It has become a staple of newspaper articles about lottery winners that, more often than not, their huge windfalls cause more grief than glamour. The lucky few frequently overspend themselves into bankruptcy, watch their families descend into nasty conflicts, and endure endless requests for money and gifts from people they don’t know.
So it is with the windfall profits of oil as well, but on a national scale. “One of the ironies of oil-rich countries is that most are not rich, that their oil brings trouble rather than prosperity,” writes journalist Peter Maass in his new book Crude World: The Violent Twilight of Oil, a blistering critique of oil companies, oil-rich dictators, and the oil-obsessed bankers that abet them both.
Maass takes his readers on a world tour of the mixed blessings of oil. Crude World describes the low-intensity wars of the Niger Delta, the presidential excesses of Equatorial Guinea, the environmental disasters of Ecuador, the corruptions of Texas, and the largely failed promise of Venezuela. It’s not a trip for the faint-hearted. In the depressing theme park of Oil World, the rich get richer and more paranoid and the poor get poorer and more outraged.
Surely, though, the rule of unintended consequences doesn’t apply to the Middle East. Aren’t the Gulf States awash in oil revenues? Saudi Arabia, with 21 percent of the world’s reserves, went from a sand-poor country of Bedouins to a wealthy and powerful geopolitical player in the space of a generation.
But the Middle East, too, is not immune to the malign military, political, and environmental effects of oil. The wealth that lies beneath the lands of the Middle East has inspired countless wars, the U.S. invasion of Iraq being only the latest. During the first Gulf War, when Iraq set about to destroy Kuwait’s oil industry, the burning oil wells and the 250 million gallons of oil that poured into the Persian Gulf irreparably damaged the environment. And on the political end, tyrants have used oil wealth to strengthen their dictatorships – in Iraq, Iran, Libya, and so on. If governments manage to avoid wasting oil through massive spills, they still manage to waste oil through direct plunder (siphoning off profits to off-shore bank accounts) or hare-brained schemes (like Dubai’s luxury real estate venture).
Even Saudi Arabia, the world’s top oil producer, doesn’t have enough to make its citizens rich. This is not a matter of distribution, but of production. “It is one of the oil industry’s structural tragedies that it requires few workers, so there was little room for Saudis at their own oil company,” Masss observes. “In a country of more than 20 million people, Aramco employed 50,000, and each year it hired just 500 employees.”
Then there is the ruthlessness of the industry itself. One former top official at Aramco and now a top consultant described for Maass the realpolitik of his former colleagues: “If they are in financial trouble and have to cut corners, they will cut corners. It means that if your tanker is old and you ought to retire it, you keep it working…It means if you have to abandon a facility that is a pollutant, you abandon it in place and walk away without cleaning it up.” Working with dictators scrambles the moral compass of oil company officials and bank executives alike.
If Oil World was a bleak place during the years of plenty, the passing of peak oil will make it bleaker still. As the extraction of what’s left under the ground or the ocean becomes more expensive or technically daunting, the fight over the scraps will become that much more intense. And thus the subtitle to Maass’ book: The Violent Twilight of Oil.
Maass does offer a few suggestions. Greater transparency in the oil industry could reduce corruption and the likelihood of the shell games by which oil-rich leaders feather their own nests. And then, of course, we must prepare for a post-oil economy. There are no shortages of ideas, Maass points out: “New technologies and Einstein-level genius are not required for new railways and wind farms.”
It also doesn’t take a genius to realize that investing lottery earnings makes more sense than buying five new houses. Rather than waiting for people – or countries – to make wise choices, we might have to change the very structures that reward the few and impoverish the many. After all his travels and all his interviews, Maass only skirts this conclusion. But until we repair this fundamentally crude aspect of our global economy, we’ll be left with the tragic ironies that oil and so many other valuable resources spawn and that Maass so ably documents.