Crude World

by Peter Maass

  Chávez was betting, almost literally, that an oil company would succeed where government ministries might not. PDVSA went from one extreme—disassociated from the government it was supposed to serve—to the opposite extreme of taking over the government’s duties. I knew that villagers in the Niger Delta would be delighted if Shell or its government-owned partner would provide the education, electricity, medical care and jobs that the negligent and corrupt government did not offer. But it was hard to imagine how oilmen might do better development work than a government’s development experts. Oil companies should certainly provide funding and support to official efforts, as well as fight corruption and waste. But replacing a government seemed a doomed concept. As Toro-Hardy said in his exasperated way, “Oil companies should do more, but they should not change their mission. Now, instead of investing in its own projects, PDVSA is investing in housing and social programs. This is very nice, but it’s not for an oil company.”

  In Venezuela, it was as though a well-meaning doctor was using the wrong instruments and wrong procedures to operate on a sick patient. Even during the boom years, signs of failure were ample—price controls on foodstuffs were leading to shortages, and the government was spending so much on subsidies that it was running into deficit problems, which is a striking achievement when large amounts of revenues are being received from oil sales. Chávez’s policies, intended to break the resource curse, seemed likely to prolong it. “I am not defending the previous governments,” Toro-Hardy said as he walked me out of his private sanctuary. “They did an awful job. But giving away money is not going to solve people’s problems. We have a saying here: ‘Bread for today and hunger for tomorrow.’”

  When oil prices slid back to the double digits, Chávez’s popularity began to slide, too. He didn’t have as much money to throw at the country’s problems. An opposition candidate even won election as mayor of Caracas in 2008. Magic shows can obscure reality but cannot make it disappear.

  One day, my journey into the twilight of oil took me to San Gorgonio Pass, in southern California. The mountains around the desert pass rise to more than ten thousand feet, but they are not the most dramatic sight. The pass, one of the breeziest spots in the state, is home to a wind farm that consists of about three thousand turbines spread over five thousand acres. Some turbines are eighty feet high, others rise above three hundred feet, and together they can produce electricity for hundreds of thousands of homes. Set against the blue sky and the brown desert, in rows of rotating white arms that glint in the sun, the turbines have the appearance of futuristic totems waving at us, luring us forward.

  The farm is located at the intersection of the I-10 Freeway and Route 62, which leads to a Marine Corps base at Twentynine Palms. This makes San Gorgonio a symbolic as well as a geographic crossroads. In one direction lies a bastion of American military power that upheld, in the last century, an economic system dependent on fossil fuels. This direction leads, or should lead, to our past. In another direction, the one symbolized by windmills rather than howitzers, lies our future.

  Though oil provides fuel for our cars and warmth for our homes, it undermines most countries that possess it and, along with natural gas and coal, poisons the environment. We need to find another way. Because I am hopeful, I have not been speechless when people have asked me, “How do we stop the human, terrestrial and climate damage of fossil fuels?”

  I tell friends and strangers about the importance of conservation. I stress the benefits of renewable energy. I note that coal plants are particularly deadly—and that we should build no more of them. Although I haven’t raised my own vegetables, I mention the importance of locally grown food and, in the developed world, meals that involve lesser amounts of meat. Of course I emphasize the importance of transparency in oil and gas deals.

  This isn’t always what my questioners want to hear, though. They want a new answer, something they haven’t heard before, a fresh solution to monumental problems that other answers haven’t seemed to solve. A new technology, a new … something. But the good news, which they haven’t understood, is that we already possess most of the answers we need. We have technologies and policies that can, to borrow a phrase from a previous generation, change the world. One of the reasons we face a world melting into violence—and just plain melting—is that for several decades we have refused to act on the answers within reach. Do you remember the solar panels President Jimmy Carter installed on the roof of the White House in 1979? If you don’t, that’s probably because Carter’s call for “the moral equivalent of war” in the realm of energy went nowhere and President Ronald Reagan took down the panels several years later. Yet solar power remains an answer that can help us survive into the twenty-second century.

  Wind farm in the San Gorgonio Pass near Palm Springs, California

  A worker at the Bibi Heybat oil field in Baku, Azerbaijan, holds the local currency.

  There are other answers.

  Some of this book focused on corruption in countries that have the misfortune to possess large amounts of oil. A remedy is at hand. It’s not a complete one, but it could, if enacted in full, return a measure of health to sick economies and polities.

  It is known as Publish What You Pay and is being promoted by a nongovernmental organization of the same name. It means what it sounds like. Few companies and governments disclose the contracts they sign or the payments they make and receive. This creates a cloud of confidentiality in which bribes can be paid, sweetheart deals can be struck and billions of dollars can be embezzled. A secret contract is a harbor for crooked executives and politicians.

  PWYP would compel companies and governments to publish the financial terms of their contracts. A related though less aggressive campaign that already involves some governments is known as the Extractive Industries Transparency Initiative, and though its goals are similar to PWYP’s, it promotes voluntary codes rather than compulsory ones.

  A few companies have published some figures, and a handful of nations have publicized a portion of their receipts. But the steps taken so far are extremely small. Today, people in Angola, Equatorial Guinea, Azerbaijan, Turkmenistan, Russia, Iraq, Iran, Saudi Arabia, Sudan and most other energy-rich countries have almost no way of knowing, even though their leaders might have signed on to EITI, how much money is paid to their governments or the terms of payment, and almost no way of confirming that energy revenues go into reliable accounts that are beyond the reach of corrupt leaders. Full transparency would help remedy these problems.

  The enforcement of prevailing laws is a remedy, too. There is a piece of philosophy from the frontier days of America: If you are involved in a shootout, you should not have any bullets left at the end. Anti-bribery laws in America and Europe are unevenly enforced. For instance, there has been no sanction against the energy companies that made dubious payments in Equatorial Guinea to President Obiang and his family. Riggs Bank, which helped hide Obiang’s money, was forced to pay millions of dollars in fines, although its principal owners, members of the Allbritton family, escaped indictment and were able to sell their bank. Riggs, however, was a niche institution with less clout in Washington than, say, Exxon or Chevron, which have not been indicted or fined for their questionable dealings. There have been some enforcements lately, of course—Halliburton paid substantial fines for its bribery in Nigeria, and Siemens A.G., the German engineering firm, paid fines of $1.6 billion in America and Europe after admitting to a global bribery spree. But much more can be done. Every year U.S. prosecutors issue only a modest number of indictments under the Foreign Corrupt Practices Act. Authorities in Europe and Asia have proven loath to file bribery charges except in the most egregious of cases. The law is a weapon that rarely leaves our holster.

  At the risk of sounding even more old-school, I’ll mention an additional remedy we need to impose: social values. Even when enforced aggressively, laws alone cannot do everything; they need to be complemented with social pressure that opposes unethical and exploitative
profiteering. Ida Tarbell noted this a century ago, in her famous exposé of the extortionary methods used by John D. Rockefeller’s Standard Oil Company. Tarbell argued that part of the problem resided in society’s ambiguous reaction to Rockefeller’s law-shaving, fortune-making success. “There is no cure but in an increasing scorn of unfair play—an increasing sense that a thing won by breaking the rules of the game is not worth the winning,” Tarbell wrote. “When the businessman who fights to secure special privileges, to crowd his competitor off the track by other than fair competitive methods, receives the same summary disdainful ostracism by his fellows that the doctor or lawyer who is unprofessional receives … we shall have gone a long way toward making commerce a fit pursuit for our young men.” Tarbell, who was right one hundred years ago, is right today.

  Just as individuals in the developed world need to be partisans of a new ethos, their governments need to encourage good governance in unstable nations that are rich only in resources. Where civic groups and multiparty systems do not exist or are weak, our governments should lobby for them so that grievances can be settled through discussion rather than violence. Democratic governments should not support dictatorships whose oppression foments rebellion. War-crimes trials should be pursued against armies and militias that commit atrocities (as many do in wartime). Development assistance should focus on reducing the reliance on mineral exports like oil.

  On paper, these policies have been adopted by democratic and even nondemocratic governments in the developed world, but in practice the situation is quite different. In Azerbaijan, Angola and a barrelful of other dictatorships, support for democratic change has been minimal. On the economic side, development policies pursued by the World Bank and the IMF have tended to do more harm than good in recent decades, leading to heavy debt loads and industrialization programs that harmed all-important agricultural sectors. We have plenty of answers; resolve is what we lack.

  The skeptic will point out that even the best of remedies, administered in the right amounts, cannot turn a curse into a blessing. This is true. There is too much corruption-inducing, economy-deforming, conflict-enhancing, fate-altering value locked up in natural resources like oil. As I’ve said, only the most stable of democracies, such as Norway, and the tiniest of emirates, such as Abu Dhabi, have avoided the downsides of dependency on a natural resource. They are the outliers. The great middle of resource-rich nations do not have bribery-proof institutions or enough oil to make everyone rich beyond complaint. To exorcise the resource curse, you would almost need to get rid of the resources. I had that wish at times. You cannot navigate the violent creeks of the Niger Delta or visit the contaminated mess of Ecuador’s Oriente region without thinking that everything would be better if oil had not been found.

  We cannot undo geology, but we can try to make these minerals less valuable over the long term so that afflicted nations might have a chance to reset their priorities. The twilight of oil, after a century in which the resource reshaped the world, will last for years, after all. When we wake up tomorrow, we will still be dependent on petroleum and complicit in the forms of violence—physical, environmental and cultural—that are the consequences of its extraction. The twilight needs to be as short as possible. This is where a fortunate convergence occurs between the answers to global warming, peak oil and the resource curse.

  Almost every climate scientist agrees that catastrophic warming will occur if we fail to dramatically reduce our carbon emissions. Changing light bulbs and driving a Prius are just the first, the smallest and the easiest of steps (though only if you can afford a Prius). The good news, according to Princeton University scientist Robert Socolow, is that “humanity already possesses the fundamental scientific, technical and industrial know-how” to solve the climate problem. Socolow and his colleague Stephen Pacala have introduced the notion of “stabilization wedges”—a set of programs, ranging from conservation efforts to fuel efficiency and renewable energy, that would collectively reduce our emissions to levels that should ward off catastrophic warming. But it won’t be easy. New technologies must be proved and scaled up, massive amounts of money must be invested, and lifestyles oriented around cheap fossil fuels must be altered. Socolow and Pacala describe their plan as “a limited set of monumental tasks.”

  There is a healthy debate over the best solutions, but when scientists shake their heads in grave doubt it’s usually not because of problems with wedge 5 or wedge 7. They are most concerned about whether we will do what we can do. The United States is by far the worst offender. It is the world’s largest consumer of energy and the second-largest emitter of greenhouse gases (China, due to its reliance on coal, the “dirtiest” of fossil fuels, has nosed ahead in the greenhouse gas category). Even in the Barack Obama era, the United States continues to lag behind Europe in the development of everything from solar panels to carbon trading and mass transit. It’s impossible to blame a shortage of ideas. New technologies and Einstein-level genius are not required for new railways and wind farms like the one at San Gorgonio Pass.

  My travels in the unhappy precincts of oil intensified my support for the efforts to avert global warming. A world in which the priority is not getting oil but getting off oil would be better not only for the atmosphere but also, as I’ve seen, for the people who live in Nigeria, Iraq, Equatorial Guinea, Russia, Iran and other resource-rich nations. The advent of peak oil is yet another incentive to cut our dependency, because in the years ahead the price will only rise—skyrocket, really—if we fail to arrest our desires for it. If you are concerned about spending too much money on gasoline, just sit back, do nothing and see where those prices are in five or ten years.

  If you happen to believe in omens, it’s tempting to think that the sky and earth are speaking to us with their shouts of global warming and peak oil, warning us to reduce our consumption of fossil fuels. If we respond, the climate will survive in its present form and oil prices will have a far better chance of staying at reasonable levels. The substance, less lucrative than before, will offer less of a temptation toward bad governance, and it will play a smaller role in our decisions to wage war. After all, why invade country X or support tyrant Y if you can survive without the dark liquid they possess?

  These issues were on my mind as I drove into the San Gorgonio Pass and saw its windmills. I would have liked to linger, but another destination called me. I turned onto Route 62 and followed it until I reached Twentynine Palms and its sprawling military facility, which is the base for the marine battalion that toppled the statue of Saddam Hussein. The base, with thousands of marines wandering around in desert uniforms, with rows of beige Humvees and the occasional whoop-whoop of helicopters overhead, brought me back to Iraq and everything I had seen there.

  I visited Colonel Bryan McCoy, who’d given the order to drop the statue of Saddam Hussein. I noticed a couple of cardboard boxes in his office, half filled; he was packing up before his battalion deployed on a new mission. It was a Friday afternoon, so the battalion’s headquarters was emptying out for the weekend. We headed for the officers’ club to have a drink with the major who’d driven the first tank into Firdos Square. It was cool and dark inside, where just a few other marines with crew cuts were passing the afternoon in a restaurant that had an amiably dingy feel. We sat near the bar, drinking beer, eating popcorn and bringing ourselves up-to-date on each other’s lives.

  We talked about Firdos—for these marines it was a small event that, to their surprise, had become a global icon. But mostly we talked about the battles fought on the way to Baghdad. The battalion had lost several of its own in the invasion, including a scout sniper shot dead during an ambush; McCoy was just a few feet away when it happened. The battalion would head back to Iraq in the coming months, because invasion had turned into occupation, and McCoy knew it would lose more troops while shedding the blood of others.

  After a few hours it was time to go, so we left the club and blinked into the still-bright sun of the Mojave Desert. After our fa
rewells, I got into my rental car and drove west on Route 62. Soon I was back at San Gorgonio Pass, looking up at the beckoning windmills. The war in Iraq had not left my mind; nor had the trouble in Nigeria, Ecuador, Russia, Saudi Arabia and other oil-drenched corners of our planet. I realized that in just a few miles I had gone from one vision of the future to another. I knew for sure that the windmills were far more revolutionary than all the toppled statues in the world.

  Acknowledgments

  I am not alone as a writer. I am surrounded by people who share their time, knowledge and friendship, to the extent that it is misleading for my name to appear alone on the cover. In these final words I wish to thank a cast of generous collaborators.

  From the day he plucked my first manuscript from obscurity fourteen years ago, Jonathan Segal has been my editor at Alfred A. Knopf as well as my greatest supporter and friend. Jon not only turns my words into prose, he provides the sort of guidance and stability that are vanishing in the publishing world. Along with Sonny Mehta, editor in chief of Knopf, Jon is a literary treasure. He is truly the best editor and advocate a writer could wish for. Without him, this book would not exist.

  For the marathons that are my books I stay in shape by writing articles for the New York Times Magazine. Editor in chief Gerald Marzorati has sent me around the globe, allowing me to learn how the world works. Without Paul Tough, who edits my stories at the Times, I couldn’t have written narratives worthy of publication. I really don’t know where I’d be without his help.