The Quest: Energy, Security, and the Remaking of the Modern World

by Daniel Yergin

  6 LeVine, The Oil and the Glory, p. 253.

  7 Interviews with Ronald Freeman, Lucio Noto, and Jan Kalicki.

  8 Interview with Richard Matzke.

  9 Wall Street Journal, August 28, 2007; Petroleum Intelligence Weekly, October 18, 2010.

  10 Kabildyn cited a book . . . need to search out . . .

  11 John J. Maresca, testimony, U.S. House of Representatives Committee on International Relations, Subcommittee on Asia and the Pacific, February 12, 1998 (“Central Asia,” cost-effectiveness); Interview with John Imle and Marty Miller; Steve Coll, Ghost Wars: The Secret History of the CIA, Afghanistan, and Bin Laden, from the Soviet Invasion to September 10, 2001 (New York: The Penguin Press, 2004), pp. 309–10.

  12 Mikhail Gorbachev, “Soviet Lessons from Afghanistan,” International Herald Tribune, February 4, 2010.

  13 Ahmed Rashid, Taliban: Militant Islam, Oil and Fundamentalism in Central Asia (New York: Yale University Press, 2000), ch. 3 (Islamic Emirate).

  14 Christian Science Monitor, February 9, 2007 (“alien”); interviews; Washington Post, October 5, 1998 (“implement”).

  15 Coll, Ghost Wars, pp. 309–13 (“no policy,” “authorized”); interview with John Imle; “Political and Economic Assessment of Afghanistan, Iran, Pakistan, and Turkemnistan/Russia,” Unocal Report, September 3, 1996 (“involvement”).

  16 Unocal Report (“scenario”); Coll, Ghost Wars, pp. 331, 342 (“spiritual leaders”).

  17 Rosita Forbes, Conflict: Angora to Afghanistan (London: Cassell, 1931), p. xvi (“anathema”); interviews with John Imle and Marty Miller.

  Chapter 4: “Supermajors”

  1 Kenichi Ohmae, The Borderless World: Power and Strategy in the Interlinked Economy (New York: HarperCollins, 1991).

  2 New York Times, December 1, 1997 (“reasonable”); Petroleum Intelligence Weekly, December 8, 1997 (“economic stars”).

  3 Carmen Reinhart and Kenneth Rogoff, This Time Is Different: Eight Centuries of Financial Folly (Princeton: Princeton University Press, 2009), pp. 18, 157 (“darling”); Timothy J. Colton, Yeltsin: A Life (New York: Basic Books, 2008), p. 411–15 (93 percent); interview with Stanley Fischer, Commanding Heights; interview with Robert Rubin, Commanding Heights.

  4 New York Times, December 26, 1998 (“understatement”), January 10, 1999 (cafeteria).

  5 Interview with Robert Maguire (“roster”); Petroleum Intelligence Weekly, August 31, 1998 (“Were he alive today”); Douglas Terreson, “The Era of the Super-Major,” Morgan Stanley, February 1998.

  6 Ronald Chernow, Titan: The Life of John D. Rockefeller Sr. (New York: Random House, 1998), pp. 554–55; Daniel Yergin, The Prize: The Epic Quest for Oil, Money, and Power (New York: Free Press, 2009), chs. 2, 5.

  7 Interview with Lucio Noto (“could survive”).

  8 Interview with Laurance Fuller; interview with John Browne; interview with Samuel Gillespie; John Browne, Beyond Business (London: Weidenfeld and Nicolson, 2010), pp. 67–71; Joseph Pratt, Prelude to Merger: A History of Amoco Corporation, 1973–1998 (Houston: Hart Publications: 2000), pp. 85–86; U.S. Federal Trade Commision, “BP/Amoco Agree to Divest Gas Stations and Terminals to Satisfy FTC Antitrust Concerns,” press release, December 30, 1998 (“competition”); Amoco Corp., Proxy Statement/Prospectus, October 30, 1998.

  9 Browne, Beyond Business, p. 72 (“lap of BP”).

  10 Interviews with Lee Raymond, Samuel Gillespie, and Lucio Noto; Exxon Corp., Form S-4 Registration Statement Under the Securities Act of 1933, April 5, 1999; New York Times, December 1, 1998.

  11 William J. Baer, testimony, U.S. House of Representatives Committee on Commerce, Subcommittee on Energy and Power, March 10, 1999.

  12 Wall Street Journal, December 1, 1999.

  13 Robert Pitofsky, testimony, U.S. Senate Committee on Commerce, Science, and Transportation, Subcommittee on Consumer Affairs, April 25, 2001 (“prices high”); Jeremy Bulow and Carl Shapiro, “The BP Amoco-ARCO Merger: Alaskan Crude Oil (2000),” in The Antitrust Revolution, ed. John Kwoka Jr. and Lawrence White (New York: Oxford University Press, 2008), p. 141 (half a cent), p. 149 (“protect competition”); Browne, Beyond Business, pp. 73–74.

  14 Interviews with Thierry Desmarest and Vera de Ladoucette.

  15 Interviews with David O’Reilly and William Wicker, New York Times, October 17, 2000 (Bijur).

  16 Washington Post, November 19, 2001; interview with Archie Dunham.

  17 Interview with Mark Moody-Stuart; Keetie Sluyterman, Keeping Competitive in Turbulent Markets 19 History of Royal Dutch Shell (Oxford: Oxford University Press, 2007), pp. 381–95.

  18 Interview with David O’Reilly.

  Chapter 5: The Petro-State

  1 Moises Naim, Paper Tigers and Minotaurs: The Politics of Venezuela’s Economic Reform (Washington, DC: Carnegie Endowment, 1993), p. 19; Herbert Adams Gibbons, The New Map of South America (London: Jonathan Cape, 1929), pp. 249, 252–53.

  2 Daniel Yergin, The Prize: The Epic Quest for Oil, Money, and Power (New York: Simon and Schuster, 1990), p. 507 (“the devil”).

  3 Terry L. Karl, The Paradox of Plenty: Oil Booms and Petro-States (Berkeley: University of California Press, 1997); Michael L. Ross, “The Political Economy of the Resource Curse,” World Politics 51 (1999): 297–322 (“rent-seeking behavior”); Christina Marcano and Alberto Barrera Tyszka, Hugo Chávez, trans. Kristina Cordero (New York: Random House, 2007), p. 15 (Venezuelan academics).

  4 Naim, Paper Tigers and Minotaurs, p. 24 (“reversed Midas touch”); interview with Ngazi Okonjo-Iweala.

  5 Karl, The Paradox of Plenty, p. 71, 123 (“change the world!” “couldn’t lose”); Marcano and Tyszka, Hugo Chávez, p. 5 (“magical liquid”); Gustavo Coronel, The Nationalization of the Venezuelan Oil Industry: From Technocratic Success to Political Failure (Lexington, MA: Lexington Books, 1983).

  6 Karl, The Paradox of Plenty, p. 72 (“trap”); Naim, Paper Tigers and Minotaurs, pp. 34–35.

  7 Marcano and Tyszka, Hugo Chávez, p. 59; Naim, Paper Tigers and Minotaurs, pp. 100–4.

  8 Marcano and Tyszka, Hugo Chávez, pp. 4, 29, 43.

  9 Marcano and Tyszka, Hugo Chávez, ch. 17.

  10 Interview with Luis Giusti.

  11 Interview with Luis Giusti.

  12 Middle East Economic Survey, December 8, 1997 (Jakarta).

  13 New York Times, December 6, 1998 (“reeling”).

  14 Interview with Luis Giusti (fire Giusti); Nicholas Kozloff, Hugo Chávez: Oil, Politics, and the Challenge to the U.S. (New York: Palgrave McMillan, 2006), p. 13; BusinessWeek (International Edition), October 26, 1998; Marcano and Tyszka, Hugo Chávez, p. 107 (Caldera).

  15 Chávez quotes in New York Times, April 10, 1999, May 2, 1999, July 27, 2000; Richard Gott, Hugo Chávez and the Bolivarian Revolution (London: Verso, 2005), p. 13 (“same sea”).

  16 Brian A. Nelson, The Silence and the Scorpion: The Coup Against Chávez and the Making of Modern Venezuela (New York: Nation Books, 2009), pp. 125–26 (chief of security); New York Times, July 28, 2000 (“annihilate,” “devils”).

  17 Bernard Mommer, Changing Venezuelan Oil Policy, Oxford Institute for Energy Studies, April 1999; Middle East Economic Survey, July 8, 2002.

  18 Gott, Hugo Chávez and the Bolivarian Revolution, p. 170.

  19 Petroleum Intelligence Weekly, September 18, 2000 (“soaring oil prices”), September 25, 2000 (“brewing energy crisis”).

  Chapter 6: Aggregate Disruption

  1 Adam Smith, Paper Money (New York: Summit Books, 1981), p. 229.

  2 Petroleum Intelligence Weekly, November 11, 2002.

  3 Cristina Marcano and Alberto Barrera Tyszka, Hugo Chávez: The Definitive Biography of Venezuela’s Controversial President (New York: Random House, 2007), p. 145 (“a great human network”); Brian A. Nelson, The Silence and the Scorpion: The Coup Against Chávez and the Making of Modern Venezuela (Nation Books: New York, 2009), pp. 14, 74.

  4 Marcano and Tyszka, Hugo Chávez, pp. 173, 175, 180.

  5 Nelson,
The Silence and the Scorpion, pp. 246–47.

  6 Interview with Ngozi Okonjo-Iweala.

  7 Ricardo Soares de Oliveira, Oil and Politics in the Gulf of Guinea (New York: Columbia University Press, 2007), pp. 73–79; Nicholas Shaxson, Poisoned Wells: The Dirty Politics of African Oil (New York: Palgrave Macmillan, 2007), pp. 16–19; Xavier Sali-i-Martin and Arvind Subramanian, “Addressing the Natural Resource Curse: An Illustration from Nigeria,” International Monetary Fund Working Paper, July 2003; Peter M. Lewis, Growing Apart: Oil, Politics, and Economic Change in Indonesia and Nigeria (Ann Arbor: University of Michigan Press, 2007), ch. 5.

  8 Transparency International, Global Corruption Report 2004.

  9 WAC Global Services, “Peace and Security in the Niger Delta: Conflict Expert Group Baseline Report,” Working Paper for SPDC, December 2003 (“criminalization”); Stephen Davis, The Potential for Peace and Reconciliation in the Niger Delta, Coventry Cathedral, February 2009, pp. 67–68, 101–33 (“new dimension”); Stephen Davis, “Prospects for Peace in the Niger Delta,” presentation, CSIS Africa Program, June 15, 2009; IRIN Africa, “Nigeria: Piracy Report Says Nigerian Waters the Most Deadly,” July 27, 2004 (“international waters”); Petroleum Intelligence Weekly, October 4, 2004 (“pushed”).

  10 Jane’s World Insurgency and Terrorism, “Nigeria Delta Groups,” March 6, 2006.

  11 Financial Times, June 7, 2006 (Greenspan).

  12 National Oceanic and Atmospheric Administration, “Hurricane Katrina: A Climatological Perspective, Preliminary Report,” October 2005; Ivor van Heerden and Mike Bryan, The Storm: What Went Wrong and Why During Hurricane Katrina—the Inside Story from One Louisiana Scientist (New York: Viking, 2006), ch. 4.

  13 U.S. Department of Energy, Impact of the 2005 Hurricanes on the Natural Gas Industry in the Gulf of Mexico Region: Final Report 2006, p. 2; U.S. Department of Energy, “Hurricanes Katrina and Rita Chronology”; U.S. Department of Energy, “Department of Energy’s Hurricane Response Chronology, as Referred to by Secretary Bodman at Today’s Senate Energy and Natural Resources Committee Hearing,” October 27, 2005.

  Chapter 7: War in Iraq

  1 Interview with Philip Carroll. Michah Sifry and Christopher Cerf, The Iraq War Reader: History, Documents, and Opinions (New York: Simon and Schuster, 2003), p. 618 (“addiction”); Richard Haass, War of Necessity, War of Choice: A Memoir of Two Iraq Wars (New York: Simon and Schuster, 2009), p. 162; Paul Pillar, “Intelligence, Policy, and the War in Iraq” Foreign Affairs 85, no. 2 (2006) (“broad consensus”), p. 20; Report to the President, March 31, 2005, The Commission on the Intelligence Capabilities of the United States Regarding Weapons of Mass Destruction, pp. 157–87.

  2 New York Times, February 10, 2003 (“indisputable”); interview (“no evidence”).

  3 New York Times, October 7, 2004 (“deceiving”); Sifry and Cerf, The Iraq War Reader, p. 413 (chemical and biological); interview.

  4 Catherine Collins and Douglas Frantz, Fallout: The True Story of the CIA’s Secret War on Nuclear Trafficking (New York: Free Press, 2011), p. 23; Laura Bush, Spoken from the Heart (New York: Scribner, 2010), pp. 242, 277; George W. Bush, Decision Points (New York: Crown, 2010), p. 253; Haass, War of Necessity, War of Choice, p. 234 (“unable to prevent”); Pillar, “Intelligence, Policy, and the War in Iraq,” p. 21 (“any analysis”).

  5 Thomas E. Ricks, Fiasco: The American Military Adventure in Iraq (New York: Penguin Press, 2007), chs. 2–3; interview with John Negroponte (“toughest message”).

  6 New York Times, August 27, 2002 (“infinitely more difficult”); Sifry and Cerf, The Iraq War Reader, p. 269 (“materialize”); Ricks, Fiasco, p. 30; George Packer, The Assassin’s Gate: America in Iraq (New York: Farrar, Straus and Giroux, 2005), ch. 4; Michael R. Gordon and Bernard E. Trainor, Cobra II: The Inside Story of the Invasion and Occupation of Iraq (New York: Random House, 2006), pp. 72–73.

  7 Haass, War of Necessity, War of Choice, p. 206 (“true threat”); Ricks, Fiasco, pp. 5, 65 ( “not have an easy time”).

  8 Interview with John Negroponte.

  9 Bob Woodward, Plan of Attack (New York: Simon and Schuster, 2004), p. 323; interview (“proposal to invest”).

  10 Donald Rumsfeld, “The Future of Iraq,” speech, School of Advanced International Studies, Johns Hopkins University, Washington, DC, December 5, 2005 (“speed and agility”); Washington Post, February 27, 2003 (Gen. Shinseki); Donald Rumsfield, “Beyond Nation Building,” speech, Intrepid Sea-Air-Space Museum, New York City, February 14, 2003; Gordon and Trainor, Cobra II, pp. 459, 506 (Franks). Also Donald Rumsfeld, Known and Unknown: A Memoir (New York: Sentinel, 2011), pp. 482–83; 649–51.

  11 Pillar, “Intelligence, Policy, and the War in Iraq,” p. 22 (“strong wind”); Brent Scowcroft, “Don’t Attack Saddam,” Wall Street Journal, August 15, 2002; interview with Brent Scowcroft; Haass, War of Necessity, War of Choice, p. 226 (“all else is jeopardized”); International Monetary Fund, “Iraq: Macroeconomic Assessment,” October 21, 2003 (government revenues); Ricks, Fiasco, pp. 96–98 (“its own reconstruction”).

  12 Gordon and Trainor, Cobra II, p. 459.

  13 Interview with Philip Carroll; Thomas Ghadhban, CERA, “Expansion of Iraq’s Crude Oil Production Capacity,” presentation, “Tale of Three Cities” conference, January 20–22, 2006 (twenty-three were put into production); Issam al-Chalabi, “Oil in Postwar Iraq,” presentation, CERA “Tale of Three Cities” conference, January 11–13, 2003.

  14 Interview with Philip Carroll; L. Paul Bremer III and Malcolm McConnell, My Year in Iraq: The Struggle to Build a Future of Hope (New York: Simon and Schuster, 2006), p. 61.

  15 Gordon and Trainor, Cobra II, p. 481 (“civil servants”); interview with Aleksander Kwaśniewski; Bremer and McConnell, My Year in Iraq, pp. 36–39; Terence Adams to author.

  16 “Iraq’s Come Back: Consequences for the Oil Market and the Middle East,” CERA, January 2004; New York Times, March 17, 2008 (expletive); Gordon and Trainor, Cobra II, pp. 483–84 (“incendiary”).

  17 Rumsfeld, Known and Unknown, pp. 473–78 (“stuff happens”); Gordon and Trainor, Cobra II, pp. 46, 465, 472, 575; New York Times, October 19, 2004; Bush, Decision Points, pp. 257–59.

  18 Gordon and Trainor, Cobra II, pp. 489–95, 579.

  19 Jeremy Greenstock, “What Must be Done Now,” Economist, May 6, 2004.

  20 Interview with Rob McKee; Vera de Ladoucette and Leila Benali, “Iraqi Production: More (but Slower) Growth ahead,” CERA, November 12, 2003 (Baath plan).

  21 Petroleum Intelligence Weekly, June 21, 2004; Michael Makovsky, “Oil’s Not Well in Iraq,” Weekly Standard, February 19, 2007; Michael Makovsky, “Iraq’s Oil Progress,” Weekly Standard, August 25, 2008.

  Chapter 8: The Demand Shock

  1 Michael Wallis, Oil Man: The Story of Frank Phillips and Phillips Petroleum (New York: Doubleday, 1988), p. 123 (“oil fever”).

  2 Petroleum Intelligence Weekly, February 6, 2004; interview.

  3 Guy Caruso, testimony, U.S. Senate Subcommittee on Energy and Water Development, June 25, 2008; Wall Street Journal, April 26, 2004 (“guidelines,” “curious,” “skeptically”).

  4 IHS CERA, “Capital Costs Analysis Forum—Upstream,” January 2009.

  5 Ke Tang and Wei Xiong , “Index Investment and the Financialization of Commodities” January 2011, p. 13 (“co-move”).

  6 Daniel O’Sullivan, Black Gold, Paper Barrels and Oil Price Barrels (London: Harriman House, 2009).

  7 Joe Roeber, The Evolution of Oil Markets: Trading Instruments and Their Role in Oil Price Formation (Royal Institute of International Affairs, 1993).

  8 CME Group, “2010 Commodities Trading Challenge: Competition Rules and Procedures” (“anticipating”).

  9 Interview.

  10 Jim O’Neill to author; Jim O’Neill, “Building Better Global Economic BRICs, Goldman Sachs Global Economics Paper No. 66, November 30, 2001; Financial Times, January 15, 2010.

  11 Interview with Mark Fisher.

 
; 12 Interview with Robert Shiller. Shiller’s definition of a speculative bubble: “A situation in which news of price increases spur investor enthusiasm, which spreads by psychological contagion from person to person, in the process amplifying stories that might justify the price increases and bringing in a larger and larger class of investors, who, despite doubts about the real value of an investment, are drawn to it partly through envy of others’ successes and partly through a gambler’s excitement.” In the case of oil, hower, it would seem that many of the investors had deep convictions but few doubts about what they took to be the “real”—or future—value of petroleum. See Robert Shiller, Irrational Exuberance, 2nd ed. (New York: Broadway Books, 2005), p. 2.

  13 Peter Jackson and Keith Eastwood, “Finding the Critical Numbers: What Are the Real Decline Rates of Global Oil Production?,” IHS CERA, November 2007.

  14 Mohsin S. Khan, “The 2008 Oil Price ‘Bubble,’ ” policy brief, Peterson Institute for International Economics, August 2009; Wall Street Journal, August 17, 2010.

  15 CalPERS, “CalPERS Sets Guidelines for New Asset Class—Commodities, Forestland, Inflation-Linked Bonds,” February 19, 2008; Bloomberg, February 28, 2008; Petroleum Intelligence Weekly, May 12, 2008; interview with David Davis.

  16 Wall Street Journal, May 17, 2008 (“more oil”); Jeffrey Curie et al., “A Lesson from Long-Dated Oil: A Steadily Rising Price Forecast,” Goldman Sachs Energy Watch, May 16, 2008 (“structural bull market”).

  17 Edward Morse, “Oil Dot-com,” Lehman Brothers Energy Special Report, May 2008; interview with Edward Morse; Petroleum Intelligence Weekly, June 2, 2008 (“biggest ramification”).

  18 New York Times, May 23, 2008 (“gouging the American public”); May 22, 2008 (“ethical compass”).

  19 Interview, Bloomberg, June 16, 2008 (travel industry); interview with David Davis.