Daniel Yergin's timeless book chronicles the struggle for wealth and power that has surrounded oil for decades and that continues to fuel global rivalries, shake the world economy, and transform the destiny of men and nations. This updated edition categorically proves the unwavering significance of oil throughout the twentieth century and into the twenty-first by tracing economic and political clashes over precious "black gold.
The canvas of his narrative history is enormous -- from the drilling of the first well in Pennsylvania through two great world wars to the Iraqi invasion of Kuwait, Operation Desert Storm, and now both the Iraq War and climate change. The definitive work on the subject of oil, "The Prize" is a book of extraordinary breadth, riveting excitement, and great value -- crucial to our understanding of world politics and the economy today -- and tomorrow.
There are no reviews yet. The quest : energy, security and the remaking of the modern world Item Preview. EMBED for wordpress. Want more? Advanced embedding details, examples, and help! Energy authority Yergin tells the inside stories of the oil market, the rise of the "petrostate," the race to control the resources of the former Soviet empire, and the massive corporate mergers that transformed the oil landscape.
He shows how the drama of oil will continue to shape our world, and takes on the tough questions: will we run out of oil, and are China and the United States destined to conflict over oil? Senators thundered against the decision.
Some manufacturing companies, notably from the chemical industry, feared that the export facilities would divert gas supplies that they were counting on and drive up the cost of gas, threatening the billions of dollars they were investing in new plants. They were joined by unlikely allies—environmental groups that opposed the development of shale gas altogether. One environmental organization methodically registered an official objection to virtually every single export application going through the regulatory process.
But the opposition from the manufacturing companies dissipated in the face of the evidence—a continuing increase in natural gas supplies and the persistence of low prices. What finally quelled the controversy and alleviated industry fears was the enunciation of an export policy by the Department of Energy.
Such intervention was highly unlikely, but the protection was there. Sempra started the same year. The LNG business is becoming ever more global.
The much- expanded scale and the growing list of new buyers has changed the market. Long-term contracts remain, and new ones are being signed. But some LNG began to be traded differently—sold on a short-term basis. Cargoes would set out for one destination, and then, as a new bid came in, change course for another, and then change course again. LNG was now no longer only an integrated business; it was also becoming a competitive market of buyers and sellers.
In , after an investment of more than a quarter trillion dollars, Australia overtook Qatar to become the largest LNG supplier. Qatar was not going to stay in second place. It lifted a self- imposed limit and announced plans to add more capacity to regain the number one position. But a new era for LNG began in February From then on, like clockwork, every few days tankers almost a thousand feet long were departing the dock at Sabine Pass for the rest of the world. Suppliers and consumers of natural gas in Asia, Europe, Africa, Latin America, North America, and Australia were now linked together in a global network of trade.
Freeport and Sempra Cameron started exporting in Several more plants are under construction in the United States. This administration—and Donald Trump himself—was obsessed with deficits in the trade balance with individual countries, and no deficit loomed larger than that with China.
The administration seized on U. Previous administrations had also promoted U. South Korea was yet another country whose trade surplus with the United States rankled Trump. The meeting was meant to focus on the nuclear threat from North Korea.
But the president wasted no time in giving top billing to renegotiating the U. LNG worth more than half a billion dollars a year. But the message was clear: It behooved other governments to push their companies to buy U.
Yet the stance of the Trump administration created some perplexity. But it is mostly not natural gas in liquefied form—LNG—that is being exported. Through , U. This is part of the new map of North American energy integration. Since the nationalization of the Mexican petroleum sector in , that industry had been a government monopoly. Pemex, the state oil company, was responsible for everything from drilling to gas stations. But output has been on a steep decline. Without major reforms, and absent an opening up with the world, the deterioration would continue.
Mexico simply could not come up with the investment required. At the same time, the country was emerging as a major global manufacturing export platform.
Nissan announced that it expected to produce more cars in Mexico than in Japan. By , Mexico was the seventh largest car manufacturer in the world, and the fourth largest auto exporter, after Germany, Japan, and South Korea.
In the U. In the adjacent Mexican sector, despite similar geology, there was virtually nothing. Pemex had neither the cash nor the technology to venture into the deep water or even to fully develop its shallow-water reserves. The Eagle Ford geological shale trend continued down into Mexico. Subsequent laws enabled companies to bid against one another for rights to drill and created electric power markets.
The energy sector was now open to competition. The result was an inflow of investment and technology from both Mexican and international companies. New, modern gasoline stations sprouted across the country. New pipelines and power plants were built. The foundations were now in place to drive down the cost of electricity to consumers and industry and make Mexico more competitive in the world economy.
Yet not everyone supported the reform. Overall, his number one target is energy reform. Instead, he wants to restore Pemex—the most indebted company in Latin America—as the monopolist national champion. AMLO has also shut down the competitive bidding for new power plants, driving up the cost of electricity. Seventeen pipelines cross the border, carrying U.
This means that Mexicans will continue to use U. While Petrobras is highly experienced in deep waters, this was a very heavy burden to put on the shoulders of one company, made worse by the huge debt load it would accumulate in the process. In and , after the impeachment of President Dilma Rousseff, the Brazilian government changed tack, initiating major reforms that allowed foreign companies to bid to be operators in the pre-salt. The result was a surge of new investment, technology, and ideas.
He succeeded in reforming the bankrupt pension system, which allowed government employees to retire early—in some circumstances, at fifty-six for men and fifty-three for women—and further opened up Brazil to the global economy and international investment.
But further reforms of the energy sector have been hampered by turbulent politics and a congress with more than twenty political parties. The coronavirus pandemic in hit Brazil hard, adding further to the political turbulence. When it comes to energy policies, Brazil and Mexico are two ships of state passing in the night. Chapter 6. P ipelines are the connectors, the necessary lines on the map that tie supplies to markets.
In previous decades, they hardly featured in public discussion. Anti—fossil fuel activists seized on blocking pipelines that would connect new resources to markets, and the twelve-hundred-mile Keystone segment became their galvanizing and highly visible symbol.
Less noticed was that the proposed pipeline length was equivalent to about one-half of 1 percent of the over two hundred thousand miles of oil pipelines that already lay beneath the soil of the United States. Canada and the United States are highly integrated on the North American energy map. In Canada, technological advances had led to rapid growth in production from the oil sands, primarily centered in the province of Alberta. While some is consumed in Canada, most is exported to the United States.
Canada supplied, in , about 50 percent of total U. The growth of Canadian imports was seen as a major contribution to U. Though not well recognized, the life cycle of GHG emissions from some newer projects are at or near the same level as average of crude oil processed in North America and within the same range as other globally traded crude oils. Keystone, whose initial leg was proposed in , is actually a network of existing and proposed pipelines developed by TC Energy, formerly TransCanada.
Striding dramatically out of a labyrinth of huge pipes, he took to the podium to, in effect, dedicate the southern segment of the Keystone system. Pipe was bought, workers hired, but the project was stymied by multiple legal and regulatory challenges, necessitating one new review after another. But it was not only in the courts. Protestors chained themselves to the fence around the White House. Two bureaus at State spent a total of seven years reviewing the proposed pipelines and eventually, in , came out with a report large enough to fill a bookshelf—eleven volumes in all—saying that the project should be approved and that there was no environmental reason not to do so.
But new legal challenges quickly emerged. In the meantime, substantial amounts of oil are being transported to the Gulf Coast by railcar. What Keystone has clearly demonstrated is that pipeline approvals are no longer like watching paint dry. They have become potent political dramas.
The Dakota Access pipeline was designed to move almost , barrels per day from the booming Bakken in North Dakota to a terminal in Illinois. The battle that ensued encapsulated what has become a central struggle over energy in the United States. The new energy map of North America is incomplete without new pipelines to move the new oil and gas supplies from wellhead to markets. But opponents of oil and gas have focused on blocking pipelines as a way to choke off oil and gas.
Dakota Access, a project of Energy Transfer Partners and other companies, would supplant railcars of oil a day. It had gone through its environmental reviews and had received the approval of the U. Army Corps of Engineers, which is required by law to sign off on parts of pipelines that cross or go below rivers and waterways.
The company had also consulted with about fifty Indian tribes and made revisions in the route as a result. The last thing to be completed was a 1,foot segment—a quarter of a mile—that would be a hundred feet below the bed of the Missouri River.
The Army Corps of Engineers gave the go-ahead in a 1,page report—almost one page for every foot of pipeline. But then the Standing Rock Sioux tribe, whose eighty-two hundred members live on a nearby reservation, objected, saying that it had not been consulted and that the pipeline, though buried deeply under the riverbed, would threaten their drinking water as well as violate both sacred tribal sites and the Fort Laramie Treaty of Energy Transfer replied that its efforts and those of the Army Corps of Engineers to consult had been spurned by the tribe and that the pipeline passed under private and federal lands, not tribal lands, and would be secured far beneath the riverbed.
But then protestors on foot and horseback breached a barbed-wire fence into a construction area where six bulldozers were operating. Guards sought to push them back with pepper spray and a couple of guard dogs. An activist filmmaker was in position at the front line to record the event. The video went viral. Selected pipelines shown transport oil from North Dakota, Canada, and the Permian. Eventually as many as ten thousand demonstrators, rallied by the environmental group Greenpeace, converged near the site, creating a media spectacle that went on for more than two hundred days.
At one point protestors tried to get a herd of bison to charge law enforcement officers. A few months later, with the change in the White House, the Trump administration issued an executive order overturning the shutdown.
Meanwhile, freezing weather and then the threat of melting snow and floods prompted the state to close down the protest camps. The last 1, feet of the 1,mile pipeline were completed.
But the battle was hardly over. The protestors and activists and their legal allies promised to fight both new and refurbished pipelines. But pipelines will continue to be at the center of the battle over new energy infrastructure in the United States, spurred by the clash between the shale revolution and environmental activism. Chapter 7. I n August , exactly one year after the end of World War II, a tanker sailed into the port of Philadelphia laden with , barrels of oil for delivery to a local refinery.
But now the country was becoming a net importer of oil. By the late s, with a postwar economic boom and car-dependent suburbs spreading out, domestic oil consumption was outrunning domestic supplies. Two decades later, by the beginning of the s, the balance between supply and demand in the global oil market had narrowed and indeed had become taut. That set the stage for the oil crisis of —the October War and the Arab oil embargo—that sent petroleum prices spiraling up fourfold.
Lines at the gas station and high gasoline prices fueled public outrage, and imports became a burning national issue in the United States. The oil crisis was a shock not only because of the economic and price impact.
That objective became the mantra of every president after him. But the track record never matched the rhetoric. By , net imports had risen to 60 percent of total consumption, and seemed sure to rise in the decades ahead. But the advent of shale oil over the next few years meant that the United States could once again even become an exporter of crude oil.
This prospect ignited a new political battle, especially since crude oil exports were for the most part legally prohibited. Why was there a ban on exporting crude oil? After all, the United States exports an almost endless list of things, from jet airplanes and chemicals to soybeans and movies. The ban was a relic, imposed during the oil crisis years of the s. An angry public would have been even more angry were oil to have been exported at a time when prices were skyrocketing.
The ban had also helped to protect the domestic system of price controls that the Nixon administration had instituted to fight inflation. A few small exceptions to the ban were allowed. But the ban did not really matter, as the United States was a larger importer, and domestically produced oil went directly into U.
In the late s, President Jimmy Carter, despite opposition from the liberal wing of his own party, began phasing out a complex, dysfunctional system of energy price controls, which discouraged investment and set different prices for the same type of molecule. The following autumn, without any fuss or hullabaloo, the Reagan administration also ended restrictions on exporting petroleum products—gasoline, diesel, and jet fuel, and other products that had gone through the refining process.
No one seemed to notice. But the ban on crude oil exports remained. There matters rested until the sudden emergence of shale oil. As the volumes rose so dramatically, so did a call to lift the export ban. Very simply, there is a big mismatch. Much of the U. As a result, these refineries are not well suited to handle the swelling volumes of lighter, higher-quality shale oil. As the volumes of light oils increase, the refineries become less efficient, imposing a financial penalty and, ultimately, higher costs on motorists and other consumers.
From an economic point of view, the most rational thing to do is let markets determine where the oil goes. If the United States exports a hundred barrels of light oil from one port on the Gulf Coast and imports a hundred barrels of heavier oil somewhere else on the same coast, the U.
But the system would be more efficient, and the economic benefits for all parties, including consumers, would be greater. The politics, however, were quite different. In contrast to the placid response to the decontrol of product exports in , crude oil exports blew up into a white-hot political issue. The result was a raucous public debate. The European Union broadcast the same message, declaring that U.
The deal was signed into law on December 18, A week and a half later, a tanker cast off from the Texas port of Corpus Christi carrying a cargo of crude oil from the Eagle Ford, bound for France. The ban on crude oil exports was now history. And even as the United States continued to import oil, it was also exporting almost three million barrels per day of crude oil—making it one of the largest crude oil exporters in the world—as well as over five millions barrels per day of petroleum products.
This was not just a matter of additional oil supplies. What was unfolding was an historic shift in both world oil and the global economy, and in power relations around the world.
But later in the year and into , that price, along with that of other commodities, began to rise—and kept rising. The world economy grew by just 30 percent, the United States by 17 percent, Europe by 11 percent, and Japan just 8 percent. In response to the supercycle and rising commodity prices, companies dramatically stepped up their investments to produce more commodities.
How could one think otherwise? In June , a major international bank convened its annual conference for hedge funds and other investors at a bucolic conference center called The Grove outside London. Yet by that time the supercycle was already ending. Economic growth in the BRICs was slowing, and that meant a slowing in the growth of consumption of oil and other commodities. Demand and the BRICs would no longer be the defining factors for world oil.
The defining factor was now U. Other countries were adding new supplies, notably Canada, Russia, Brazil, and Iraq. But dominating the growth was shale—by far. This was significant not only for the world market, but also for geopolitics.
Chapter 8. In modern times, however, it is not only the magic of the White Nights, nor the majesty of the city and the charm of its palaces and canals, that pulls people from around the world.
During those days almost ten thousand people are drawn there by the St. Petersburg International Economic Forum, which is held under the sponsorship of the hometown boy who made good, Russian president Vladimir Putin. In , Putin shared the stage with German chancellor Angela Merkel. This was when the global impacts of the U.
The lack of chemistry between the two leaders was all too evident; the interaction between them was brittle and cold, and they kept their eyes fixed more on the audience than on each other. When the formal interview was over, questions came from the audience. In passing, however, the questioner happened to mention shale gas. At that, the Russian president erupted. He launched a broadside, warning against possible shale gas development in Eastern Europe, denouncing shale gas as a grave danger, an environmental threat, a despoiler of land and water.
The questioner sank back into his seat. Putin reacted so vehemently because shale gas was also becoming a matter of geopolitics.
Around the world, it was becoming clear that the unconventional revolution is about more than the flow of oil and gas. It is also about the relative positions of nations. But no longer. The current extensive U. That, combined with the size of its oil reserves and its ability to quickly increase or decrease output, makes Saudi Arabia the balancer in the world market. The nature of the U. Yet in , even before shale oil, imports from the Gulf amounted to less than 20 percent of total U.
As already noted, oil sands in the province of Alberta had made Canada the largest supplier of U. In , only about 11 percent of U. For their part, Gulf producers are focused on Asia as their most important market. Disruptions of supply affect the global system into which America is so integrated—with almost 30 percent of U.
GDP and close to 40 million jobs resulting from trade with the rest of the world. Even if the U. Case study number one is Iran and the nuclear agreement. In , sanctions were applied on Iranian oil exports and finance. The aim was to force Iran to the negotiating table, as we shall see later.
The expected shortfall in world supplies would drive prices up, hitting oil- importing countries, causing the sanctions to crumble. The rise of shale has been one of the keys to diversifying the European gas market and enhancing energy security. When European leaders talk about energy security, they are often less focused on oil and more on natural gas—and in particular the degree of reliance on Russian gas.
This concern was magnified by the reliance on pipelines with their inherent inflexibility. Enter U. European buyers now had multiple options and choices, which meant diversification of supply—the keystone of energy security. G Coast and crossed through the Panama Canal into the Pacific. Its destination was China. A few months later, another tanker unloaded at Shenzhen the first shipment of U. LNG to China. These voyages demonstrated that the supposed zero-sum life-and-death competition between China and the United States for access to constrained energy, so vividly imagined just a few years earlier, was not going to happen.
The shale revolution removed at least one major area of contention in U. While the United States is only one among several suppliers of oil and LNG to India, this growing trade has brought the two nations closer together and added an important positive new dimension to a relationship that had been more contentious in the past. Japanese companies, and the Japanese government, are also keen to receive U.
LNG, already significant for electric generation, filled much of the void—in responsible for almost 40 percent of its electricity generation. South Korea, at the time of this writing, is the largest buyer of U. Moreover, the option of U. For how long and how much more will U. Some say it is still early in terms of the ability to recover resources.
Everywhere else, each time the map of the resources got smaller. Environmental opposition could become more potent. Yet most new wells drilled in the United States have some element of fracking; such a ban would mean a flood of imported oil, and the negative economic impacts would be felt across the country. Geological constraints that are not currently foreseen could emerge.
Or, although hardly thought of beforehand, a viral epidemic could shut down demand, drive down prices, and lead to a retreat in drilling. The world has never before seen anything like the speed or scale of the growth. It is as if, in in terms of volume, the United States had added, in little more than a decade, the equivalent of another major oil-producing country. Yet even as U. The shale revolution was in search of a new revolution—this one based not on technological breakthrough, but on its economics.
Shale has been described as a manufacturing business. In contrast to traditional wells, the output of shale wells, as noted earlier, falls significantly over the first year or so before leveling out. Thus companies constantly drill new wells to compensate for the declines in their previous ones. For the independents, it has been all about growth, funded by investors and debt.
But then growth was no longer enough. The investors who had previously cheered on the companies as they strove for ever-higher production now soured on them. Investors wanted money back; they wanted a return on their investment. When investors looked at the shale companies, it was no longer growth at any cost but rather growth at what cost. The need to reduce costs sets the scene for mergers and consolidation.
While the independents have scaled back, the majors have stepped up. ConocoPhillips, once a very international company, has shifted back to emphasize North America onshore. Two of the largest majors, ExxonMobil and Chevron, have both partly pivoted back to North America, directing significant investment to the Permian in order to make it a growing part of their global portfolios. To a lesser degree, BP, Shell, and Equinor have moved in the same direction.
When it was all added up, the growth in U. By February , it had reached the highest level of production ever—thirteen million barrels per day—more than Saudi Arabia and Russia and on the way to tripling the level of At that moment struck the calamity of —the coronavirus pandemic and the shutdown of the globalized world economy, which slammed shale as it did most industries.
As a result of a drastic cutback in investment, shale output will go in reverse and decline. When growth returns, it will be at a slower pace. But, whatever the trajectory, shale is now established as a formidable resource. This was made starkly clear by the unprecedented interaction among Moscow, Riyadh, and Washington in the vast oil market crisis in that the virus unleased, to which we will turn later. Moreover, the struggle to adjust to the crisis demonstrated in a new way how energy continues to be so central to geopolitics.
Certainly that is the way Vladimir Putin sees it. In , the Soviet Union collapsed and fifteen newly independent states emerged, ranging from the tiniest, Estonia on the Baltic Sea, to Kazakhstan, equal to India in geographic size.
Yet the Russian Federation—Russia—still looms over the newly independent states. It sprawls across the map, encompassing eleven time zones from Europe in the west to the tip of the Chukotka Peninsula in the Far East, just sixty miles across the Bering Strait from Alaska.
Yet Russia still has formidable accoutrements of power. It has scale. I will definitely recommend this book to non fiction, history lovers. Your Rating:. Your Comment:.
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