Oil Book Review! (Oil, Power, and War: A Dark History)

I recently finished the sweeping history of oil by Matthew Auzanneau, "Oil, Power, and War."  Originally published in 2015, this work was translated into English (from French) in 2018.  This book's existence stands apart from the prevailing available literature on the history of oil for a variety of reasons.  For one, it creates a counter-narrative to the preeminent work on the history of oil, "The Prize", by Daniel Yergin.  Secondly, while Yergin's book won the Pulitzer, "Oil, Power, and War" hardly has a handful of reviews in English available online.  Lastly, the book attempts to upend a number of debate topics around oil.  As a few examples, when most are worried about climate change, it focuses on peak oil; when economics focuses on internal sources for financial crises, it suggests oil is at the source of 20th century economic growth and its panics; and while others count the days to oil's peak, it claims we've passed it.

The book itself is profound.  It provides poetic musings amid its findings.  It organizes the history of oil into seasons to describe its rise, peak, and fall.  It pulls from experts in a wide range of disciplines, from the military to government officials, energy organizations, and scholars in economics, energy, and physics.  And it genuinely worries about the state of mankind.  At one point the author describes the human discovery of new sources of oil as 'honey on the anthill': a one-time offering from the gods and an addiction limited at the source.

Oil as Economics

As an economist, the book's suggestion that economic history is misguided (focusing on debt, technology, and ideas, or human behaviors, when it should be focusing on the ratio between how much energy we consume versus how much energy it costs to consume it) brings me pause.  The author suggests that economic well-being is tied to energy and energy is tied to physics or the rules of nature (here the author make reference to the physics concept of "dissipation" and therefore the laws of thermodynamics).  

Their point of reference is a 2013 study by French scholar Gael Giraud, who concluded that "energy - rather than capital or work, which without energy would remain inert - seemed to be the essential, decisive factor in economic activity."  The author states that if this is correct then "our efforts to interpret economic phenomena have been in vain much like the astronomers who sought to understand planetary motion before Copernicus.  Class economic theories - Marxist and capitalist alike - would in this case be no more than anthropocentrist opinions (page 538)."  Is it possible that our past recessions and future economic fate are tied explicitly to energy and not poor investment decisions or market regulation?  The author makes more detailed claims on this topic.

For example, when discussing the 2008 financial crisis, they ask if there is a link between it and a slow steady swell in oil prices that has been ongoing for some time (page 510).  The arguments for this case are as follows: consumer energy costs rising over time may impact ability to make mortgage payments; oil prices are distinctly linked to inflation in general, which cause the Fed to raise interest rates, which bursts financial bubbles (such as sub-prime mortgages). They suggest, "if validated, this would make the 2008 crisis the third oil crisis; the burst subprime bubble and ensuing financial crash would be merely its results, its symptoms."

This argument goes further as the author attempts to tie it back to other financial crises.  They state the same dynamics were in effect in the 1973 crisis (where City Bank and Chase, both historic oil banks, required bailouts).  Lastly, they make the most damning claim that, "since 1945, of eleven US economic crises of varying severity, ten were associated with a strong increase in oil prices, while eleven out of twelve major fuel price increases were accompanied by economic crises.  More specifically, nine of these crises were preceded by soaring pump prices."

As a researcher, these claims require two actions: 1. to check if this is accurate (to understand the "what") and 2. to ask whether the explanation is satisfactory (to understand the "why").  This will be taken up in a subsequent post.

Oil Fetish

Another philosophical point of contention is the prevailing attitude throughout the book that oil is, in fact, historically unique.  More than historic energy sources (coal, wood) and those of the future (hydro, solar, nuclear).  This is tied to the belief that oil may be among the most energy dense sources of stored energy.  Other future sources require work, or energy, to extract energy, whereas oil (and the prior forms of historic energy sources) were sitting patiently waiting to be used.

This idea extends into the author's view of oil's internal history.  Initially, extracting oil and gas was very, very easy.  In many cases it was waiting on the surface, bubbling up in anticipation.  As extraction of 'conventional' oil sources resulted in its near exhaustion, humanity has had to perform extraordinary acts of innovation to pull this energy source from more difficult places (tar sands, deep water wells, arctic locations, etc.).  This has resulted in decreasing the ratio of energy generated to energy extraction costs, slowing global growth.  

It's worth also pointing out that detail on future energy sources not yet fully developed, such as solar/wind/hydrogen, are not given substantial attention here.  The fact is that when discussing alternatives, the author points to the continued dominance of oil in spite of its continued rising costs of extraction.

This viewpoint is likely useful in undertaking a study on oil as comprehensive as this one.  It seems to me, at least, that it has limitations.  Oil and gas were, clearly, the fuel of industrial growth in the second half of the 20th century and the beginning of the 21st.  But in the long view of history, they were not the source of economic growth in the 18th or 19th centuries, which saw energy taken from wood, slaves, and animals slowly replaced by coal.  Famously, the first US oil well (Drake Well) came in operation within a couple years of the civil war (a war over the use of slavery in the United States). 

With this longer view of history, we should see the viability of energy sources maybe not contingent on the ratio of energy extracted to energy spent, but instead energy extracted for human energy spent.  In other words, passive energy sources where human effort is not required are of paramount importance to value in an economic system.  Therefore, for example, it doesn't matter if we have to produce 1,000,000,000 wind turbine energy systems as long as the amount of energy received exceeds that which it takes humans to put them together.  Or, in other words, may be scale can outdo the limitations of science.  

Whether that is true in spite of the laws of physics, (or within the larger ecological system) as the author strongly argues, is a reasonable debate.  Here's hoping that the energy sources of the future derived from quickly replenishing natural processes (daily sunshine, wind patterns, etc.) provide enough and last long enough for our ever-increasing appetite; otherwise, we'll fall into the largely pessimistic viewpoint that we, as a species, will need to be contented with something other than growth.

Conclusion

All in all, it is important to emphasize the magnificent undertaking this book represents.  It tells the stories of peoples and societies crushed under global powers as they clashed for energy supplies.  It warns convincingly that relying on this source indefinitely (by hoping in new unconventional sources, innovative technologies, and advances in efficiency) will be catastrophic.  Further, oil may have already proven itself as the cause of previous crises.  

Whether we have to accept our fate or boldly find new energy sources of even greater potential, this book does not conclude.  It does provide substantial time to the anti-growth viewpoint, which harmonizes with the sub-title of the book "a dark history."  If we cannot find a way, we are in store for a dark future.

What researchers can provide to this discussion is meaningful, particularly economists:

• Are our 20th century economic crises tied to energy costs and consumption patterns?  
• Do we see evidence of countries with greater reliance on alternative energy sources finding insulation from oil and gas costs?  
• Have we reached a peak in oil extraction in spite of the unreliable statistics provided by global governments?  
• What can we expect for the remainder of the 21st century and for those who are most likely to be de-prioritized in a global competition for resources?  
• And how does this book compare with the views espoused by other histories, such as Daniel Yergin's "The Prize" (and subsequent volumes) as well as historians of other sources of energy around the world?  

Each of these deserve careful time and attention.