Customer Reviews

The Complete Idiot's Guide to the Politics of Oil

5 star:		(2)
4 star:		(3)
3 star:		(0)
2 star:		(1)
1 star:		(1)

 

 

I'm just a few chapters into this book, but I was enjoying it enough so that I wanted to make a brief comment. I'll probably write a more thorough review later.

This book presents the history of oil, and how it came to dominate the politics and policy of the entire world in just the last century. There is some interesting history in that the authors discuss how the oil industry actually originated in Romania. By the time of the first oil well in the U.S. in 1859, Romania was already mining 1000 metric tons of oil per year by means of open pit mines, since this was before effective drilling began.

Until then mostly all there was was oil seeps with oil coming up from the ground, and the occasional farmer using the gloppy stuff to lubricate an axel or two, and it was used in patent medicines. But there was no real industrial or widespread use even in heating or lighting, with whale oil being the main product there. Then because of some strange coincidences involving several people who were brought together, the first American oil well was sunk, and the rest, as they say, is history.

I notice one person here panned the book because of its perceived liberal bias, but it's really only a slight liberal bias in that sense. And the authors do mention that the evidence about Bush's "secret oil report" that supposedly influenced the discussion to invade Iraq that's discussed was only reported by a European newspaper. They don't claim it's actual fact.

But anyone who doesn't believe that the U.S.'s need for oil at least to some extent drives political policy is living in a very naive, political cloud-cuckoo land. We live in a world of increasing resource scarcity on many fronts now, and oil is just the most conspicuous of those.

So overall, a good book on the subject and one that I learned a good deal from.

This book serves as an excellent guide to understanding the source for a host of national and international conflicts. The organization of the text is exceptionally useful, allowing you to breeze over parts that you may not be interested in (for me, this was the scientific aspect of oil development) and quickly understand the more engaging material (such as international relations and energy politics). An excellent basic guide that should be a must for all high school and college students interested in political science. It doesn't get a five stars from me because, at times, the material is almost too basic, but that's what this book series is all about. Excellent for a comprehensive review that covers the bredth, not necessarilly the depth, of the topic.

The best part of this book is that it's a basic nuts and bolts look at oil in politics, which fills in a lot of holes in a reader's mind. The authors start, of course, with a very brief historical overview of the oil business which, while useful, could be had in significantly greater detail elsewhere. They then consider everything from national security and terrorism as it relates (or may relate) to oil to lobbying, economic issues and environmental issues.

A strength is the brief discussion of whether the war in Iraq was about oil. Whether it was or wasn't, it's a public perception and is worth thinking about. Another is a brief discussion of the Bush Energy Plan, part of which was classified. Whether recklessly serving oil interests at the expense of the rest of the economy was a Bush policy or not, the appearance of impropriety hangs over his policy. I also thought the complexity of oil pricing was well presented in chapter 18.

While I liked the book, there are some problems with it. One is that the authors make a few statements that are unsupported with evidence. In the first chapter, for example, they state that the OECD (Organization of Economic Cooperation and Development), which they seem to call the OCED, is a consumer cartel for oil consuming countries. I've never understood the OECD this way and I don't think most would. Nor can I recall any time when the OECD acted to broker the collective oil imports of its member countries, so as to exert some downward pressure on the price of oil. Some members of the OECD are also oil producers (US, UK, Norway), which implies that these countries may not necessarily dislike high oil prices. The consumer cartel idea goes back to Richard Nixon, which he called for as a way to thwart the power of producer nations in increasing price, though it never went anywhere.

Another problem that cropped up a few times is the economic analysis of aspects of oil, which I found to be poor. Toward the end of chapter 17, for example, the authors discuss the role of the US dollar in the oil industry. They state that both the United States and oil producing countries depend on a strong dollar. This is the so-called dollar hegemony idea. Because oil is paid for in dollars, there is greater global demand for dollars among non-OPEC countries, which assists the US in financing its trade deficit. I'm not convinced that an absence of petrodollars would be a barrier to financing non-oil trade with the US. So long as countries want to export to the US, the US will not have significant problems here.

That oil is denominated in US dollars supposedly gives the US clear economic advantages, but this is not easy to see. If the US had to convert to other currencies to buy oil, they say, the US trade deficit would be worse. Wouldn't this depend on the relative strength of the dollar against other currencies? Because the euro is strong against the dollar, for example, EU economies gain a cost advantage when they convert into dollars to buy oil. This acts to partly off-set the high price of oil. If oil was denominated in another currency and the dollar was strong against that currency, then the US could achieve the same advantage. As it stands, the US economy gains no exchange-rate benefit or disadvantage at all from oil purchases, given that oil is denominated in dollars. It is also true that a weak dollar serves the interests of the US economy overall, especially when the economy is sliding into a recession. The weak dollar means that exports are cheaper and imports more expensive, both of which imply stimulation of the domestic economy (excepting for oil imports).

Better economic analysis of oil would have improved the book, though it is still a good read.

This little book is pretty good. A few errors in it, but the first part is a good survey of oil and politics. Later it began to be a somewhat tedious of a single viewpoint. Not objective enough to be a real guide, but for somewhat who doesn't know the background and history of the business it's a nice little book.

Some of the critics of this book blast because it links wars to the struggle for continuing supplies of oil. Finally someone from the Bush administration agrees. Here's quotes from Alan Greenspan's new book, "The Age of Turbulence: Adventures in a New World:"

"Whatever their publicized angst over Saddam Hussein's 'weapons of mass destruction,' American and British authorities were also concerned about violence in an area that harbors a resource indispensable for the functioning of the world economy," Greenspan wrote.

"I'm saddened that it is politically inconvenient to acknowledge what everyone knows: The Iraq war is largely about oil," added Greenspan, who for decades had been one of the most respected U.S. voices on fiscal policies.

The book began with petroleum facts and figures, which were informative enough (but which can be easily obtained for free online), but then morphed into a populist op-ed piece, a series of insinuations based on anecdotes and contextually questionable quotes. Clearly, the authors spent a lot of time looking for quotes and figures which backed their preconceived political point of view.

If you are a left wing ideologue, or a believer in conspiracy theories, you'll love the book. But then again, you won't need to buy it because you'll already believe everything the authors say.

If you're a hard right winger, you'll be flummoxed and probably toss it after you finish the statistics.

If on the other hand, you prefer to think critically and are willing to try and understand complex issues (including perhaps even more than a single perspective!), you'll probably dismiss this as lightweight ideology from folks who really, really want to believe that oil companies are all intrinsicaly evil.

For example, the authors strongly imply, and steer the reader towards believing, that the Afghan war was all about a pipeline. Really? Show me some analysis. How much oil or gas revenues will the pipeline generate? How much net profit? How much of that then goes to the IRS? Then consider what the cost of the war has been. Does the assertion make any economic sense? It does not. If you then believe, as the authors must, that the US government is sufficiently immoral so as to cause at least some Americans and innocents to die because of a pipeline, then why didn't the wicked US oil barons instead just say "Kuwait caused 9/11" send in the troops, and take tiny Kuwait and its oil fields (immensely more profitable and less risky than a single Afghan pipeline) for a fraction of the time and cost of the Afghanistan war? Or better still, why not just embezzle a few billion off the US budget, hand it out to your Big Oil pals, and forget about war altogether? And why did the UN support the Afghan war, and many countries send troops in? Because Bush and/or the oil companies hoodwinked the entire world? Or were all these countries participating in the pipeline conspiracy too? But then the cut to the IRS starts getting smaller. All decent questions that the authors might have addressed, but they were silent on the implications of their conspiracy theories. They clearly did not wish to reseach alternative explanations.

Or, if you believe the old populist saw that refineries are intentionally shut down to drive up prices, then you have to believe that whatever the refineries might then make from higher profits will more than offset days or weeks of zero daily revenue. And you also need an explanation for falling prices. From 1984 to recent years, oil prices, gasoline prices, and oil share prices languished; many oil companies went bankrupt, hundreds of thousands of employees lost their jobs. Do the authors believe that the evil CEO's took a 20 year break from bad deeds, and sacrificed company performance so the US could enjoy cheaper fuels? Yet the authors' conspiracy theories offer no support for mechanisms behind falling price environments. Presumably they think that the market can drive down the price of gasoline, but if the price goes up, there must be evil afoot. They don't seem to understand the nature of commodities.

Perhaps there is more going on in the oil industry than meets the eye, but the authors of this book have very little grasp on the realities of the business, and in the end their one-sided collection of speculations caused me to dismiss their credibility. It's a shame that uninformed readers take this for a reference work. If you really do want to learn how the industry works, you can do much better than this.

The first half of the book was great, very informative and written fairly and accurately. But as soon as the subject turned to modern day political issues, the overwhelming prejudice of the blatantly liberal authors began to shine through. It would have been such a great book if it could have presented non-partisan views on the politics of oil, but instead the authors couldn't resist pushing their anti-Bush agenda for the entire second half of the book.

Their arguments were totally one-sided and they conveniently omitted many important facts and arguments about the reasons for the current administrations' energy policies. I was very disappointed in that aspect of the book; and although the rest of the material was well presented, it was hard to not question the motives behind each explanation and wonder what else they weren't telling me.