By Donella Meadows
–January 10, 1991–
Daniel Yergin’s new book The Prize: The Epic Quest for Oil, Money, and Power is perfect background reading for this perilous time in the history of the Middle East. It provides a much-needed long-term perspective on the politics of the Persian Gulf, and on how politics everywhere is transformed by the presence or absence of petroleum, the world’s most problematic resource.
Since the first Titusville well in 1859, oil has meant light, warmth, convenience, prosperity, monopoly, pollution, billionaires (Rockefeller, the Rothschilds and Nobels, Hunt, Gulbenkian, and Getty, to name just a few), wild economic ups and downs, constant government intervention in the market, and war. These blessings and curses all follow directly from the geologic nature of oil.
Because it occurs in rare but often huge pools, oil, when it is found at all, is found in ridiculous abundance. The only limit to its availability is the willingness of investors to set up pumps and refining and delivery systems. From the beginning the oil industry’s worst problem has been “too many straws in the tub.” Periodic gluts have devastated prices. At one point in 1861 Pennsylvania oil plummeted to ten cents a barrel. In 1931 a barrel of East Texas crude was going for six cents.
The time-honored solution to that problem has been monopoly and cartel. Rare underground pools, however huge, can be cornered. When ownership is concentrated, pumping can be limited to keep prices high. OPEC was by no means the first entity to discover that principle. John D. Rockefeller was, in the 1850s, strangling his competitors with techniques that are now illegal — except when governments themselves engage in them, a phenomenon that is well documented in Yergin’s book.
In short, a free market in oil has always been disastrous to producers and has never been allowed to exist for long. Saddam Hussein’s invasion of Kuwait is just one more in the long history of power plays to determine who puts how many straws into the tub.
The other basic geological characteristic of oil, besides its local abundance, is just the opposite — its general and increasing scarcity. Where it isn’t, it will never be. Where it is, it someday won’t be. The faster it is used, the sooner that day will come.
At one time the world’s great oil powers were Pennsylvania and Rumania, both depleted now. U.S. production in the lower 48 is now only half of its peak in 1970, and it’s falling fast. Even Alaska is on the downward side of its production cycle. All over the world the wells that have been producing longest are nearing the end of their life expectancy. The newest fields with the largest remaining pools are in the Persian Gulf. That explains why Saddam’s invasion is of compelling interest to the rest of the world.
Yergin’s book shows that governments have long been willing not only to distort markets for petroleum, but to go to war for it. World War I demonstrated the supremacy of oil-powered ships, trucks, planes, and even, in the defense of Paris, taxis. World War II began with Japan heading for the oilfields of the East Indies and Germany heading for Baku and Ploesti. The overthrow of Mossadegh in Iran in 1953, the Suez crisis of 1956, and nearly all the jockeying of the Cold War have been oriented around crucial centers of oil production and transport.
As what Yergin calls the Petroleum Century nears its close, with depletion on the horizon, I have often wondered why governments go on being willing to kill over oil, rather than move on into the next century. On both economic and environmental grounds the ultimate energy strategy is based on solar-based renewables and smart efficiency, a combination that could make us independent of Arab oil within a decade. I used to think that the government is blind to these opportunities because of the political power of the oil companies, for which Yergin’s book provides plenty of evidence.
But, reading his descriptions of the crucial role of oil in war, I saw another reason for our unwillingness to get serious about renewable energy. Solar sources have properties exactly the opposite of oil. They cannot be depleted. They also cannot be cornered. They are dispersed, not concentrated. Rather than being available in a rush, all at once, they come to us at a measured pace.
That means that renewables can heat our homes, cook our food, move us around, carry our communications, but they are not well suited to provide enormous bursts of power. They could run our economy, but probably not move an M1 tank, or level a city, or punch a jetfighter through the sky. Judging from the formidable history of oil and war we all inherit, I would guess that the most fundamental reason a million soldiers are now poised on the Kuwait-Arabian border is not to redeem Kuwait, or to punish a dictator, or to protect our economy, or even to serve the oil companies. The real reason we’re going to war is to corner the resource that will ensure our future ability to go to war.
Copyright Sustainability Institute 1991