Bottom of the Barrel

Why the Saudis wish they’d discovered water instead.

The worlds first oil well was drilled 150 years ago on a farm two miles outside the wooded hamlet of Titusville, Pennsylvania, by a man named Edwin L. Drake. Drake was forty years old, an erstwhile railroad conductor and a gifted huckster; he arrived in Pennsylvanias logging country with a bogus titleColonel E. L. Draketo better impress the locals. His financiers had mostly written him off by August 1859 when, more than a year after he started his work, Drake finally struck oil. The farmers who worked along Oil Creek came running to witness the future bubbling up greasily from the pasture.

What happened nextrecounted in detail in The Prize, Daniel Yergins 1991 doorstop of an oil historywas dizzying. Speculators rushed to buy every available scrap of land in what became known as Pennsylvanias Oil Regions, goaded by tales of miraculous good fortuneone well had repaid $15,000 on the dollar over less than two years of production. The states oil output more than sextupled between 1860 and 1862. Up in New York, there wasnt enough office space on Wall Street to accommodate all the new companies the industry was spawning.

But if some colossal fortunesmost notably John D. Rockefellerswere made on Pennsylvania oil, far more were ruined by it. The fever of speculation, coupled with the unpredictability of the new industry, caused prices to plummet from $10 a barrel to 10 cents over a span of just one year, then shoot up again. In one Pennsylvania boomtown, a plot of land that was worth almost nothing in 1864 was sold for $2 million a year later, then again for less than $5 thirteen years after that. The upheavals ultimately swallowed up Edwin Drake himself; the man who first drilled the industry into existence had a brief, disastrous run as an oil buyer on Wall Street, and just seven years after he hit oil was reduced to begging money from his friends. James Townsend, the Connecticut banker who funded Drakes work, fared better, but no less bitterly; the suffering and anxiety I experienced, he later wrote, I would not repeat for a fortune.

While contemporaneously volatile Gilded Age industries, such as railroads, have long since settled into normalcy, oil remains afflicted by the paradox that Drake stumbled across a century and a half ago: the people who should theoretically reap the greatest benefit from oil are often the ones who suffer the most on account of it. Of the worlds top ten oil-exporting countries, only Norway can claim to have an open, democratic society and a transparent government; only Norway and the United Arab Emirates rank in the IMFs top ten for gross domestic product per capita. Seven of the top ten, meanwhile, are rated as in danger on the Failed States Index compiled this summer by the Fund for Peace and Foreign Policy magazine. All in all, Sheik Ahmed Yamani, the oil minister of Saudi Arabia from 1962 to 1986, once grumbled, I wish we had discovered water.

This is the thing that interests Peter Maass in Crude World: The Violent Twilight of Oil. I lived in Asia for several years and wondered, if oil was such a blessing to countries possessing it, how South Korea, which has no oil, became an economic tiger, as well as Japan, whose oil reserves are minuscule, he writes. Oil-rich Iran, meanwhile, has endured political upheavals, war, andindignity of indignitiesgasoline shortages amid an overflow of unrefined crude. Nigeria, the worlds ninth-biggest oil exporter, has seen 80 percent of its oil wealth go to 1 percent of its population, according to the World Bank; the country has a lower GDP per capita than Senegal, which mostly exports fish and nuts.

Economists and international development types have spent years trying to quantify, prove, and disprove this phenomenon, known as the resource curse; the notion that access to natural riches creates not prosperity in the nations that have it, but rather poverty, instability, and corruption. How it happens is easy enough to understand. Resource markets are often volatile, and people with ready access to natural wealth have few incentives to come up with more innovative or diversified means of making moneywhy build Silicon Valley when you can sit back and collect revenue checks off the uranium deposits in the backyard? (You dont have to go halfway around the world to see how this workstake a look at the economic indicators for West Virginias coal country.) In developing countries, lucrative resource exports also tend to strengthen local currencies, which hurts industrial and agricultural exports and worsens resource dependency.

Oil brings its own particular problems, too. Once the drilling and shipping infrastructure is online it doesnt require much manpower to keep the crude flowing, which means that oil-rich countries can, and usually do, enjoy both high GDP and high unemployment. If populations grow too much, wealth becomes a zero-sum game, which explains why oil has made the relatively few citizens of Kuwait prosperous and happy, while populous Saudi Arabia foments a worsening stew of middle-class ennui. And of course oils centrality to national security means the stakes are always highits been awhile since anyone accused the United States of overthrowing a government on account of a cobalt mine.

Maass, a veteran war correspondent for the New York Times Magazine and the author of Love Thy Neighbor,one of the first and best book-length journalistic treatments of the Balkan conflicts of the 90s, is chiefly interested in the miseries that these market forces visit upon the people and places in their path. This concern with the micro over the macro makes Crude World something of an anachronism among recent oil books. Climate change goes almost unmentioned save for a few pages in the conclusion; Maass spends an early chapter on peak oil, in which he endorses the theory that we have most likely already passed it, but then moves on.

Maasss main preoccupation is the surreal, dysfunctional society that has grown up around the international petroleum industry, and at its best Crude World offers an unflinching depiction of it. The most striking aspect of his account is how unchanged this society is from one country to another, a self-contained world which from Port Harcourt to Baku is inhabited by the same broad categories of residentsTexan engineers in SUVs, migrant workers from low-wage countries like India and the Philippines, a mostly interchangeable cast of local political buffoonsliving in the same prefab communities of fortified hotels and private militias, bankrolled by the same handful of companies. It is nothing less than the skeleton of modern civilization; the only thing more impressive than its architecture is its invisibility to anyone who isnt looking for itor living in the shadow of it.

Maass frames his book as a journey into oil, and at the outset it is an engrossing one, equal parts Heart of Darkness and Mad Max. Maass visits the Niger Delta in Nigeria, a country which, prior to the discovery of oil, seemed to have bright prospects, and now contains four times as many guns as computers. He travels up the deltas network of oil-choked creeks in a canoe with members of a rebel militia engaged in a long-running pitched battle with Royal Dutch/Shell, the largest player in Nigerias oil industry. The landscape is apocalyptic, lousy with tangled pipelines, the creek banks lit with burning gas flares. Nigerian soldiers stand guard on a Halliburton drilling barge. Maasss canoe passes an island shantytowndubbed Little Russiafull of prostitutes who service the soldiers and oil workers on the mainland.

A Potemkin village built by Shell to demonstrate its investments in the local community is mostly derelict; the company has provided a health clinic but no resources to operate it, an electrical generator but no fuel. The rebels, meanwhile, style themselves as agents of environmental and social justice, but are just as dependent on the oilfields as Shell is. The industry supports them indirectly by way of the pipelines they illicitly tap, and directly through kidnapping ransom payments and infrastructure protection rackets; It was an Escher schematic of recirculated violence, Maass writes.

Maass has an admirable empathy for his subjects, and he extends itthough not uncriticallyto the ostensible villains in his story. I liked most [oil] executives I met, he writes. He correctly identifies the main difference between oilmen and less rapacious professionals as one of circumstance: If you want to alter the behavior of an executive who usually follows the highest ethical standards, just give him a briefcase and tell him that his job depends on his winning an oil contract in a country that is not Norway. This moral complexity has its limitsthe oil businesss routine claim that it is simply going to the necessary lengths to provide a product that everyone needs is badly undercut by the industrys long-running efforts to break the political will for the kind of renewable energy expansion that could lessen that dependencybut Maasss basic point stands. As any cell phone manufacturer trying to get coltan out of the Democratic Republic of Congo could tell you, the moral distance between an oil buyer and a Nokia executive is a lot shorter than you might think.

Still, Maass provides plenty of reasons to feel less than charitable toward the guys. Most damning is his account of the transformation of Equatorial Guinea, which only became an oil exporter in the 90sby which time, Maass writes, the worlds politicians, bankers and oilmen had promised to do a better job. If you think this is actually going to happen, of course, you havent been paying attention. Instead, the American government, several U.S.-based oil companies, and Riggs Bank (whose main branch was across the street from the U.S. Treasury in Washington until Riggs was absorbed by PNC Financial Services in 2005) find themselves kowtowing to the brutal regime of President Teodoro Obiang in the name of uninterrupted oil shipments. In the town of Ebebiyin, Maass watches phalanxes of ExxonMobil, Halliburton, ChevronTexaco, Marathon Oil, and Total employees march behind Obiangs motorcade in a parade honoring the president. This is the sort of thing that most companies PR flacks would not be thrilled to hear about: Obiang is a low-rent military dictator who displayed his predecessor in a cage at a public movie theater before executing him, used his countrys oil revenues to buy a personal Boeing 737 with gold-plated bathroom fixtures, and may have eaten one of his enemies.

Obiangs subjects, meanwhile, have barely benefited from the boom in Equatorial Guinea, something which is only partly Obiangs doingits cheaper and easier for the oil companies to import foreign workers and establish their own supply chains independent of the Equatorial Guinean economy. The plantlike most oil installations in the developing worldcould have been on the moon for all the benefit it offered local businesses, Maass writes of one natural gas facility. Those are local rocks, the Texan plant manager tells him, pointing to the roadside gravel at the worksite, but importing them would be cheaper.

Unfortunately, once Maass leaves Africa, Crude World feels less like a journey and more like an overbooked weekend getaway. Maass proceeds through his multi-hemispheric oil-ravaged itinerary Ecuador, Azerbaijan, Iraq, Saudi Arabia, Russia, and Venezuelaat breakneck speed, and the reader barely has time to take in the bleak scenery. Its too much material for a book clocking in at scarcely 200 pages before the endnotes, and there are telltale signs that Crude World took a lot of cuts in editing. Characters are treated to lengthy introductions only to offer up a brief quote or two and then abruptly disappear; scenes are cut off before theyve had time to build any momentum. Some sections are clearly repurposed magazine articles that were originally about other things. A lengthy chapter on the travails of Iraqs oil ministry following the American invasionMaass covered it, and was on hand to watch the Marines topple the statue of Saddam Hussein in Baghdads Firdos Squaretells us plenty about the incompetence of the Coalition Provisional Authority, but not much new about oil (fact: Iraq has a lot of it).

Even when Crude World doesnt feel rushed, it often feels shallow. Maass has put in the time on his subjectin the introduction he says he worked on this book for the better part of a decade, and visited eleven countries in addition to the aforementioned half dozen. But you still get the sense that at the end of the day, he didnt quite get the story. The bulk of the people he speaks with are official talking heads who acquiesce to brief and useless interviews, leaving him to speculate on the real motives behind their on-the-record bromides. The best muckraking in Crude World borrows from earlier work by reporters who have had better luck prying loose the secrets of the oil industry, such as Harpers Magazines Ken Silverstein; otherwise, that world remains frustratingly opaque here. In one odd scene, Maass attends the gala dinner event at an industry conference in Houston, makes a few notes about the menu and the Exxon-Mobil CEOs keynote address, and apparently leaves without talking to anyone.

The weakest part of this kind of reporters book about energy is invariably the conclusion, in which the desire to sum everything up and offer at least some sliver of hope runs aground on the daunting complexity of, and lack of clear-cut solutions to, global warming, energy security, or any other of the increasingly existential problems posed by our fossil-fuel dependence. On this score Crude World is characteristic, offering a couple of narrow good-governance prescriptions and a vaguely optimistic anecdote involving wind turbines. A world in which the priority is not getting oil but getting off oil would be better not only for the atmosphere but also, as Ive seen, for the people who live in resource-rich nations, he writes.

It feels like a cop-out, in part because Maass himself has drawn far more interesting lessons from his reporting elsewhere. In a 2005 Times Magazine piece, he made the provocative argument that well-intentioned environmentalists who opposed drilling in pristine domestic wildernesses like the Arctic National Wildlife Refuge should think harder about whether it was right to do sooutsourcing oil production to other countries isolated Americans from the impacts of their petroleum-intensive lifestyle. Perhaps a few more drilling platforms in our most precious lands and waters would make us understand that the true cost of oil is not posted at the gas pump, Maass wrote in the article. And a barrel that didnt come from a relatively responsibly managed operation like those in the United States, he pointed out, would have to come from an unregulated nightmare zone like the Niger Delta. Better a few displaced caribou than the wholesale ecological and economic destruction of another country.

In the end this is almost certainly a false choiceits hard to believe that, sooner or later, we wont try to get our hands on every last drop of oil the earth has to offerwhich may be why Maass left the argument out of Crude World. But there is something clarifying about putting the dilemma in those stark terms; the first step toward thinking productively about a problem of this magnitude is recognizing that none of the options will be remotely easy.

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