Crude World (35 page)

Source: BP Statistical Review of World Energy 2008

*
Proved reserves of oil: Generally taken to be those quantities that geological and engineering indicates with reasonable certainty can be recovered in the future from known reservoirs under existing economic and operating conditions.

**
Canadian oil sands: 152.2 billion barrels

APPENDIX B

U.S. CRUDE OIL IMPORTS

TOP 15 COUNTRIES

(Figures in barrels per day)

Source: Energy Information Administration. Figures for March 2009.

NOTES

Introduction

“Nothing to do with oil”:
Quote from Rumsfeld interview with Steve Kroft in November 2002. Available at
www.defenselink.mil/transcripts/
transcript.aspx?transcriptid=3283
.

They are examples:
The resource curse theory gathered force in academic circles after Jeffrey Sachs and Andrew Warner published a National Bureau of Economic Research paper in 1995: “Natural Resource Abundance and Economic Growth.” Their paper, which tracked the performance of ninety-five countries between 1970 and 1990, showed a correlation between dependence on natural resources and slow economic growth. “Resource-poor economies often vastly outperform resource-rich economies in economic growth,” they concluded. Subsequent research showed variations in the fates of resource-rich nations; the curse was not absolute and was affected by a variety of factors. Some of the best research on the curse has been conducted by Michael Ross of the University of California-Los Angeles, Paul Collier of Oxford University and Terry Lynn Karl of Stanford. Karl’s
The Paradox of Plenty: Oil Booms and Petro-States
is a seminal text.

As the graffiti:
Along the Quito-Lago Agrio highway, about forty miles west of Lago Agrio.

Norway was the outlier:
For an incisive look at Norway’s unique experience with oil, see Terry Lynn Karl’s
The Paradox of Plenty: Oil Booms and Petro-States
, pp. 213–221. “The structures that ‘received’ Norway’s boom could
hardly have been more different from those of the developing countries,” Karl wrote. “Oil companies, especially eager to exploit resources outside of OPEC’s dominion, did not encounter a poor country, a weak state, undeveloped social forces, or a predatory, authoritarian ruler … Organizing a framework for controlling the oil industry required a high degree of sophistication in planning and administration, which Norway, unlike other oil exporters, possessed in abundance.” There is no shortage of reports and articles on the fortunate outcome of the Norwegian experience. Some of the latest include “Thriving Norway Provides an Economics Lesson,” by Landon Thomas Jr.,
New York Times
, May 14, 2009, and “Frugal Norway Saves for Life After the Boom,” by Doug Sanders,
Globe and Mail
, January 31, 2008.

“fill the sight by force”:
Roland Barthes,
Camera Lucida: Reflections on Photography
, p. 91.

1 Scarcity

Simmons is the prosperous founder:
The firm, Simmons & Company International, is based in Houston. Since its 1974 founding, the company says, it has acted as financial adviser on $134 billion in transactions.

Most, if not all:
See
The End of Oil: On the Edge of a Perilous New World
, by Paul Roberts, pp. 48–49.

As a teenager:
Simmons’s participation on a high school debate team was chronicled by Mimi Swartz in a
Texas Monthly
article, “The Gospel According to Matthew,” published in February 2008.

The geological phenomena: Twilight in the Desert: The Coming Saudi Oil Shock and the World Economy
, by Matthew R. Simmons, pp. 100 and 334.

Daniel Yergin:
See Daniel Yergin’s opinion piece “It’s Not the End of the Oil Age,”
Washington Post
, July 31, 2005.

The price is expected:
For an analysis of the relationship between supply, demand and prices, see the report “Causes and Consequences of the Oil Shock of 2007-2008” by James Hamilton, an economics professor at the University of California, San Diego. Hamilton presented his report at an April 2009 conference sponsored by the Brookings Institution; it has been posted at
www.brookings.edu/
economics/bpea/~/media/Files/Programs/
ES/BPEA/2009_spring_bpea_papers/2009_
spring_bpea_hamilton.pdf
.
Also, the global recession that began in 2008, though reducing the price of oil in the short term, could make the return of high prices even more dramatic, because some companies have been unable to secure financing for oil-exploration projects. In a story on its website,
The Wall Street Journal
noted that “the long-term outlook for oil supply isn’t getting any better, which means the prospects for a price spike when demand finally recovers is increasing.” See
www.blogs.wsj.com/environmentalcapital/
2009/04/24/oil-prices-opec-secretary-warns-of-darkening-crude-supply/
.

He tells audiences:
See Naimi’s speech to an OPEC meeting in Vienna on September
12
, 2006. Available at
www.saudi-us-relations.org/fact-book/speeches/2006/
060912-naimi-vienna.html
.

There is an echo of truth:
See the report by the U.S. Senate Permanent Subcommittee on Investigations, “The Role of Market Speculation in Rising Oil and Gas Prices,” June 27, 2006.

Simmons reintroduced:
For a lengthier discussion of peak oil, see pages 45–52 in Paul Roberts’s
The End of Oil
. For an even lengthier discussion, see Kenneth Deffeyes’s
Beyond Oil: The View from Hubbert’s Peak
.

Nor can we squeeze:
See “Scraping Bottom,” by Robert Kunzig,
National Geographic
, March
2009
; “The Costly Compromises of Oil from Sand,”
New York Times
, January 7, 2009; “Canada Pays Environmentally for U.S. Oil Thirst,”
Washington Post
, May 31, 2006; “An Empire from a Tub of Goo,”
Globe and Mail
, January 26, 2008; and Elizabeth Kolbert’s “Unconventional Crude,”
New Yorker
, November 12, 2007.

Responding to American support:
For an excellent description of the
1973
embargo, see Daniel Yergin’s
The Prize: The Epic Quest for Oil, Money, and Power
.

What’s known is that:
According to the 2008 BP Statistical Review of World Energy, published in June 2008, the world’s proved reserves of oil are 1.2 trillion barrels. Posted at
www.bp.com/liveassets/bp_internet/
globalbp/globalbp_uk_english/reports_and_
publications/statistical_energy_review_2008/
STAGING/local_assets/downloads/pdf/
statistical_review_of_world_energy_full_
review_2008.pdf
.

A modern example is Oman:
For more information on Oman’s troubles, see “Oman’s Oil Yield Long in Decline, Shell Data Show,”
New York Times
, April
8
, 2004, and “Thirst for Oil Feeds Innovation in Oman,”
Washington Post
, August 12, 2008.

Saudi Arabia possesses:
Figures from the BP Statistical Review of World
Energy, 2008. See
www.bp.com/productlanding.do?categoryId=6929&contentId=7044622
.

Every day, the Saudis provide:
Saudi production varies according to world demand. Aramco claims a production capacity of nearly 12.5 million barrels a day. In recent years, production has ranged between 8 million and 10.5 million barrels a day.

The much-contested reserves:
See the U.S. Geological Service report “Arctic National Wildlife Refuge, 1002 Area, Petroleum Assessment, 1998, Including Economic Analysis.” See
www.pubs.usgs.gov/fs/fs-0028-01/
fs-0028-01.htm

Before visiting the kingdom:
The conference, organized by the Center for Strategic and International Studies, took place on May 17, 2005.

I noted that Royal Dutch/Shell:
See “Can Shell Put Out This Oil Fire?,”
BusinessWeek
, May 3, 2004.

This scenario assumes:
The technology is certainly available to significantly increase the use of alternative energy in the medium term. For instance, a key impediment to greater wind power is the absence of transmission lines to distribute wind energy across the country; building a new grid would require large amounts of capital. But combined with rigorous conservation efforts, a shift from fossil fuels is imaginable. The will to do so, as I explain in the conclusion, is another matter.

The end of the suburban: The Long Emergency: Surviving the Converging Catastrophes of the Twenty-First Century
was written by James Howard Kunstler and published by Atlantic Monthly Press in 2005.

“Someday (and perhaps that day will be soon)”:
See Simmons,
Twilight in the Desert
, p. 179.

“I can read two hundred papers on neurology”:
Quoted in the
Financial Times
, February 27, 2004, in “Saudi Aramco Dismisses Claims over Problems Meeting Rising Global Demands for Oil.”

“This is not the first time”:
“It’s Not the End of the Oil Age,”
Washington Post
, July 31, 2005.

2 Plunder

President Teodoro Obiang’s:
His full name is Teodoro Obiang Nguema Mbasogo.

Obiang, whose salary:
For salary information, see Ken Silverstein’s posting at Harpers.org,
www.harpers.org/archive/2006/04/sb-obiang-eg
. For details on the $700 million, see the report by the U.S. Senate Permanent Subcommittee on Investigations, “Money Laundering and Foreign Corruption: Enforcement and Effectiveness of the Patriot Act; Case Study Involving Riggs Bank,” issued on July 15, 2004. Copy posted at
www.hsgac.senate.gov//files/06/18/15/f061815/public/_files/
ACF5F8.pdf
.

In Ecuador, oil led to:
See “Drilling into Debt,” a report pubished in
2005
by Oil Change International. Copy posted at
www.priceofoil.org/thepriceofoil/
debt-poverty/
.

Equatorial Guinea became:
In
1999
the World Bank demanded, in exchange for loans to help build a 665-mile pipeline that would deliver Chad’s oil to an export terminal in Cameroon, unprecedented guarantees that Chad’s corruption-plagued government would use the revenues for development projects. Almost as soon as the oil began to flow, Chad’s government began to flout the agreement, diverting revenues to weapons purchases. In 2008, the World Bank officially withdrew its support for the project, but the withdrawal had no practical effect on the flow of oil and money, as the pipeline was fully operational by then and did not need further support from the bank. See “World Bank Pulls Plug on Chad Oil Pipeline Agreement,” by Lesley Wroughton,
Reuters
, September 9, 2008. The bank said in a statement, “Regrettably, it became evident that the arrangements that had underpinned the bank’s involvement in the Chad/Cameroon pipeline project were not working.”

Equatorial Guinea may be:
My account of the history of Equatorial Guinea is drawn from a number of sources, including Max Liniger-Goumaz’s
A l’Aune de la Guinée équatoriale
, Robert Klitgaard’s
Tropical Gangsters: One Man’s Experience with Development and Decadence in Deepest Africa
, and Adam Roberts’s
The Wonga Coup: Guns, Thugs and a Ruthless Determination to Create Mayhem in an Oil-Rich Corner of Africa
.

At Black Beach Prison, Obiang:
See Roberts,
Wonga Coup
, p. 41.

Macias was sentenced to death:
See Roberts’
Wonga Coup
, p. 39.

One of his aides:
See Ken Silverstein, “U.S. Politics in the ‘Kuwait of Africa,’”
Nation
, April 4, 2002.