It's not just the resulting poverty and inequality that is the issue, either.
It's the blowing of civiisation's last best chance over the last fifteen or twenty years - the sheer squandering of scarce resources and future education at the feet of the vulgar Beckhams/Britney Spears culture that has come to exercise the thoughts of huge numbers of our society, when we need people to be oriented toward reality.
Only in an era of complete idiocy can expensive antics, like the Wall St bailout and Afghanistan, therefore occur.