Notes from underground

 
By Ed Crooks
 

Three accounts of the oil industry will make you think the next time you fill the tank

 
In his introduction to Naked Lunch, William Burroughs explained the title as “a frozen moment when everyone sees what is on the end of every fork”. If you have spent any time looking at the oil business, you will know exactly what he meant.
 
So much in modern life, from plastic cups to Boeing 787s, is made from or with oil that discovering the facts of how it is extracted, processed and distributed is like peeling back the surface of the everyday world to reveal the hidden structure beneath. When BP’s Macondo well ruptured in the Gulf of Mexico in 2010, many people were confronted for the first time by some of those realities – including the awe-inspiring difficulties of working in the deep waters where oil companies venture now that the more accessible areas have been sucked dry, and the catastrophic consequences of failure. The video feed from the sea bed a mile down, showing oil and gas pouring unstoppably from the well into the waters of the gulf, brought home to American consumers the ugly side of a business that they had habitually ignored.
 
The three books under review, in contrasting styles, achieve a similar effect: shining a light on the industry to expose the consequences of our dependence on oil. At the very least, they will make you think the next time you fill the tank.
 
 
The Oil Road is an unusual work: an elegantly written travel book about a pipeline. The Baku-Tbilisi-Ceyhan pipeline,, known as BTC, carries crude from oilfields in the Caspian Sea to a tanker port in the Mediterranean, providing a secure route for the booming energy exports of the former Soviet republic of Azerbaijan. Filled to capacity, it can carry more than 1 per cent of the world’s oil supply, making it a strategically critical piece of infrastructure for the world.
 
Exploring the political, social and environmental impact of the pipeline as they travel its 1,100-mile length and beyond, James Marriott and Mika Minio-Paluello spin an unexpectedly engaging tale. Both men are members of Platform, a curious hybrid of protest group and arts collective that makes its points through exhibitions and performances, rather than demonstrations and speeches, and their book is a similarly distinctive blend of travelogue, reportage and history.
 
Not many books about oil include references to Rainer Maria Rilke and Filippo Marinetti, or cite Robert Fagles’ translation of The Odyssey in their bibliographies alongside the 2008 annual report of the state oil fund of Azerbaijan. Marriott and Minio-Paluello have points to make about the corrosive effect of oil money, and about the damage done by oil to the environment. Getting BTC built was an important diplomatic objective for the US and Europe, as well as a commercial priority for BP, which owns much of the oil that flows through it. As the authors point out, the interests of people living along the route were never the principal focus.
 
But the book is more a series of reflections than a polemic or manifesto. Rather than John Pilger or Naomi Klein, the presiding spirit is that of Iain Sinclair, who uses rambling excursions in and around London to uncover hidden aspects of the city’s past and present.

Following the route taken by the oil, from the offshore platforms in the Azeri-Chirag-Gunashli oilfield in the Caspian to refineries in Germany, Marriott and Minio-Paluello intersperse the story of their journey with historical anecdotes, often showing how oil has shaped the regions they pass through from Baku to Bavaria. It is an illuminating technique, pointing up how much continuity there is in the nexus of money, power and oil.

Not that the pair are slouches as reporters. They deliver some sharp observations about the suppression of free speech in Azerbaijan and the danger of leaks, and uncover a genuine scoop in pinning down stories that Russia had bombed BTC during the war with Georgia in August 2008. In fact, a different nearby pipeline was attacked, apparently deliberately, but was not hit.
 

 
Around the same time that oil was beginning to flow through BTC, in the summer of 2006, the US was enlisting the help of the UN to revive a less successful attempt to add to global oil supplies: the effort to raise Iraq’s production after the US-led invasion of 2003. The story of how that proved so difficult is told in Greg Muttitt’s Fuel on the Fire, a history of Iraq’s oil industry from before the war to the arrival “en masse” of western oil companies at the end of the decade.
 
Muttitt is a former colleague of Marriott and Minio-Paluello at Platform, and has a walk-on part in The Oil Road, but his own book is very different, if equally impressive. A painstaking piece of investigative reporting with 48 pages of footnotes, based on documents released under freedom of information legislation and interviews with Iraqis, it gives the best account yet of a hitherto under-reported story.
 
After nine years, a financial cost of about $1tn, and more than 100,000 dead (according to the Iraq Body Count project), we still do not have a fully convincing explanation of why the US was so committed to invading Iraq. The absence of any connection between Saddam Hussein and the 9/11 attacks, the likelihood that he had no effective weapons of mass destruction, and the potential for sustained chaos and bloodshed after he was toppled, were all understood by people who knew Iraq well before the invasion, yet the US administration was determined to push ahead nevertheless.
 
Muttitt suggests an explanation that was always one of the allegations thrown by critics of the US, but has received little serious attention: that it was, at least in part, a war for oil. That is not in the simplistic sense that the US and British governments were trying to grab Iraq’s resources for the benefit of ExxonMobil and BP, although those interests were a factor in post-war planning.
 
Rather, it is that the US saw a need to bring on new sources of oil production to meet growing global demand. Iraq, with the world’s fifth-largest oil reserves, was an obvious source of increased supply, but for as long as Saddam remained in power its exports were constrained by sanctions.

From that perspective Saddam needed to be removed, Muttitt argues, but thereafter it did not matter who produced the oil. “What the major powers need is a continuous flow to consumers through purchase, not theft, over many years,” he writes. Exxon, BP and other western groups were important only because they had the technology and skills that were most likely to maximise production.
 
Muttitt does not claim that oil was the single motive for the war, and accepts that the US administration may have made a genuine mistake in over-estimating Iraq’s capacity to produce weapons of mass destruction. But the weight of the evidence that he sets out suggests that the maximisation of Iraq’s oil production was an important objective both before and after the war. In that sense, after years of slow progress, the invasion appears to be showing results. In July, for the first time since the 1980s, Iraq’s oil production surpassed that of Iran, which has been constrained by international sanctions. The International Energy Agency, which monitors oil markets on behalf of developed countries, forecast last year that Iraq would make the largest contribution to increased oil supplies of any country in the world over the coming decade.
 

 
The impact of political instability in the Middle East on future oil production is one of the issues considered by Jeff Rubin in The Big Flatline, a brisk introduction to a world of constrained energy supplies. His previous take on the issue, Why Your World Is About to Get a Whole Lot Smaller (2009), put a more positive spin on the retreat of globalisation caused by increased fuel costs. The Big Flatline is gloomier, possibly reflecting the fact that Rubin has in the interim resigned from his comfortable job as chief economist at CIBC World Markets, the Canadian bank. It is also less successful than its predecessor, with more irrelevant digressions and fewer original ideas, but it is nonetheless important.
 
Although the flow of oil will not stop, Rubin argues, the new sources of crude, in deep water and tar sands and shale rocks, will be more expensive than the production we have relied on in the past, and that increased cost will be a significant constraint on economic growth.
 
The book does not fully refute the opposing position, that thanks to the techniques of shale production pioneered in North America, we are in fact entering an era of energy abundance, with ample supplies of oil and gas. But the warning that constraints on energy use will set limits to growth is worth taking seriously nevertheless. The Big Flatline should be read in conjunction with “Is US Economic Growth Over?”, a much talked-about recent paper by Northwestern University economist Robert Gordon. He suggests six reasons to believe it might be, including the need to curb energy consumption to fight the threat of global warming.
 
The good news about energy scarcity, Rubin argues, could be that “we’ll buy fewer things, but we’ll also have more time to enjoy our lives”. For many people, however, especially in emerging economies, that may seem like an unattractive prospect. If energy supplies do become tighter, we can expect intensified efforts to grab hold of what is left.
 
Ed Crooks is the FT’s US industry and energy editor
 
Copyright The Financial Times Limited 2012.