Table of Contents
The world has been at war for a long time. For years, world leaders have been fighting to gain control of oil reserves found in the Middle East. This is because oil is “gold”. Oil is paramount to wealth and power. Countries with oil control the world prices of commodities and the global trade. This is because oil is used to run machinery in all industries ; hence a raise in oil charges leads to an raise in the cost of inputs; consequently, firms produce less and charge more for commodities. Also, an increase in oil prices affects the transport network. This is because fuel prices increase leading to an increase in the travel expenses which consequently affects how many people travel either for leisure or trade. The aim of this is to show how much oil affects the world’s economy. This explains the wars that have been in existence for centuries between the Middle East and the western world. All leaders want to control the oil reserves since it is the key to world power.
This paper will focus on the book, The Prize: The Epic Quest for Oil, Money, and Power by Daniel Yergin. The book gives a chronological sequence sine 1850-1990 of events that have affected the global oil industry. The book got published in 1990. This date was significant because, in the previous two months before the publication, Saddam Hussein had ordered the invasion of his troops into Kuwait. This period was clouded by wars, and it was an extremely dark period since three months after the book was published; US troops coordinated and dispatched troops to the Middle East with the objective to oust the Iraqi from Kuwait. This coverage won the hearts of many and led to the book winning the Pulitzer Prize in 1992. This marked the beginning of the enmity between Iraq and the United States, especially their deceased president, Saddam Hussein.
The book begins in a farm, in Pennsylvania, in the office of a professor. This was five years before the American civil war started. The professor made a discovery that revealed substantial marketable properties of rock oil. Yergin thus traces the events hat transpired after this discovery and how the world was transformed, as a result. The author, Yergei, has used third person to tell the history of the world as it was.
The reliability of the information in the book is unquestionable since it was developed in a ten year span. Daniel, alongside his staff carried out extensive research on the oil industry to ensure accuracy of the data. This book was so widely read that it formed the basis of a film that runs for approximately six hours. This paper will cover the summary, themes, characters, and the styles in the book as well as two pages on my opinion, as a reader, regarding the book.
1) Hydrocarbon Society
People relied mainly on coal to provide energy, before the discovery of oil. However, soon, oil prevailed and took over the lives of people. People started heavily to depend on oil for energy both in the homes and the industries. This was in the 1850s, at the time; coal was the most sought after resource since it was cheap and convenient. However, when gasoline fueled automobiles started becoming popular, the need and demand fro oil became greater. Technology also played a crucial part in all this, since it was through science and technology that people discovered that the oil could be refined and applied for other applications. “Kerosene, gas, and candles met American demand for artificial light at the end of the 19th century, but all three presented serious health and safety problems. In 1877, Thomas Edison perfected the incandescent light bulb, commercialized his invention, and priced it competitively with gas. His first generating plant opened in 1882. Electricity offered superior light and proved instantly irresistible.” (Pg 100) Thus, the industrial world became known as a "Hydrocarbon Society" and its residents became known as "Hydrocarbon Man." Oil became a necessity and life without it seemed impossible. Oil is a finite resource, and whichever country could gain ownership of the reserves would be guaranteed of world power and control. This is what has been causing war between the Middle East and the western nations since they fear that the Middle East will control them.
Today, the United States, imports 40% of its oil from the Middle East to run its $14 trillion economy. Every developed country has had to rely on oil at some point to run their industries especially during the industrial revolution. Today, we cannot survive without energy. Everything around us depends in one way or another on petroleum. This means the world is one large hydrocarbon society where everyone relies on oil, and its applicants to survive.
2. The relationship oil to the rise of modern capitalism
Oil is an extremely vital income generator in the Middle East. To run the economy, these people heavily rely on oil. In the beginning, the Middle East was a monopoly. They determined oil prices and the entire world had to abide. However, the introduction of other oil producers changed all these. When the Soviet Union broke Russia was able to invest in production and exportation of oil. Today, African countries like Libya and Nigeria have also emerged as dominant oil producers. This has broken the monopoly power of the Middle East and has to some extent helped to regulate oil prices in the world. This has created a lot of stability since the world is not solely relying on one region to provide them then with the most crucial resource in the world. (pg 650)
The discovery of oil led to a lot of political turmoil. Dictators were born and started controlling these reserves. For example, Saddam Hussein and Gadaffi, all who were killed for their involvement with terrorist activities. This shows the power oil has and how much damage it can do. For instance, Iraq was suspected of using funds from oil to develop nuclear weapons. This posed a serious risk to the world. However, the enmity between the Middle East and western countries can be attributed to the west’s desire and attempts to take over and control the oil in these countries. This led to political rivalry, where the western countries made every possible effort to make sure they had control of the oil. This sparked off rebel groups who were opposed to the invasion by foreign countries who were trying to “steal” their resources. However, after 1973 embargo, it seems justifiable that these countries ought to be controlled because they hold a lot of power that could damage economies.
3. Intertwining relations between oil, politics, and international power
Yergei in the book shows the relationship of oil, international power and politics. Oil is an indispensable resource that the world has become dependant on, hence cannot function without oil. Thus, when this became clear in 1973, the countries that produce oil realized that they could use this resource as a weapon. This, thus, triggered international politics that has been in existence since until today. An example of his is shown when the book talks of the Arab-Israeli conflict, which resulted in the Arabs reducing their oil output. Consequently, the market prices of commodities shot up increasing the cost of living tremendously. Thus, the Arab oil embargo was implemented forcing the western countries to implement strict measures in order to ensure their future, as far as oil was involved, was safeguarded. The outcome of the embargo was a public relations disaster and billions of dollars was lost, as a result. Another impact of this 1973 embargo was that the west realized they needed another plan and alternative to supplement Arab oil. Thus, this event altered the modern history of international politics and the history of oil.
The role of oil in steering politics is also evident in the modern post World War 2 geopolitics. When the Americans realized that oil was becoming a vital commodity in ensuring the industrial era, the president, Franklin D. Roosevelt, at the time flew to Egypt where he met with the Saudi Arabian president. “The thought of kerosene fires at sea was terrifying, but after the first safe delivery to London in 1861, global trade grew rapidly. Europe was oil-hungry for the same reasons as Americans: lighting, industrialization, and urbanization. U.S. consuls eagerly pushed the new "Yankee invention," and helped develop distribution network” (Pg 200). This was in 1945 when the Second World War was coming to an end and, it opened the chapter of oil politics. Another reason that triggered this visit is the fact that coal mining states in the US were slowly dying. Many people started turning to Oil as a source of energy. Thus, the president needed to ensure reliable relations between the countries to safeguard the oil supply to the US. The two presidents decided on a deal where the US would protect the Saudi Arabian oil fields in exchange for preferential treatment in the oil market this was to ensure continuation of the good relations. The impact of this deal was that Germany lost the world war due insufficient oil to fuel their tanks an issue that created conflict between the US and Germany since weeks before Roosevelt visited the Saudi president he had rejected a deal with the Germans.
After the world wars ended, the US on several occasions was engaged in wars over oil. For example in the early 1990, the US went to war with the Iraqi late president, Saddam Hussein, who had invaded Kuwait. It is intriguing to note that the two occasions when the US went to war over oil were under the George Bush regimes since it is rumored that the two have connections to oil money.
Some of the key events that shaped the oil history and international politics are explained as discussed in the book. These include:
• The Embargo
• The Achnacarry agreement
In 1928, some leading oil companies came together with the sole objective of ending oil price wars. This agreement is also referred to as the “As-Is" Agreement of 1928. However, the companies failed to meet the objectives since most key players in the oil industry had been left out of the movement. Thus, when the Second World War started the movement died.
This was a move by governments to acquire oil by purchasing the right from oil producing countries to own parcels of land, as well as the underlying resources. However, soon after the second world wars, the method ceased.
The embargo was as a result of the Arab-Israeli war. The Arabs starved the world of oil leading to an increase in the price of living. Although this embargo was weak and lasted shortly, the impact oil had shaped the history of international politics as well as oil. This is because the west sought to find alternative sources of oil and energy.
The Prize is a book that tells a story of how oil has dominated the world economy and politics. This saga has affected all continents in the world, although not in equal measure and it has been steering the world politics for centuries. The early chapters of the book revolve around the time when the leading oil companies were being established. They also cover the impact of these companies in terms of the adaptation of governments, the threats the companies possessed, the benefits of these companies and the general impact on society. Although, not known to many, the discovery of oil influenced the outcome of the world wars immensely, and up to date, it has continually shaped the politics of the world.
The book shows how much oil affects the world economy as well as international relations. Some of the questions that are addressed in the book are:
• How does oil change world politics and countries positions?
• What are some of the economic or political risks involved in the oil business, and ways of managing them?
• Will the world’s oil supply run out? Will the world shift its demand? What could be the effects in oil prices in a period of ten years, will they be low or will they increase?
• Will the word’s changing climate affect the oil business?
• What is the future for Hydrocarbon Man?
However, all these questions have been asked time and time again throughout the text and no answer has ever been given. To answer this, world has to first understand how oil became such a defining commodity in the society. Over the years, there has been a ceaseless struggle by world countries to attain energy security. This is because energy is what drives the country. It is what makes life easier and successful. Hence, these conflicts never cease as everyone wants a chance to guarantee their future.
The Soviet Union is also a key character in the book. This is because they are a leading oil exporter and after its break up the new states joined the global oil industry. Thus, after years of wrangles between the states, it was decided that the wisest thing would be to build a pipeline that would link Baku to a Turkish port in the Mediterranean sea. Thus, it can be stated that the two most life changing events that have transformed the oil industry are the gulf war and the break up of the Soviet Union. . (pg 608)These two actions significantly transformed the international systems. This marked the birth of globalization as countries shifted their focus from oil security to growth of economies. Thus, international trade thrived, and the world stated operating as a single national economy. The years that followed were marked by abundant petroleum supply and low oil prices, a factor that helped boost the economies of several countries. In addition, oil ceased being a strategic issue of contention and world leaders focused more on developing their countries rather than fighting each other. Countries such as China and Japan began emerging and becoming noticed. As the author says, "Was, then, oil power an illusion, or was it a product of a constellation of economic, political, and ideological circumstances? Was it a one-time phenomenon, or will it prove to be a recurring fixture of international life? Control of, or at least access to large sources of oil has long constituted a strategic prize. Of that there can be no doubt. It enables nations to accumulate wealth, to fuel their economies, to produce and sell goods and services, to build, to buy, to move, to acquire and manufacture weapons, to win wars. Yet it is also a prize that can be overvalued. Moreover, the very reality of a world based on oil is coming to be questioned" (Pg 783).
The low oil prices led to the restructure g of industries world wide. The oil majors were remade while other companies, for example, BP merged with others to give them a better chance in the market and a competitive advantage. For instance, BP and Amoco merged to become BP Amoco. Soon after, BP Amoco merged again with A.R.C.O to expand, and emerged as a much bigger BP, Exxon and Mobil. Another example is Chevron, which merged with Texaco and started using the name Chevron. These are some of the industries that underwent restructuring in order to expand and gain competitive advantage in a rapidly expanding market. European companies were also not left out; rather they also merged to become bigger. All in all, in the 1990s, the focus in the policy makers mind, shifted from oil to other issues. Energy security was established, and countries assumed that prices would always remain low. As technology developed, the distance between people and countries reduced, and trade was much easier than before. Moreover, the excitement of the new technology drew more people to technology based careers whilst abandoning the petroleum industry. This was the first time in an exceedingly long time when the world was not thinking about oil.
However, this peace and tranquility was short lived. Soon after the September 11, terrorist attacks in the United States. Massive lives were lost and damage worth millions of dollars incurred y the states. This greatly influenced the international relations in the world. As a result, the US and it s allies retaliated where they invaded Afghanistan, and drove the Taliban away. In addition, they invaded Iraq. Since the gulf war, the two countries had never been in any major war; however, this was different. Despite warnings that an attack on Iraq would jeopardize, if not destroy, the world peace as well as the international relations, George Bush invaded Iraq. This was referred by some as the second gulf war. International relations were seriously disrupted. For instance, Germany and France were opposed to the invasion while Britain supported the Americans. (pg 342)
Some of the economic outcomes that resulted from this invasion are that Libya rejoined the international community. However, the Persian Gulf and the Middle East were engulfed in violence. This greatly affected the economy in the Middle East, and the oil prices shot up again rendering the world economy in a state of chaos. In addition, the US and Europe underwent a turbulent banking and credit crisis e in 2007 and 2008, and this time it was the emirates who bailed out Western financial institutions.
North America, Europe and Japan underwent massive economic growth, a fact that made oil a key factor in the economy. High economic growth and rising incomes in China, India, the Mideast and other emerging countries meant strong growth in oil demand, which was used to power industry, to generate electricity, and to fuel the rapidly growing fleets of motor cars and trucks. Another notable aspect is that Russia’s oil output begun to recover adding to the quantity of oil in supply.
However, oil and its products have one outstanding disadvantage, which is the pollution of the environment especially through the release of carbon dioxide. Thus, to curb this issue, the world countries came up with the Kyoto protocol. (pg 156)This was a treaty signed by countries agreeing to a reduction in the release of carbon dioxide in the atmosphere. Although initially, the US senate rejected the treaty because it seemed to limit production, today, they are committed ambassador of the project.
On the issue of energy security, the world is still facing some fears regarding the issue. The US imports over 70% of its oil, thus if the world at some point would fail to agree and withdraw from trading with the US, the country would suffer key set backs. This shows the importance of energy security in any economy. Globalization has made it possible for countries to trade as one community; this has made things much easier as transactions today take seconds online. Statics reveal that the United States depends on petroleum for 40 percent of the energy used both domestically and commercially. This is the energy that helps in the operation of the country’s $14 trillion economy. The question on energy security has been triggered by the continuing dramatic changes in the world oil. The two world wars, World War one and World War two, were real life examples of how much energy means to a country. For instance, Germany lost the war because it lacked oil to run its tankers. However, the current international systems for energy security started in the 1970s. Today, there are new entrants in the oil market where China and India have become major consumers of the commodity. Consequently, there is a rising need for countries to address the issue of the security (Physical) of energy infrastructure. This includes pipelines transmission lines and power plants as well as other infrastructures that help in the transport of oil. It should be noted that it is crucial for the physical security of the infrastructure and the integration of India and China in the market to be accomplished to enhance energy security in the twenty-first century.
However, today things are better because other forms of energy that were previously non existent have been developed. For example, wind energy has been successfully used to drive some machinery. Solar, on the other hand, has become a very common source of energy. This is because it is not only clean, but it’s also free and countries fo not have to stage wars struggling over its control. Water energy is also as efficient and effective. These discoveries were made as people were trying to find alternatives to oil, which was proving to be frightfully expensive, and a pollutant. (pg 160)
Today, people are developing a culture of using oil and other energy sources with greater efficiency. This is a common global policy objective aimed at conserving the resources available and minimizing pollution. The industrial world, on the other hand, is also almost twice as energy efficient as it was in the 1970s when the countries were desperate fro the commodity. Thus, Given these statistics, it seems that the future projection of efficiency is hugely promising. However, the sad bit is that it is estimated with the increase in population, income and growing world economy, the world will require at least an additional 40% of oil and petroleum in the next 25years. The solution thus lies with the policy makers and the market trends as well as the level of technology that will be available at the time and the scale of the developments. This means that, years to come, irrespective of the oil prices, oil will still be a crucial factor in determining world politics, as well as the global economy. This fact makes the western countries uneasy because it means they still have to maintain ties with the Middle East to get oil. In addition, oil will also be responsible for determining how people live, the lifestyles they can afford, and the global calculus of power. This is why Daniel, in this story, provides a framework of issues faced today by the world in an attempt to help the world understand what needs to be done. He also aims at showing the policy makers in the world the importance of the choices and decisions they make. This is in regards to their international relations with other countries as well as the risks and opportunities that are that lie ahead. Thus, the book, “The Prize: The Epic Quest for Oil, Money, & Power” is not just a history book like any other rather it is a book that gives its readers a starting point to comprehend the impact of energy and in understanding how oil is likely to shape the future. (pg 240)
Half of the world’s wars have been in the pursuit of power. The world super powers have been competing for the resources available for centuries. Oil has played a vital role in fueling these wars. Oil was not a commodity used in the beginning. People were comfortable using coal to run engines, cook, light up their homes and supplying energy. However, when oil was discovered, everything changed. Everyone wanted to own it and control it. Governments went as far as trying to own rights to parcels of land in order to take advantage of the resources underlying. In addition, some countries, for example, America, went as far as holding back door meeting to ensure they got preferential treatment in the oil market. When the Arab Countries realized the power they possessed, they started using this resource as a weapon against their enemies. A notable example is the Arab embargo where the Arab countries reduced the output of oil because the Americans favored the Israelites. This caused a lot of chaos and countries lost billions of potential revenue. (pg 560)
As a result of this, countries started looking for alternatives that would supplement oil in their industries. Today we have electricity and solar panels that operate independently of oil or petroleum. Other countries, for example, Russia and Nigeria, also discovered oil, though, not in as much quantity as in Saudi Arabia. This offered hope in the world. In addition, the availability of oil in other countries reduced the monopolistic power of Saudi Arabia as the sole producer of oil globally. This fact led to a reduction in oil prices, a fact that made it possible for economies to grow and expand.
In addition, the end of oil struggles made it possible for other countries to focus on development of innovations like the internet which has taken the world by storm. Generally, the world was a truly peaceful place until the 9/11 attacks which rendered the international community in turmoil all over again. For instance, The US, Germany and France were in disagreement regarding the US invasion of Iraq. The events that followed resulted in world wide financial crises. Economies suffered immensely especially in 2007 and 2008.
Oil prices play a very vital role in the world. For instance, when the prices are high, price of commodities increases tremendously. This lays a heavy burden on individuals who have to spend more to have their needs met. In addition, production and economic growth is reduces because the cost of production increases discouraging the current producers from producing and hindering potential entrants in the market from joining for fear that they will not be able to match up to the high costs. Transport sector is also significantly affected y oil prices because people have to pay more to transport goods and raw materials. Thus, oil producing countries hold a lot of control over the world; hence the international community ought to intervene and put measures that will prevent them from using these free God given resource as a weapon to punish the world because of a war that started long ago.
The book was exceptionally helpful in explaining the history of oil and how countries have been struggling to own the control of this resource. It gives the reader a clear description of events that transpires and shaped the world as known today. It also has some shocking revelations that most people would probably be too ignorant o find out themselves. All countries must learn to share what is available rather than trying to reap each other off out of greed for power. This has been the greatest evil in the society where everyone is greedy for power and those who have it refuse to let it go easily. This, in my opinion, is what has caused all the bloodshed in the world and animosity that would probably have been avoided. Some people have also attributed terrorism to oil wars where some Arab groups oppose the interference of western countries in their economies. To some extent, this seems true but, on the other hand, giving a country or a region the sole control of such a vital resource would undoubtedly cost the world a great deal if they decide to use it as a weapon against the world.