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

by Daniel Yergin

  20 New York Times, June 23, 2008, June 20, 2008 (“deliberately chosen”); Wall Street Journal, June 23, 2008, Associated Press, June 20, 2008 (memo).

  21 Interview with David Davis; Oil Bubble or New Reality: How Will Skyrocketing Oil Prices Affect the U.S. Economy: Hearings Before the Joint Economic Committee, U.S. Congress, 110th Congress, 2nd Session, June 25, 2008, p. 10.

  22 California State Board of Equalization, Fuel Taxes Division, Statistics & Reports—2008, at http://www.boe.ca.gov/sptaxprog/spftrpts08.htm.

  23 The Pew Campaign for Fuel Efficiency, A History of Fuel Economy: One Decade of Innovation, Two Decades of Inaction, January 2, 2011.

  24 Admiral Dennis Blair, testimony, U.S. Senate Committee on Commerce, Science and Transportation, May 3, 2007; Energy Security Leadership Council, Recommendations to the Nation on Reducing U.S. Oil Dependence, December 2006.

  25 Interviews; James Hamilton, “Oil and the Economy: The Impact of Rising Global Demand on the U.S. Economy,” hearings, Joint Economic Committee, U.S. Congress, May 20, 2009, pp. 27–29; interview with Rick Wagoner, Petroleum Intelligence Weekly, July 14, 2008.

  26 International Energy Agency, World Energy Outlook 2010 (Paris: OECD/IEA, 2010), pp. 605–11.

  27 New York Times, July 16, 2008; Petroleum Intelligence Weekly, July 21, 2008.

  28 Benjamin S. Bernanke, “Economic Policy: Lessons from History,” speech, Center for the Study of the Presidency and the Congress, April 8, 2010; Hilary Till, “The Oil Markets: Let the Data Speak for Itself,” EDHEC Working Paper, October 2008, p. 22.

  29 Financial Times, September 8, 2009.

  30 Interview with Robert Shiller.

  Chapter 9: China’s Rise

  1 PetroChina Company Limited, Global Offering, March 27, 2000.

  2 Cheng Li, ed., China’s Emerging Middle Class: Beyond Economic Transformation (Washington, D.C.: Brookings Institution Press, 2010).

  3 George W. Bush, Decision Points (New York: Crown, 2010), p. 427.

  4 Interview with Zhou Qingzu; interview with Wang Tao; Eliot Blackwelder, “Petroleum Resources of China and Siberia,” Mining and Metallurgy 187, July 1922 (“never produce”).

  5 H. C. Ling, The Petroleum Industry of the People’s Republic of China (Palo Alto: Hoover Institution Press, 1975), p. 237; Yu Qiuli, minister of petroleum from 1958 to 1964, from Yu Qiuli, YuQiuli: Huiyilu (Memoirs) (Beijing: Liberation Army Press, 1996), p. 1003, cited in Erica Downs, “China’s Quest for Oil Self-Sufficiency in the 1960s,” unpublished manuscript, 2001, p. 5 (“cut off”).

  6 Erica Downs, “China’s Quest for Oil Self-sufficiency in the 1960s.”

  7 Ling, The Petroleum Industry of the People’s Republic of China, pp. 152–59, 188–89, 209, 230–39; interview with Zhou Qingzu.

  8 Interview with Zhou Qingzu.

  9 Henry A. Kissinger to the President, May 7, 1971; Kissinger to Ambassador Farland, June 22, 1971; Kissinger to Farland, late June 1971, the National Security Archive; Henry A. Kissinger, White House Years (Boston: Little Brown, 1979), pp. 738–41.

  10 Erica Downs, “China’s Energy Rise,” in Brantly Womack, China’s Rise in Historical Perspective (Lanham, MD: Rowman & Littlefield, 2010), p. 181 (“petroleum export–led”); Downs III, p. 24 (“must export”); Daniel Yergin and Joseph Stanislaw, The Commanding Heights: The Battle for the World Economy (New York: Simon and Schuster, 2002), ch. 7.

  11 Joseph Fewsmith, Dilemmas of Reform in China: Political Conflict and Economic Debate (New York: M. E. Sharpe, 1994), p. 17.

  12 Interview.

  13 Interview with Zhou Qingzu; PetroChina Company Limited, Global Offering, p. 73.

  14 Interview with Zhou Jiping.

  15 Julie Jiang and Jonathan Sinton, Overseas Investments by Chinese National Oil Companies (Paris: International Energy Agency, 2011), p. 22; Erica Downs, Inside China Inc.: China Development Bank’s Cross-Border Energy Deals, John L. Thornton China Center Monograph Series, no. 3, March 2011 (Washington, DC: Brookings Institution, 2011).

  16 Moscow Times, September 28, 2010 (“new start”).

  17 Interview (“throwing a match”); Frank J. Gaffney Jr., Statement of Frank J. Gaffney Jr., hearing, “National Security Implications of the Possible Merger of the China National Off-shore Oil Corporation (CNOOC) with Unocal Corporation,” before the Committee on Armed Services, House of Representatives, July 13, 2005, pp. 6, 8; interview with Fu Chengyu; Xinhua, October 12, 2006 (“talking about the win-win”); Chevron, “Chevron Acquires Interest in Three Deepwater Exploration Blocks in China,” September 7, 2010 (“welcome the opportunity”); interview.

  18 Erica S. Downs, “Business Interest Groups in Chinese Politics: The Case of the Oil Companies” in China’s Changing Political Landscape: Prospects for Democracy, ed. Cheng Li (Washington, DC, Brookings Institution, 2008); interview with Zhou Jiping ; Jiang and Sinton, Overseas Investments by Chinese National Oil Companies, pp. 7, 25; Erica Downs, “Who’s Afraid of China’s Oil Companies?” Energy Security: Economics, Politics, Strategy, and Implications (Washington, DC: Brookings Institution Press, 2010), ch. 4; Fu Chengyu, speech, CERAWeek, February 2006; interviews.

  Chapter 10: China in the Fast Lane

  1 Interviews.

  2 Far Eastern Economic Review, February 2004 (“certain powers”).

  3 Time, June 28, 2004; Wall Street Journal, July 9, 2004.

  4 Voice of America, July 29, 2010 (“lifeline of our commerce”).

  5 Far Eastern Economic Review, April 2006; Wall Street Journal, October 4, 2010 (“hegemon”); Office of the Secretary of Defense, U.S. Department of Defense, “Military and Security Developments Involving the People’s Republic of China 2010”; Washington Post, July 31, 2010; See Wang Jisi, “China’s Search for a Grand Strategy,” Foreign Affairs, March–April 2011, p. 71 (“reckless”). For a discussion of the emergence of the “core interest” concept, see Michael Swaine, “China’s Assertive Behavior, Part 1, ‘On Core Interests,’ ” China Leadership Monitor, No. 34 (2011).

  6 Hu Jintao, speech, G8 Summit, St., Petersburg, July 2006 (dilemmas); interview (“exporting to America”); Zhou Jiping , “Embracing the Low Carbon Economy of Sustainable Energy Development,” speech, International Petroleum Technology Conference, Doha, December 7, 2009.

  7 Interview.

  8 Kelly Sims Gallagher, China Shifts Gears: Automakers, Oil, Pollution, and Development (Cambridge: Massachusetts Institute of Technology Press, 2006), pp. 2, 34–36, 63–79, 172; Jim Mann, Beijing Jeep: A Case Study of Western Business in China (Boulder: Westview Press, 1997); Wall Street Journal, June 8, 2004.

  9 New York Times, December 22, 2010.

  10 The World Bank and State Environmental Protection Agency of the People’s Republic of China, Cost of Pollution in China: Economic Estimates of Physical Damages, 2007; Daniel H. Rosen and Trevor Houser, China Energy: A Guide for the Perplexed, China Balance Sheet Project, Center for Strategic and International Studies and the Peterson Institute for International Economics, May 2007, pp. 13, 42.

  11 Liu Zhenya, “Strong Smart Grid,” speech, July 26, 2010.

  12 Julie Jiang and Jonathan Sinton, Overseas Investments by Chinese National Oil Companies: Assessing the Drivers and Impacts (Paris: International Energy Agency, 2011), p. 20.

  Chapter 11: Is the World Running Out of Oil?

  1 Kenneth S. Deffeyes, Hubbert’s Peak: The Impending World Oil Shortage (Princeton: Princeton University Press, 2001), pp. ix, 10, 158 (“chaos,” Thanksgiving ); Michael C. Ruppert, “Colin Campbell on Oil: Perhaps the World’s Foremost Expert on Oil and the Oil Business Confirms the Ever More Apparent Reality of the Post 9-11 World,” The Wilderness Publications, 2002 (“extinction”); Oil Depletion Analysis Centre, “New Oil Projects Cannot Meet World Needs This Decade,” The Wilderness Publications, November 16, 2004 (“unbridgable”); Independent, June 14, 2007; UK Energy Research Centre, Global Oil Depletion: An Assessment of the Evidence for a Near Term Peak in Global Oil Production (London, 2009), p. x.

  2 Int
ernational Energy Agency, World Energy Outlook 2010 (Paris: International Energy Agency, 2010), p. 139.

  3 Ali Larijani, speech, Arab Strategy Forum, Dubai, UAE, December 5, 2006 (“expiration date”).

  4 Daniel Yergin, The Prize: The Epic Quest for Oil, Money, and Power (New York: Free Press, 2008), p. 36 (Archbold).

  5 H. A. Garfield, Final Report of the U.S. Fuel Adminstrator, 1917–1919 (Washington, DC: GPO, 1921), p. 8 (“walk to church”); Francis Delaisi, Oil: Its Influence on Politics, trans. C. Leonard Leese (London: Labour Publishing, 1922), pp. 86–91 (Curzon); National Petroleum News, October 29, 1919, p. 51 (“ever-increasing decline”); Dennis J. O’Brien, “The Oil Crisis and the Foreign Policy of the Wilson Administration, 1917–1921,” Ph.D. dissertation, University of Missouri, 1974 (“necessary supply”).

  6 Robert Goralski and Russell W. Freeburg , Oil & War: How the Deadly Struggle for Fuel in WWII Meant Victory or Defeat (New York: William Morrow, 1987); Arthur J. Marder, Old Friends, New Enemies: The Royal Navy and the Imperial Japanese Navy (Oxford: Oxford University Press, 1981), pp. 166–7 (“scarecrows”); Basil Liddell Hart, The Rommel Papers, trans. Paul Findlay (New York: Da Capo Press, 1985), p. 453.

  7 Donella Meadows, Dennis Meadows, Jorgen Randers and William Behrens III, The Limits to Growth: A Report for the Club of Rome’s Project on the Predicament of Mankind (New York: Signet Books, 1974).

  8 Chemical Week, July 19, 1978 (“twilight”).

  9 Independent, June 14, 2007 (“glass”).

  10 William E. Akin, Technocracy and the American Dream: The Technocratic Movement 1900–1941 (Berkeley: University of California Press, 1977), ch. 6. The Leading Edge 2, no. 2 (February 1983) (“manpower and raw materials”); Tyler Priest, “Peak Oil Prophecies: Oil Supply Assessments and the Future of Nature in U.S. History,” unpublished paper, p. 17 (“hieroglyphics”); Fred Meissner, “M. King Hubbert as a Teacher,” presentation, Geological Society of America Annual Meeting, Seattle, Washington, 2003 (“comprehend”); David Doan, “Memorial to M. King Hubbert,” Geological Society of America Memorials 24 (1994), p. 40.

  11 Interview with Pete Rose; Priest, “Peak Prophecies,” pp. 18, 21–22 (“mathematician that he is”), fn. 52–53 (Broussard).

  12 Washington Post, April 7,1974 (“light post”).

  13 M. King Hubbert, speech, American Petroleum Institute, March 8, 1956 (“blip in the span of time”); Chemical Week, July 19, 1978 (lifetimes); T. N. Narasimhan, “M. King Hubbert: A Centennial Tribute,” Ground Water 41, no. 5 (2003), p. 561 (“period of non-growth”).

  14 Colin Campbell and Jean Laherrere, “The End of Cheap Oil,” Scientific American, March 1998 (“only minor deviations”); Peter Jackson, “Why the ‘Peak Oil’ Theory Falls Down,” IHS CERA, November 2006, Steven Gorelick to author; Peter R. Rose to author.

  15 Interview with Pete Rose (“very static view”); William L. Fisher, “How Technology Has Confounded U.S. Gas Resource Estimates,” Oil and Gas Journal 42, no. 3 (1994).

  16 Leonardo Maugeri, “Squeezing More Oil from the Ground,” Scientific American, October 2009, pp. 56–63; “The Benefits of DOFF: A Global Assessment of Potential Oil Recovery Increases,” IHS CERA, August 19, 2005 (digital oil field).

  17 Matthew R. Simmons, Twilight in the Desert: The Coming Saudi Oil Shock and the World Economy (Hoboken: John Wiley, 2006) (central tenet).

  18 Interview with Khalid Al-Falih (“robust”).

  19 Interview with Mark Moody-Stuart; Peter McCabe, “Energy Resources: Cornucopia or Empty Barrel?” AAPG Bulletin 82, no. 11 (1998), pp. 2110–34 (revisions and additions); McCabe, “Energy Resources,” p. 2131 (“symmetrical”). A good case study of “not running out” is provided by the Permian Basin, one of only two “super giant” oil fields in the Lower 48.

  20 Peter Jackson, Jonathan Craig, Leta Smith, Samia Razak and Simon Wardell, “’Peak Oil’ Postponed Again,” IHS CERA, October 2010. For two thoughtful and highly informative analyses on depletion and “running out,” see Steven Gorelick, Oil Panic and the Global Crisis: Predictions and Myths (Oxford: Wiley-Blackwell, 2010) and Leonardo Maugeri, The Age of Oil: The Mythology, History, and Future of the World’s Most Controversial Resource (Westport: Praeger, 2006), chs. 16–20.

  Chapter 12: Unconventional

  1 Rod Lathim, The Spirit of the Big Yellow House (Santa Barbara: Emily Publications, 1995), pp. 33–47; William Leffler, Richard A. Pattaroizzi, and Gordon Sterling, Deepwater Exploration and Production: A Non-Technical Guide (Tulsa: Pennwell, 2011), ch. 1.

  2 Peter Jackson, Jonathan Craig, Leta Smith, Samia Razak, and Simon Wardell, “Peak Oil Postponed Again: Liquids Production Capacity to 2030,” IHS CERA, 2010.

  3 John S. Ezell, Innovations in Energy: The Story of Kerr-McGee (Norman: University of Oklahoma Press, 1979), pp. 152–69.

  4 Tyler Priest, The Offshore Imperative: Shell’s Search for Petroleum in Postwar America (College Station: Texas A&M Press, 2007), p. 245.

  5 James Burkhard, Pete Stark, and Leta Smith, “Oil Well Blowout and the Future of Deepwater E&P,” IHS CERA, 2010. In the late 1970s, deepwater was considered anything over six hundred feet. Today two thousand feet is a customary definition for the point at which deepwater begins.

  6 New York Times, December 26, 2010, May 7, 2010, September 7, 2010, May 28, 2010; Wall Street Journal, May 27, 2010; BP, Deepwater Horizon Accident Investigation Report, September 8, 2010; National Commission on the BP Deepwater Horizon Oil Spill and Offshore Drilling, Deep Water: The Gulf Oil Disaster and the Future of Offshore Drilling, January 2011. Det Norske Veritas, Forensic Examination of Deepwater Horizon Blowout Preventer, final report, Volume 1, March 20, 2011.

  7 Tony Hayward, speech, Cambridge Union Society, November 10, 2010 (“could not happen”).

  8 U.S. Department of Interior, “Increased Safety Measures for Energy Development on the Outer Continental Shelf,” May 27, 2010, p. 6.

  9 National Commission on the BP Deepwater Horizon Oil Spill and Offshore Drilling, “Stopping the Spill: The Five-Month Effort to Kill the Macondo Well,” Staff Working Paper, number 6; Bloomberg, September 19, 2010.

  10 Federal Interagency Solutions Group, Oil Budget Calculation: Deepwater Horizon; November 2010.

  11 Terry Hazen et al., “Deep Sea Oil Plume Enriches Oil-Degrading Bacteria,” Science 330, no. 6001 (2010), pp. 204–8; New York Times, September 20, 2010.

  12 Wall Street Journal, January 7, 2011.

  13 Barack Obama, speech, Andrews Air Force Base, March 31, 2010.

  14 BP America, Deepwater Horizon Accident Investigation Report, pp. 11, 32.

  15 National Commission on the BP Deepwater Horizon Oil Spill and Offshore Drilling, Deepwater: The Gulf Oil Disaster and the Future of Offshore Drilling, ch. 4.

  16 IHS Global Insight, The Economic Impact of the Gulf of Mexico Offshore Oil and Natural Industry and the Role of the Independents, July 21, 2010, pp. 9–11.

  17 Interview with José Sergio Gabrielli de Azevedo (“had to go offshore”); Upstream Online, May 4, 2009 (Lula).

  18 U.S. Senate Foreign Relations Committee, Subcommittee on International Economic Policy, “Overview on Global Energy Security Issues,” April 8, 2003.

  19 IHS CERA, The Role of Canadian Oil Sands in US Oil Supply, Canadian Oil Sands Dialogue, April 2010.

  20 Paul Chatsko, Developing Alberta’s Oil Sands: From Karl Clark to Kyoto (Calgary: University of Calgary Press, 2004), pp. 97–98 (“promising way”); Arthur M. Johnson, The Challenge of Change: The Sun Oil Company 1945–1977 (Columbus: Ohio State University, 1983), p. 131 (“enamored”); Peter McKenzie Brown, Gordon Jaremko and David Finch, The Great Oil Age (Calgary: Detselig, 1993), p. 75 (“important role”).

  21 Chatsko, Developing Alberta’s Oil Sands, p. 218 (“single most important”); IHS CERA, Oil Sands Technology: Past, Present, and Future, Canadian Oil Sands Energy Dialogue, January 2011.

  22 Energy Resources Conservation Board, “ERCB Conditionally Approves Tailings Plan for Shell Muskeg River Project,”
press release, September 20, 2010.

  23 IHS CERA, Oil Sands, Greenhouse Gases, and US Oil Supply: Getting the Numbers Right, Canadian Oil Sands Dialogue, September 2010.

  24 U.S. Geological Service Survey, “An Estimate of Recoverable Oil Resources of the Orinoco Oil Belt,” October 2009; Associated Press, May 2, 2007 (“bosses made us come”); Reuters, May 2, 2007; Houston Chronicle, May 5, 2007 (“our bosses”); EFE news service, May 1, 2007; Financial Times, May 1, 2007.

  25 Guy Elliott Mitchell, “Billions of Barrels Locked Up in Rocks,” National Geographic, February 1918, p. 201; Washington Post, June 16, 1979 (“doing without”).

  26 Leta Smith, Sang-Won Kim, Pete Stark, and Rick Chamberlain, “The Shale Gale Goes Oily,” IHS CERA, 2011.

  27 Interview with John Hess.

  28 Peter Jackson, Jonathan Craig, Leta Smith, Samia Razak, and Simon Wardell, “ ‘Peak Oil’ Postponed Again: Liquids Production Capacity to 2030,” IHS CERA, 2010.

  Chapter 13: The Security of Energy

  1 Rondo Cameron and Larry Neal, A Concise Economic History of the World (Oxford: Oxford University Press, 2002), p. 118.

  2 Randolph S. Churchill, Winston Churchill, vol. 2, Young Statesman,1901–1904 (London: Heinemann, 1968), p. 529; Winston S. Churchill, The World Crisis, vol. 1 (New York: Scribners, 1928), pp. 130–36 (“navel supremcy”); Winston S. Churchill, Churchill, vol. 2, Companion Volume, part 3, 1926–27 (“less size”).

  3 John DeNovo, “Petroleum and the United States Navy Before World War I,” The Mississippi Valley Historical Review 41, no. 4, March 1955, pp. 641–56; Aurthur A. Hardinge, A Diplomatist in the East (London: Jonathan Cape, 1928), p. 280 (“knocked down”); Parliamentary Debates, Commons, July 17, 1913, pp. 1474–77 (“variety”).

  4 Interview with Richard Fairbanks.

  5 James Woolsey.

  6 Robert J. Lieber, The Oil Decade: Conflict and Cooperation in the West (New York: Praeger, 1983), p. 19.

  7 106th Cong. Rec., 2nd Session, vol. 146, part 13, p. 19330 (“SPR was created”).