The Age of Oil: The Mythology, History, and Future of the World's Most Controversial Resource [Hardcover]

Leonardo Maugeri (Author)

Book Description

Publication Date: May 30, 2006

Oil is the most vital resource of our time. Because it is so important, misperceptions about the black gold abound. Leonardo Maugeri clears the cobwebs by describing the colorful history of oil, and explaining the fundamentals of oil production. He delivers a unique, fascinating, and controversial perspective on the industry—as only an insider could. The history of the oil market has been marked, since its inception, by a succession of booms and busts, each one leading to a similar psychological climax and flawed political decisions. In a single generation, we've experienced the energy crisis of 1973; the dramatic oil countershock of 1986; the oil collapse of 1998-99 that gave rise to the idea of oil as just another commodity; and the sharp price increases following hurricane Katrina's devastation in the Gulf of Mexico. Today, we are experiencing a global oil boom that, paradoxically, seems to herald a gloomy era of scarcity exacerbated by growing consumption and the threat from Islamic terrorism in the oil-rich Middle East.

Maugeri argues that the pessimists are wrong. In the second part of his book, he debunks the main myths surrounding oil in our times, addressing whether we are indeed running out of oil, and the real impact of Islamic radicalism on oil-rich regions. By translating many of the technical concepts of oil productions into terms the average reader can easily grasp, Maugeri answers our questions. Ultimately, he concludes that the wolf is not at the door. We are facing neither a problem of oil scarcity, nor an upcoming oil blackmail by forces hostile to the West. Only bad political decisions driven by a distorted view of current problems (and who is to blame for them) can doom us to a gloomy oil future.

Editorial Reviews

From Booklist

Sixty years ago, a British diplomat was questioned about the morality of his government's policies in the Middle East. "The world," he responded, "runs on oil, not on quaint notions of right or wrong." With the soaring price of oil now threatening to spur a dreaded inflationary cycle here and abroad, those words certainly resonate. There is understandable anxiety, even hysteria, regarding the future cost and availability of this vital resource. Maugeri has attempted to explain to lay readers how the oil industry developed, how it works, and where it is headed. The history of oil, Maugeri illustrates, has always been characterized by cycles of booms and busts, but they are caused by market factors, not malevolent conspiracies. The present danger, he claims, is that panicky or ambitious politicians will make current problems far worse. Maugeri minimizes the threat of blackmail by oil--producing nations, and he dismisses fears that the world is running out of oil. Environmentalists and those who demand reliance on alternative renewable-energy sources will dispute many of his assertions. Still, this is a valuable effort to explain the issues. Jay Freeman
Copyright © American Library Association. All rights reserved

Review

"Maugeri minimizes the threat of blackmail by oil-producing nations, and he dismisses fears that the world is running out of oil. Environmentalists and those who demand reliance on alternative renewable-energy sources will dispute many of his assertions. Still, this is a valuable effort to explain the issues."

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Booklist

"Maugeri leverages his insider's knowledge to cast doubt on those who argue that oil reserves are dwindling or that geopolitical concerns have rendered the future of oil production too unreliable to be viable….[r]ecommended for academic libraries….[o]f interest to public libraries."

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Library Journal

"Are we running low on oil? After a slew of books by pessimists, here is a convincing counterargument by an oil company analyst. Maugeri explains that the industry has been scarred by recurrent periods of over-production. The major players' resulting cautiousness probably makes current estimates of reserves very conservative., if prices continue at today's levels we can expect aggressive investments in exploration and technology to yield enormous extra supply."

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Harvard Business Review

"Believing calls for economic independence from oil to be an insupportable overdramatization and sterile overreaction to oil's cyclical behavior, Maugery seeks to counter the trap of catastrophism that he sees as infiltrating the public discussion as deeply as the George W. Bush administration. He sets out to debunk these fears by describing this cyclical behavior through the history of the oil industry and similarly recurrent fears about oil shortages, fears that would produce a damaging American interventionist policy in the Middle East, as he suggests."

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SciTech Book News

"Maugeri's authoritative, well-written assessment of the global oil situation relates so well to the current energy predicament that it belongs in most academic and public library collections. With knowledge and experience in developmental strategy for a major international oil company, Maugeri provides a lively, insightful perspective to the history and condition of the world petroleum industry. A specific argument is carried through the book: the world is not running out of oil--there is more than enough oil in the ground. Sequences of oil scarcity and overproduction are shown to be more related to economics and politics than to geology and technology. The 21 specific chapters are encompassed in two principal parts: A History of an Unreliable Market (and the Bad Policies It Prompted) and Misconceptions and Problems Ahead. Appendixes deal with oil consumption and with the production and reserves of specific countries and major oil companies. As a library holding for students of political science, economics, science, and technology, this book should be shared with its antithesis, Kenneth S. Deffeyes's Beyond Oil: The View from Hubbert's Peak. Well footnoted; extensive bibliography; thorough index. Highly recommended. Lower-division undergraduates through faculty."

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Choice

"In marked contrast to the panic-crisis books of late, this work strikes an optimistic chord on the state of world-oil supplies….Unlike the resource pessimists, Maugeri asserts that due to the uncertainty about the level of world reserves, any attempt to quantify supply is futile. Not only does he argue soundly, but he solidifies his position by insights gleaned from long experiencce in the industry. While some of his conclusions may be rejected, his research is not to be disputed."

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The Engergy Journal

"This informative book is really two in one: a concise treatment of the checkered but fascinating history of the oil industry, from Edwin Drake's first successful well and John D. Rockefeller's Standard Oil Trust to post-Saddam Iraq, and an extended nontechnical essay on the myths and misconceptions that have come to surround this important commodity. As senior vice president of Eni, the Italian oil firm, the author is an industry insider, but he draws on a wide range of scholarship and writes persuasively and well."

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Foreign Affairs

See all Editorial Reviews

Product Details

• Hardcover: 360 pages
• Publisher: Praeger; annotated edition edition (May 30, 2006)
• Language: English
• ISBN-10: 0275990087
• ISBN-13: 978-0275990084
• Product Dimensions: 9.2 x 6.2 x 1.5 inches
• Shipping Weight: 1.6 pounds (View shipping rates and policies)
• Average Customer Review: 4.1 out of 5 stars  See all reviews (9 customer reviews)
• Amazon Best Sellers Rank: #446,320 in Books (See Top 100 in Books)

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Customer Reviews

Most Helpful Customer Reviews

12 of 13 people found the following review helpful:

4.0 out of 5 stars Interesting and Thought-Provoking!, March 20, 2007

By 

Loyd E. Eskildson "Pragmatist" (Phoenix, AZ.) - See all my reviews
(HALL OF FAME REVIEWER)    (REAL NAME)   

This review is from: The Age of Oil: The Mythology, History, and Future of the World's Most Controversial Resource (Hardcover)

"Oil is the most vital resource of our time" - an attention-getting introduction to Maugeri's "The Age of Oil"

The first section covers the history of oil, beginning with Drake's discovery, Rockefeller's monopoly on refining and transportation, the entry of other competitors (Russia, Texas, Mexico, Venezuela), Churchill's leadership in converting the British Navy and then create a protected source in Persia, new uses (transportation, plastics) and the fading of its original attraction (lighting), the development of new industries dependent on oil use (autos, motels, gas stations), Texas' regulations providing a model for OPEC, new Arab producers, etc., with a periodic sprinkling of former warnings that we soon would run out. Then follows the '73 oil embargo, the '79 second shock (Iranian Revolution + rebellion in Venezuela + Soviet invasion of Afghanistan + the Iran/Iraq War), the '96 counter-shock caused by the Saudi decision to regain their market share (beaten down by considerable cheating among OPEC members; not motivated by Reagan's efforts to beat down the Soviets, though their lowered internal prices did not even cover production costs and the Saudi action sharply reduced their external earnings), and Hussein's '90 invasion of Kuwait (U.S. response was driven by fear he would go on to Saudi Arabia).

Maugeri also informs readers that Russia's shock therapy privatization failed due to the absence of a legal framework for the process, and the existing deep-rooted corruption within the system. The result was a redistribution of Russia's riches (including oil) into the hands of the elite, further acerbated by a "loans-for-shares" scheme by the oligarchs to prop up Yeltsin through the next election (Russia's failure to repay them was followed by rigged auctions that further enhanced the new capitalists' riches).

Ensuing negative production projections were caused more by disruption in Venezuela, Russia and Iraq, terrorism threats, oil companies' focus on buy-backs instead of exploration, oil company write-downs of reserves (due to the financial difficulty in developing, and in some cases even accessing them), China's surging use, and the Katrina disruption. A unique Maugeri contribution is his pointing out that environmentalists concerns also led to an exaggerated appearance of shortage due to special increased demand for the lighter, sweeter crudes most quoted in the media.

"The Age of Oil" then moves to the question "Are We Running Out of Oil?" Maugeri thinks not, again citing the numerous prior cries of impending doom. Rationale offered include Hubbard's theory applying ONLY to areas already well-explored (the U.S.), a new Russia theory disconnecting oil creation from organic sources - thus broadening its possible locations, improved recovery methods, inadequate exploration of large Middle East areas (the nations involved choosing instead to focus on developing existing fields - some of which still use 40+ year-old equipment), examples where prior recovery estimates proved wildly short (eg. Kern County, CA), neglect of alternative sources (shale oil, tar sands, ultra-heavy oils), and the potential improved efficiency from switching users to diesel.

Bottom-Line: Maugeri may well be correct in believing that oil doomsayers are overly pessimistic, especially given their track record. On the other hand, I'm also reminded of the hypochondriac who constantly woke up thinking he was dying - one day he was right! Finally, concern for global warming may make questions about oil reserves irrelevant!

20 of 24 people found the following review helpful:

5.0 out of 5 stars A strong dose of perspective in today's crazy oil market, June 6, 2006

By 

T. Umrath - See all my reviews
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This review is from: The Age of Oil: The Mythology, History, and Future of the World's Most Controversial Resource (Hardcover)

I found this book to be a fantastic history of the oil industry and an interesting, thoughtful perspective on the not-so-dismal future of petroleum. I've read about 20 books on energy over the past two years. For me, this one ranks a close second to Vaclav Smil's "Energy at the Crossroads: Global Perspectives and Uncertainties"; ("Age of Oil", however, is much better suited for a general audience). I found it scholarly, logical, and pragmatic. I think readers will appreciate how Maugeri unravels the complex world of oil prices, economic, political and geological impact on exploration/production, and the mysteries of reserves accounting. At $49, the book is expensive, but I think it's worth the price to anyone who's interested in the history of and prognosis for oil. I read it in two nights and found it well worth the money.

10 of 11 people found the following review helpful:

4.0 out of 5 stars "The Age of Oil" by Leonardo Maugeri: The Glass is Half Full, September 25, 2006

By 

Aldo Manzini (Los Angeles, CA) - See all my reviews
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This review is from: The Age of Oil: The Mythology, History, and Future of the World's Most Controversial Resource (Hardcover)

Highly Recommended; In Part I of his book, Maugeri, a senior executive at ENI, the Italian oil "major", takes us through an overview of the history of "black gold" from its discovery up to the second Gulf War. This is a story that has been told by others (most notably Yergin). Part II, on the other hand, is primarily concerned with refuting the arguments of the oil "doomsayers" (see Simmons, Kunstler, et al) who predict a bleak future characterized by a growing World demand and a declining World supply of oil and gas. Maugeri thinks this is all nonsense, and he goes on and tries to refute each step in the doomsayers' logical construct.

At its core, Maugeri's position is based on simple microeconomics. This is the mainstream view which suggests that as with any commodity, high demand will lead to high prices which in turn will justify investments in exploration and extraction technologies, thus ultimately leading to higher supply and a fall in prices. In his view, the absence of any major new field discoveries in recent decades is nothing more than a reflection of a lack of investments in exploration during the eighties and nineties, as opposed to a clear signal that we are reaching the bottom of the barrel.

Similarly, Maugeri dismisses the concerns of the political and military strategists that fret over the West's dependence on the Middle East. In his view, the dependence is even greater in the opposite direction, a fact by now well understood by producing countries in the Middle East (including charter members of the "axis of evil" such as Iran) whose political survival is tied to satisfying the economic demands of their fast growing populations. Thus, the U.S. military presence in the Gulf region is viewed by Maugeri as unnecessary at best.

Maugeri is obviously an optimist. It is quite possible that in fact the necessary investments will be made, that new supply will come on stream "just-in-time" to meet the growing energy demands of another billion Chinese and another billion Indians eager to join the global economy and substantially raise their living standards. But there is no certainty that this will be so. It is just as easy and logically defensible to imagine a World of declining "cheap" reserves, forced to dig a lot deeper and a lot harder to satisfy the demands of a competitive global economy, where the supply trend is chronically out of step with demand, and where the market is hostage to the fear of the next supply disruption (sounds familiar?). What might be the market clearing price under such conditions? No one knows for sure. What we do know is that there is no economic law that suggests that the price of oil should always be lower than the price of a barrel of Perrier water ($426).