Destiny Disrupted Mashup with The Prize: The Epic Quest for Oil, Money and Power

I mentioned that mixing up a book on the history of oil with a book on why Muslims feel disgruntled with the world as it exists today was interesting...

Interesting, because you switch from a very geopolitical, grand strategy, business mindset to one that is more about...

Religion.  Meaning.  Pursuit of an ideal community.

I have to admit, I am projecting a bit of my own Catholic upbringing on to what I was reading about Islam.  I don't claim I actually understand Islam, but I think I have a better grasp of the appeal than a strictly secular look.

First - what I consider a fairly significant difference.  See, I spent 11 of my first 12 years in school at Catholic institutions.  I am pretty familiar with concepts like the "Kingdom of Heaven", the "Church as the Body of Christ", etc.  But early Christians thought that Jesus would bring the Kingdom of Heaven to earth in their lifetime, and when that didn't happen our concept evolved to a more spiritual understanding.  The Kingdom of Heaven is what we will find in the afterlife.  And the whole "Church as the Body of Christ", for me at least, was tied in with what we were taught about the Reformation.  That is, the Catholic Church grew materialistic and corrupt...leading eventual to the Protestant movements and the Reformation to help make some much needed changes.  So my Catholic upbringing talked about how Catholic believers form a community, the 'body of Christ', and that there is a back and forth discussion between these believers and the official leaders of our church. 

Islam is, in many ways, different.  There's no Pope, no formal institution for making clergy.  But there are similarities, as well.  Ways that the religion recognizing who is legitimate and who isn't.  A belief in the community, etc.

So what stood out to me as perhaps the most significant (and new, even though I've studied this topic for years) difference was the notion that Muslims are seeking to create the ideal community in the world.  I immediately thought of it as the "Kingdom of Heaven", but I admit I'm throwing Christian concepts at it.  They're pursuing this not in the mystical, spiritual fashion we Christians have developed...but in a much more real, earthly way.  Part of the benefits of having your founder live and lead for a significant period of time, instead of dying early. 

The appeal of the caliphate is the appeal of building that Kingdom of Heaven here on earth.  And whoo-boy!!!  What an appeal!  You go tell Christians today that you're building a Kingdom of Heaven, and see just how many perk up and take notice.  (They may be skeptical, and may not join, but most will at least want enough of an understanding to decide if they should believe it or not.)

It actually reminded me more of the founding of the United States of America.  If you read about our early history, there was this notion that we were embarking on a grand experiment.  Building a new and better society.  This place where "We the People...in order to form a more perfect union..."  (Though we, in the United States today, are beset by a feeling that we've lost that.  The rich and powerful have taken over, the union is not so much about "We the People" as it is about the 1%...etc. etc. etc.)

Mixing up a book like Destiny Disrupted with a book like The Prize brings home some of the complaints I've heard about our culture.  INTERNAL complaints, mind you.  Complaints I heard growing up, surrounded by that Catholic upbringing.  Complaints that we're superficial.  Materialistic.  Focused on status.  Forgetting that there are more important things in life than  money. 

To a certain extent, I dismiss those complaints because of that upbringing.  Because I know that there are many, many Americans that are concerned with living a good life.  That there are sound reasons for separating our public and private lives, but that if I went and talked to any American about religion or spirituality or whatnot that there would be plenty to talk about.  (Though NOT, thank God, all of them agreeing with the views of Christian Conservatives.  So many of them give religion a bad name.  I probably am influenced, again, by that Catholic upbringing and teachings like Matthew 6:5.  I'm basically skeptical of anyone making too public a display of their faith, because it seems more like they're trying to show off to everyone else how faithful they are...and the truly pious keep it more private.  They live a good life, without any fuss or need to publicize how good they are.)

Yet the book on oil sort of brings the complaints back, because they show how much we compartmentalize our lives.  John D Rockefeller  was a Christian.  Yet the decisions he made as a good businessman were not necessarily the decisions of a good Christian.  (Though given that I only know what I've heard in history, and nobody knows someone in and out, I will not presume to say that he was or wasn't a good Christian.  I just want to say that the decisions he made as a businessman could have been very different from the decisions he made as a Christian.)

Our modern life is more...isolating.  Alienating.  People don't feel like there's as much meaning to it.  The fights over class and wealth are tied into this superficially...because when you're barely getting by on your income it's hard to feel like doing a good job matters.  If you do a good job, all you're really doing is putting more money in the pockets of those who already have plenty...and even if you're working two jobs, you will probably never get to that level of comfort and security.

The fight against terrorism isn't just about fighting a horrible misinterpretation of religion.  It's about providing a competing alternative, one where people can get that meaning and fulfillment, that sense of community so many of us need.

One that shows you can build a 'Kingdom of Heaven' that isn't harsh and controlling, that reminds us all that God's also about mercy and compassion.  (Though allegedly ISIS does that internally, what with providing healthcare and other goods for their community.  Still...from what I hear you don't want to face the punishment for breaking their rules.)

I could talk plenty about my own (competing, alternative) interpretation of what such a society would be like...but that's sort of personal and I don't think anyone else is very interested in it.  It's the sort of thing best done as a discussion over coffee, or late at night.  All that would be a digression.

Main point is - the appeal of the caliphate and anti-Western attitudes goes back to some very real gaps in our society.  Gaps that we, living here, know we can fill in a variety of ways...but in ways that do not necessarily show in the public sphere.

The Prize, Thoughts

I wanted to take some time before posting my thoughts on my recent reading material, partly because there's so much to it.  Once I start, I think whatever topic I begin with will crowd out all the rest.  As I mentioned yesterday, breaking up the reading for this book by mixing it with Destiny Disrupted also changes the perspective a bit, and offers some interesting insights.  Yet if I start discussing that, I will miss some basic points I wanted to make about this book, in and of itself.

So.  Reading this book was a bit like working on a complicated 'connect the dot' pictures.  I already had connected the dots for individual areas, but this book provided a much larger context and scope that helped create a more coherent picture.  In some ways, that meant I was aware of how much was glossed over.  It's over 700 pages of reading material already, so of course they had to gloss over some history. 

What I found most interesting was the way he tied the oil industry to economic recession (and boom).  I had heard the term "oil choke collar" already, and knew it embodied this notion that high oil prices choked off growth because people had to pay more for gas.  What's interesting, to me at least, was that the book made it sound like this was known and widely accepted economics...yet even today news articles make it sound like this is a new and untested concept.  (Or perhaps that's my take on it). 

The thing of it is, I remember hearing about 'stagflation' and what it did to Jimmy Carter's presidency.  And I know all about the Reagan years, and the belief in trickle down economics and that deregulation boosted the economy.  Yet, if this book is to be believed, none of that mattered.  Nothing Jimmy Carter did hurt the economy, nothing Reagan did really helped the economy.  It was all about the oil market. 

I want to emphasize this a bit more, because so much of our political debate is tied in with the belief that it DID matter.  We hardly touch on the oil price at all (other than to grumble as consumers, of course.)  Sure, I heard about the 'oil choke collar'.  In one place.  Maybe I'm just not reading enough economic news?  If this was widely known and accepted, I would expect an entirely different national discourse on the state of our economy.

But perhaps that's also because of the strange history here in the States.  We produce oil.  Yet we consume more.  So the independents of the oil industry have a larger say in what we do.  Sometimes to odd affect - given how crucial oil is to national security (can't fight a war if your tanks and planes are out of gas) you would think conserving the secure supplies in our own nation would be important.  Instead, for a period of time, we actually had tariffs to encourage domestic consumption.  And said it was for national security reasons!!!

I also am pondering this whole concept of 'rents'.  That is, the price of oil (more than any other commodity, perhaps) is so market driven that the difference between the cost of producing a gallon and the retail value of that gallon can be huge.  Can, not necessarily is.  I'd heard before that the oil industry has to spend a lot more to invest in developing new sources, etc.  I know they waste a lot of money drilling dry holes, trying to discover oil.  Plus there's the upkeep to the infrastructure, and labor costs, etc.  I've heard that's part of why state-run oil industries don't stay competitive over the long run.

Yet it's a funny type of expense, because it's the kind of thing that matters in the long run.  In the short run,  if you don't want to spend the money on those sorts of things, the difference between the cost of producing a gallon and the cost it sells at can be pretty large.  So the book focuses a lot on what happens to these 'rents'.  How the oil producing countries wanted to take a larger and larger share of those rents.  How tariffs and taxes in the importing countries can transfer the 'rents' to the pockets of their own governments.

The book did an excellent job of explaining how expensive it is to search for oil.  The argument over who should get what (the essence of politics, according to at least one of my classes) is eerily similar to the arguments over intellectual property rights.  The industries that took on the costs of finding and developing oil should get some profit off it, sure.  Just as one would hope the creators and artists who make something new should benefit and get credit for it.

Yet at some point, it's reasonable to believe that they have earned 'enough'.  That the risks and challenges they faced were well compensated, to the point where they are not entitled to more.  (In intellectual property, there's reason to believe that too stringent a policy will destroy creativity and stifle innovation.  That's why a limit is sometimes set for when those rights will expire.)

If you apply that to the concessions given oil companies, at least at the beginning, you can see why the exporting countries felt like they didn't owe the oil companies anything when they nationalized the industry.  Now you're getting into the murky history of colonialism, nationalism, and whether the country where natural resources are found should benefit directly from the resources within.  There are entire books on this topic, so I don't want to get sidetracked too far.

Another dot connected - I had heard Osama bin Laden was mad at Saudi Arabian leadership partly over how oil was used.  I think he wanted to drive prices up?  Anyways...this book connected a few dots there, as well, as it discussed the "oil weapon" and attempts by oil producing countries to use it.

So oil 'rents' seem to be a key concept here, and one well worth considering when looking at international politics.  Yet there are consequences, too, to gaining too much from the rents.  I recall reading about 'Dutch disease' in some of my economic classes, and though this book never mentioned it by name it did touch on it when discussing the effects of oil on national economies. (Again, this is where the United States would be an interesting comparison study, as a producer as well as consumer.)

All in all, a good book to read with plenty of food for thought.  And it's only part of the story.

General update

I finally finished The Prize, and I'm letting the thoughts percolate a bit.   I'm also reading a new book Destiny Disrupted.  It makes for an odd counterpoint, but I think it's kind of interesting to read them in conjunction.   It shows the drastically different world views of the realpolitik and grand strategy tied up with oil,  vs.  the feelings and history affecting the analysis of some of our greatest threats to energy (and Western society)  today.

But I'll leave it at that.   In other news, I'm very pleased with a roast I just finished cooking today.   See, cold weather makes me want to turn on the oven and bake...but I really don't need more sweets.   (I've already got a cherry chocolate dump cake, and decided to make some pumpkin yeast bread that also turned out pretty yummy.   I decided rather than creating a cinnamon sugar swirl I would mix up some cream cheese, Nutella, cocoa, and a little bit of powdered sugar.   Rolled out the dough, spread the filling, rolled it back up and put in a bread pan.   I stuck half in a freezer, because again... I don't actually need that much for me.   I may have to take some in to work.)

Anyways.   I marinated the beef in an orange juice, garlic, worcestershire, honey, apple cider, orange peel, beef stock, salt etc. mix overnight.   Browned the meat,  precooked the potatoes, onion and mushrooms.   Simmered down the marinade, and threw it all in a pan with a bay leaf. Baked at 325 for about 3 hours and it turned out pretty darn tasty.

And my house is toasty, and smelling like good food.  :)

Oil, Modern World, National Security

I'm still working my way through The Prize: The Epic Quest for Oil, Money & Power and I wanted to type some things out in order to gain clarity and insight.

It's still a pretty good book, and certain things are beginning to fall into place for me.  It's like I knew part of the story, but I didn't know how all they connected until it was laid out for me like this.

And that is...odd.

I'm not quite sure how to explain it.  I grew up with what I assume most people my age did.  There's a sense that big oil is evil (and how can they claim they're suffering, and then post record profits during one of the worst years of the recession?).  There's a sense that we're ruining our environment, and the big oil companies are not willing to admit it or change anything because they'll lose money.  There's a sense that our foreign policy is dictated by moneyed interests.  That our values and morals as a nation are compromised by the dirty realities of oil, and money.

And there's a lot of resentment over that.

Growing up with all these competing ideas (I just laid one of the competing viewpoints, but there are others I didn't list) requires putting on some filters and finding a way to make sense of it all.  I am not so naive as to think we, as a nation, always do what is morally right.  Or that realpolitik doesn't affect our thinking.

Yet I disagree, on principle, with analysis that paints it black or white.  That says the rich are automatically greedy and self-serving.  One of my personal rules of thumb is that it's almost always more complicated than you think, with grey areas and ambiguities.  So (to go to more recent times) when I heard people claim our involvement in Iraq was all about oil I was somewhat skeptical.


I have seen what happens when large groups of people buy into conspiracy theories, and it isn't pretty.  You have to use critical thinking to sort through what is and isn't so, and that's hard.

But to bring this back to the book I'm reading - I haven't got to recent events yet.  I'm still reading about the post-World War II era.  There are odd parallels between what happened back then and the world of today.  Rising oil prices.  The sudden drop in oil prices as the markets are glutted.  Refusing to lower production in order to maintain market share.  The death of the Saudi Arabian king.

Yet from what I have read so far I've noticed two or three things.

Most importantly - Why is so much of this new to me?  This is our history we're talking about.  Great events of our time.  Things I knew about actually make more sense, appear to have a logic behind it that I can even, sometimes, agree with.  I mentioned that I tend to dismiss conspiracy theories, but it seems hard to believe that so much of our history is glossed over and overlooked.  Hard not to feel like it's somewhat deliberate, even.  In this case, btw, I'm not just talking about the history of oil.  I got a similar feeling when a friend loaned me a book on the history of labor in the US. 

Secondly - the oil industry reminds me of research into social dilemmas. The strive to make the market more predictable, to prevent over-production.  The pressure to get what you can while the getting is good.  The resistance to controls and attempts to work as a group to manage the industry.  (Except where I thought of these efforts as wholly good when it comes to conservation of water, or fishing industries, it's strange to apply to oil...especially since, as a consumer, I absolutely love it when oil prices drop.)

Third - and perhaps I should list this as 'most importantly', except the first point was the greater shock to me personally - if using oil gave us considerable war time advantages, i.e. ships could go faster and maneuver more quickly, etc...

Then why is getting OFF oil not considered a matter of national security?  Imagine if you had tanks that could go twice as long before refueling?  Isn't that a considerable battlefield advantage?  Imagine that you could fly a plane without refueling at all?  Again - considerable battlefield advantage.

I know there  have been moves in that direction.  I vaguely remember hearing discussion on hybrid tanks.  I know that is getting ready to fly a solar powered plane around the world.  (Not a military plane, but the technology is being developed).

There's been all sorts of developments in solar power and biofuels.  Batteries, wind power, and more.  The technology is getting there.

So what better time to make a real, sincere, concerted effort to convert our military to a more sustainable energy source?  Purely because of the considerable military advantage it could bring us?  Edited to add:  I am clearly not the only one who sees this.  So the question is are we doing everything we can to make the conversion?

Edited again: the last paragraph of this article mentioned the trouble with bringing renewable energy to Afghanistan.  From personal experience, one of the challenges is that the local people may steal solar power resources in order to use them for something else.

Business,Big Oil, Society, Etc.

I have moved on to another book, though since it is 773 pages of rather dense reading material I am not sure how long it will take me to finish it.  It's called The Prize: The Epic Quest for Oil, Money & Power. 

I picked it up because I've heard over and over again about how the war in  Iraq was over oil.  I was always rather skeptical of the claim, but I figured I ought to read up on the industry before deciding whether it's true or not.

It starts with a history of the oil industry, Standard Oil, Rockefeller, the Rothschilds, etc.  It brings up mixed feelings for me, so I'm blogging to sort it all out.

First of all, what I'm bringing to the table.  I heard about the trust busters in American history.  How monopoly was bad and stifled competition.  (This wasn't about oil, specifically, but I knew there was an era of legislation aimed at monopolies.  Broke up the telephone industry, as well as Standard Oil.) 

Then, in some of my public policy classes, I heard the argument that monopolies weren't all that bad.  That trying to break them up may not be such a big deal.  Good or bad?  I'm not entirely sure, that's part of what I wanted to think about when reading this book.

I also bring my own prejudice in favor of nested hierarchies, i.e. I think the best form of organization is layered so that the lowest levels make the decisions appropriate to their level, but within a coordinated whole.  Decentralized to an extent, but not to the point that there's wasted effort and gaps.

I also know that uncertainty is painful, and systems to reduce uncertain are good.  Up to a point.  They can also become so rigid and limiting that it becomes harder for anyone to make change (like China around the time of Empress Cixi).  It's like you may reduce variation in order to prevent some of the worst downturns, but you also generally level things out so that nobody has as much of an upturn, either.  (And you can open yourself up to those 'Black Swans' of the financial crisis fame, where you reduce uncertainty 99% of the time, but that 1% is a total disaster.)

In short, I have some inclinations and frameworks for reading this, but my mind is not entirely made up on what's 'right' or 'wrong'.

So anyways.  I sympathized with Rockefeller's aims initially.  This whole crazy boom/bust cycle was insane, and inefficient.  People would find oil, rush to develop it, destroy the golden goose in the process, glut the market, then go out of business as they were unable to turn a profit.  I can see why that would be hell on anyone trying to build a business, and why Rockefeller would see to stabilize the industry.  I can even, kind of, see why he would fight so hard to create Standard Oil.

But at what point has he succeeded at the original goal (i.e. reducing the uncertainty and wild craziness in order to build a profitable business) and started fighting to control the entire market out of more selfish and greedy reasons?  Did Standard Oil really have to own 90% or more of the market in order to achieve his goal?  Didn't he get what he wanted when they had 65% of the market?

(These questions, btw, are less about oil and more about our modern complaints against big business, and the way it crowds out small and more local businesses.  And it ties in with the modern economy, where most of us are dependent on wages paid by others.  Less freedom to do our own thing.  Which makes it harder to speak with an independent voice.)

Then there is the question of tactics.  At what point did Standard Oil cross the line from a reasonable pursuit of profit, and into (for lack of a better term) bad sportsmanship.  In sports, you want to see teams play their best.  Want to see them win by giving it their all, playing well, and maybe catching a lucky break here and there.  You don't want to see a team win by cheating, by injuring other players when the referee isn't looking, or paying someone off to lose, or paying someone to break the leg of a competitor.  Then winning is no longer about who is the better team, it's about who is better at cheating.

In the same way, businesses sell a product.  And the company that can make the better widget, faster, and at a lower price is the company that is playing a good game.  The one that isn't making a better widget, but decides to flood the market with widgets because they know they can survive the profit loss and hope it will drive the competition out of business is not actually a better business.  It's not winning by making better widgets.  It's winning by manipulating the game in order to drive out competition. 

This was the rise of big business, where they had the big budget that allowed it to survive cutthroat competition.  (On a certain level, it reminds me of biological eco systems.  There was a void in the eco-system for large predators, and it got filled.  Yet just because we now had wolves in the business eco-system, doesn't mean we stopped having foxes and other smaller predators.  And perhaps it's not about good or bad so much as what makes for a healthy and viable system.)

All of this is even more interesting given the recent drop in oil prices, and Saudi Arabia's claim that they will not reduce production.  Essentially it's their bid to maintain market share, just like what I am reading about from over 100 years ago.

I don't have any real conclusions right now, I just wanted to get some of this out of my head.

Two more things.  First - it was kind of shocking to realize that 'Big Oil' got its start not with the combustion engine, but with the drive to get better illumination.  We use electric light bulbs everywhere now, and it's hard to imagine how valuable kerosene was before electricity.

Second - so far the history of Big Oil is pretty much capitalism at it's worst.