The Prize : The Epic Quest For Oil, Money, And Power / Daniel Yergin

This massive tome (700+ pages) traces the history of the oil industry from the 1850s into the early 1990s. It provides a panoramic saga that takes the reader from the hills of Pennsylvania to the Saudi Arabian desert, with numerous stops across the globe. While Yergin focuses on the oil industry, showing how it became the essential ingredient in fueling the world economy, he also details how this resource helped to shape the politics of the Twentieth Century.

The first half of the book captures in great detail (at times plodding) the expansive growth of the oil industry. In its early days, fortunes were made and often lost, as individuals of all stripes got caught up in the search for oil across the American landscape. Yergin portrays a colorful cast of characters, everyone from wildcatters and tycoons to politicians eager to join in get-rich schemes. Thousands of companies sprang into existence as a result, and then like most industries, slowly began to consolidate until just a handful controlled this valuable resource.

Oil quickly began to drive the world economy in the first half of the past century, and the industry did it its best to collude in keeping prices high. But this proved a difficult task. From the beginning, the politics of oil was a volatile arena. While the Standard Oil Company attempted to become the behemoth controlling the industry, in the end it never came close to achieving this goal.

The second part of the book focuses on the power shift that took place in the industry following the 1950s, after huge oil fields were discovered on the Arabian Peninsula and in South America. Rather than remaining top dog, the commercial oil industry was soon faced with a wave of countries nationalizing their petroleum resources. Still, because these countries were competing against each other, prices for oil remained on the low side.

This all changed when the Organization of the Petroleum Exporting Countries (OPEC) formed and it began to unite various countries to increase the cost of this precious resource. This led to several “oil shocks” that sent the economies of the western world into a tailspin. But just as the oil companies failed to control the fluctuations in the global price for petroleum, OPEC was also unable to dictate what the consumers in the western world paid at the gas pump.

Yergin provides a host of reasons for this fact. The members of OPEC all had separate political aims, often in conflict with each other. Additional oil fields and conservation efforts also played a big part in keeping their power in check. As he shows time and again, the oil genie, once released from his bottle, proved beyond the control of the oil industry or the oil producing countries.

As I pointed out, there are times when this book gets bogged down in the minutiae of facts and figures. Fortunately, Yergin is a good storyteller and has done painstaking research on this topic. For anyone wanting a better understanding of the Twentieth Century, his book provides an excellent overview of Big Oil’s impact. The chapter on the role of petroleum in the outcome of World War II is especially enlightening.

As the years following the 1990s have shown, the oil industry remains a key component driving our global economy. While many have tried to link their good fortune to this commodity, it remains a resource that continues to elude efforts to control fluctuating prices. To this day, oil remains the joker in the deck. Try as they might, the oil industry and the oil producing countries have yet been able put the genie back in the bottle.  Yergin has done an excellent job of showing why that most likely will be the case for a decade or two to come.

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