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44 of 48 people found the following review helpful:
4.0 out of 5 stars
Declining Production, Yet Plenty of Problems!, September 26, 2009
This review is from: Crude World: The Violent Twilight of Oil (Hardcover)
One of the ironies of oil-rich countries is that most are not rich, that their oil brings trouble rather than prosperity. Norway is THE outlier to this statement; other less dramatic exceptions are usually tiny nations with disproportionately large reserves - Kuwait, Brunei, and the United Arab Emirates.
Maass goes on to remind readers that world oil production is headed downhill. Most, if not all, OPEC members have exaggerated the size of their reserves to obtain the largest possible quota and revenue. Actual data is kept secret. Houston banker and oil professional Matthew Simmons, however, realized several years ago that credible data were in plain sight - papers presented at Society of Petroleum Engineers conferences. His meta-analysis (first published as "Twilight in the Desert") concluded that "Saudi Arabia clearly seems to be nearing or at its peak output." (Saudi Arabia has a claimed 264 billion barrels of oil reserves, almost 2X that of runner-up Iran; Alaska's ANWAR probably only has ten billion barrels).
Then its on to summaries of conditions in a variety of nations 'blessed' with some degree of oil riches. Equatorial Guinea, population 600,000 and reserves of several hundred million barrels, is first. The hospital Maass visited had no medicine, and there was no medical school to supply it with doctors. Despite billions in foreign investment, the local economy benefited little. For example, it's $1.5 billion natural gas facility was built by foreign workers living on site who sent their paychecks home. Even manual labor - digging ditches, etc., used flown-in foreign workers. Instead of buying cement from a local company that might not deliver on time, a small cement factory was built on site. Raw materials were imported. Prefab units housed the workers - no local material or workers were used. It also had its own phone system (Houston area code), power plant, and water purification and sewage systems. Most food was and still is imported for the plant workers.
Few households have running water or electricity, nearly half of children under 5 are malnourished. Meanwhile, the president, despite a $60,000/year salary, controlled about $700 million in deposits at Washington D.C.'s Riggs National Bank. (Royalty payments were made directly to these accounts in the president's name - akin to Americans remitting taxes to President Obama.)
Moving to Nigeria, the world's 8th largest oil exporter and home to 50 million, readers learn that it has earned $400 billion in recent decades, yet 20% of its children die before their 5th birthday and 90% of citizens live on less than $2/day. The World Bank estimates 80% of oil revenues have gone to 1% of the population. Much of the oil revenues that were not stolen were squandered - eg. the multi-billion dollar Ajaokart steel complex is idle and widely viewed as a total loss. Meanwhile, pollution has killed off most of the fish and harmed cropland in the delta where most of the oil is produced - leaving area residents poorer than before. Shell also has burned 2.5 billion cubic feet of natural gas at the site because it was the easiest and cheapest disposition - pouring carbon dioxide and other pollutants into the air.
Saudi Arabia's leaders formerly led lives similar to that of its people, before oil revenues began. Now they have lavish jets and palaces, and make little effort to deny the widespread corruption. Some of the alienated (also upset over the introduction of western ways and workers) revolted in 1979; the output was an estimated $70 billion in oil revenues given to projects between '75-'02 that included construction and operation of mosques and Islamic study centers around the world.
About 30% of Saudi men are unemployed - too proud to take low-paying jobs filled by foreigners, and unable to qualify for good jobs because the nation's schools are third-rate. Unfortunately, the oil industry is not labor intensive - ARAMCO (the national oil concern) only has 50,000 employees in a nation of 20 million.
Maass' coverage of the U.S.S.R. and Russia explain why the former union collapsed - 80% of its revenues came from energy sales when President Reagan in 1985 convinced Saudi Arabia's King Fahd to increase production to benefit American drivers. CIA Director Casey separately reinforced the point with the King as a way to get at the godless Communists; the King also saw this as a way to get back at OPEC members exceeding their quotas. Thus, oil prices fell from $30/barrel to $12 just as Premier Gorbachev came to power. Maas suggests a possible repeat collapse of their economy under Putin, caused by the current oil price decline.
Venezuela has the world's 7th largest oil reserved. President Hugo Chavez, like Premier Putin, has used to revenues to boost the welfare of the nation's citizens. Unfortunately, he too is now laboring under the current oil price decline. Chavez originally became upset that the state-owned oil company (PDVSA) received more oil revenues (60%) than the Venezuelan government (40%). Chavez reversed that, and fired 18,000 managers and engineers when they protested. Clinics, schools, hemispheric aid, etc. have all benefited - however, Chavez has been unable to strengthen the overall economy - possibly because ot the 'Dutch Disease.' (The theory is that an increase in revenues from natural resources will deindustrialize a nation's economy by raising the exchange rate, which makes the manufacturing sector less competitive and entangles the public services with a priority of furthering business interests - named after the 1970-1980 reaction of the Dutch economy to the large influx of revenues from natural gas reserves.)
Bottom Line: Maass's book does a good job of explaining why oil riches are often not the blessing one would think. His recommendations ('Publish What You Pay' - bringing daylight to where the oil monies go), and getting off oil dependency are both good ones.
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68 of 80 people found the following review helpful:
2.0 out of 5 stars
Read with a grain of salt., February 20, 2010
This review is from: Crude World: The Violent Twilight of Oil (Hardcover)
As a drilling engineer, I have worked in many of the places described in this book, even been to some of the bars mentioned. For the record, Chin, the lady who owns the Shangrila bar in Malabo, is not Chinese, but Korean. Anyway, I find much of what Maass says about peak oil, falsifying reservoir figures, and outright bribing of government officials as very accurate, and coincides with what we in the industry already know. However, what I find unsettling is his tendency to tell many half truths with regard to many of the places he visited. These half truths can only be obvious to one who has been there, as I have, and tend to reduce his credibility in all his other points. For example: His description of Malabo and Bata, Equatorial Guinea was completely misleading, and borderline lies. Both of these small cities have reaped huge benefits from the growth caused by the oil industry. Maass presents them as receiving nothing, with the local people living in total destitution, standing on the sidelines while their corrupt president, and the big oil companies reap all the rewards with no regard for the local community. While some of that premise is true, the rest is not, and nothing could be further from the truth. I spent six years in EG, staging in and out of both Malabo, and Bata countless times. During the six years I was there, I saw tremendous growth. Not just presidential palaces, but a new airport, new soccer stadium, new apartment complexes for the locals, new roads, many other types of buildings, and businesses were built there and thrived. Local workers were used in all of the non-oil construction projects, of which there were many, and even on projects that were directly related to the oil companies. While he was correct in describing the major operators, Exxon/Mobil, Marathon, and Hess as living in gated compounds, apart from the local communities, there are thousands of expats in EG who do not. In order for any operator to work in any area of the world they must use the oil field service companies. Wherever you find the oil companies, you will also find the oil service companies. Always. These service companies run on a much smaller budget then the oil companies, and usually rent offices, warehouses, and staff houses that are well within the local communities. To say, as Maass does repeatedly, that the locals in EG did not benefit from the oil industries presence, is an out right lie. I spent much of my time on the offshore platforms, and can assure you that approximately 70% of the personnel on board every rig were made up of locals. All the oil service companies employ the vast majority of their workers from the local communities. Only the technical positions were filled with expats. This amounts to thousands of local workers who are directly employed by the oil industry, and thousands more indirectly employed by the support industries. He sites that all the food the oil companies eat is imported. This is because EG produces nothing. They never have and maybe they never will. It's not just the expats who eat the imported food stuffs, but also the locals. So his contention that the local population does not derive any benefit from the oil industry is, once again, an out right lie. I cannot dispute his contention that the EG president is not a crook. In fact this man is a total despot, but Maass's contention that there is no trickle down benefit is so misleading that it leads one to wonder what his motive really is. Is it to legitimately expose genuine wrongs, or is it to sensationalize his book in order to sell it. I could go on about his views in Nigeria, Baku, and other places, but this review shouldn't be a novel. My point is well made with the examples I've shown. Read this book with a grain of salt.
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16 of 17 people found the following review helpful:
5.0 out of 5 stars
A Wakeup Call - If we're listening..., September 30, 2009
This review is from: Crude World: The Violent Twilight of Oil (Hardcover)
"We're addicted to oil," said George W. Bush, as though that was some kind of revelation. Well, it actually might be to most Americans. If asked, the majority of the public would probably say they only use oil to fuel their car or heat their home. In fact, oil is the essential ingredient in 100% of all our possessions, and most of our activities. No food is eaten without massive oil inputs. No iPods or flat screen TV's entertain us without oil to make them, deliver them, and fuel them. Even if we all biked to work, the roads themselves are made of oil.
If we actually stop to think about it, our oil need is beyond an addiction, for if the will is there, a junkie can be weaned from his fix. Oil is more like the water a fish swims in, so familiar and so necessary, it's not even noticed. Or, as Peter Maass says in his outstanding book Crude World, oil is oxygen.
In the U.S., we consume 21 million barrels of oil a day, but we produce only about 9 million. The rest comes from other countries - many of which are not our friends, and are not democracies. It is this foreign supply of our daily fix that gets the bulk of Maass's scrutiny, and it's an eye-opener, to say the least, because oil has a paradoxical way of making the people who live in most countries that export it poorer, not richer; the oil curse, as it's called.
With their slick corporate PR campaigns (BP - "Beyond Petroleum") and unlimited lobbying budgets, the oil companies are able to project a high-tech, consumer-friendly image as benign providers of clean energy. That may be mostly true in the United States, with its advanced legal, political, and regulatory system. But what happens to these ostensibly fine corporate citizens when they can extract oil in poor third world countries? Here Peter Maass blows the lid off their carefully contrived corporate image, with intimate and devastating personal portraits of exploitation in action. Maass blithely walks into the most dangerous civil wars, jungles, and guerrilla training camps to show countries like Equatorial Guinea, where a tiny fraction of the population aligned with the brutal dictator Teodoro Obiang skim virtually the entire gross revenues of the country, while the remaining people live in filth. To ensure their continued access to the country's riches, ExxonMobil, Marathon Oil, Chevron, and others treat Obiang as a valued friend and enlightened leader. U.S. officials like Condoleeza Rice treat him as a confidante, and our own banks help him launder his plundered wealth.
And that's only one story. Maass takes us around the world as the story changes and fascinates, but the conclusions are the same. Crude World is a cook's tour of the devil's kitchen, and is too riveting to put down. Every American should read it, and know where his daily fix really comes from. We can't get off of oil today, but we might just move a little bit faster if we think about how many people have to starve for us to fill our SUV's.
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Question: You write about BP's problematic safety record in Crude World. Were you surprised by the Deepwater Horizon disaster? 
