The Prize: The Epic Quest for Oil, Money & Power

THE PRIZE by Daniel Yergin is an 884 page history book about the oil industry. High points include the discoveries of oil in Pennsylvania, Texas, Baku, Sumatra, Iran, and in off-shore locations. (Baku was an independent duchy that was taken by Russia in 1813, by way of the Treaty of Gulistan. But now, Baku is the capital of Azerbaijan.) High points of this book also include info on collaborations between companies, e.g., Standard Oil of California, Standard Oil of New Jersey, Texaco, Socony, Gulf, Royal Dutch Shell, British Petroleum, and Compagnie Francaise des Petroles (see page 503). The book avoids chemistry, and avoid disclosing innovations relating to the detection, drilling, and refinement of oil. The book is mainly about politics. For me, the most exciting part of the book was about oil supplies for the Allies and Axis countries during WWII. For example, we read that U.S. General Carl Spaatz, under Eisenhower, led an attack on May 12, 1944 of 935 bombers against Germany's I.G.Farben synthetic oil factory in Leuna, Germany (page 346), and on May 28th attacked Germany's oil facilities located in Rumania. The book is essential reading for anyone interested in WWII, in the Middle East, or in how the world is put together. The book is abundantly readable, and can be understood in its entirety by any intelligent high school student. Difficult words rarely occur, and they make their appearance on only a dozen or so pages in the entire book. For example, we find imbroglio (page 477), condottiere (page 501), disquisition (page 521), nostrum (page 570), and hegemony (page 638). That's about it for the difficult words in this book! PHOTOGRAPHS. The book contains 32 pages of glossy B & W photos showing, e.g., an oil well in Pennsylvania (1859), an oil field of 15 oil wells in Pennsylvania (1865), George Bissell, John Galey, Spindletop oil well (1901), Marcus Samuel, oil well in Sumatra (1885), Calouste Gulbankian, King Ibn Saud, Germany's synthetic fuels plant before and after being bombed, Mossadegh, George McGhee, etc. The following (below) outlines some of the highlights of this book. JAPAN IN WWII. In entering WWII, Japan believed that it had enough oil to last for two years, and that afterwards it could get oil form the East Indies (Borneo, Balikpapan in Borneo, Sumatra). In fact, the Japanese were able to capture enough East Indies territory to provide 50 million barrels/year, sufficient for the Japanese fleet. Japan discovered a huge oil field in Sumatra, called THE MINAS STRUCTURE. However, a problem was that Japan did not bother to provide convoys to protect their oil tankers. Eventually, Japan provided convoys, but the US used the radio signals from the convoys as homing devices. US submarines, by early 1945, cut off 100% of Japan's oil supply. In desperation, Japan tried using tug boats pulling rubber bags filled with oil, but the oil dissolved the rubber. Also, Japan decided to build coal-burning ships, but these sailed slowly. Also, Japan turned to pine roots, which were dug up and distilled in thousands of small stills, producing 75,00 barrels of oil/month (pages 73-75, 318, 350-364). RED LINE AGREEMENT. This concerns Mesopotamia and interest by Anglo-Persian Oil Co., and by Turkish Petroleum Co. Turkish Petroleum Co. was assembled by CALOUSE GULBENKIAN, son of a wealthy Armenian who imported Russian kerosene into Turkey. In 1917-1918, that is, at the close of WWI, England realized that it would need oil for any future wars, and thus decided to invest in Mesopotamia and Persia. Three groups, (1) Anglo-Persian, (2) Royal Dutch, and (3) American companies, in 1925 sent expedition to Iraq, and on October 15, 1927 at BABA GURGUR discovered a huge source of oil (page 204). A contract was then signed, giving Royal Dutch/Shell (24%), Anglo-Persian (24%), French (24%), Near Eastern Development Co. (24%), and Calouse Gulbenkian (5%) the indicated percentages. The contract included a map with a red line circling Turkey, Saudi Arabia, Israel, and Iraq (but not circling Persia or Kuwait) (page 204-205). The RED LINE AGREEMENT provided that participants in the Iraq Petroleum Co. (IPC) could not operate independently within the red boundaries. They were required to act in unison or not at all (page 282). After WWII, American companies (Jersey and Socony) argued that the RED LINE AGREEMENT was no longer valid, but France and Mr. Gulbenkian argued that it was still valid (pages 413-414). France needed the RED LINE AGREEMENT to be intact, because without it, France would have no access to middle eastern oil. Gulbenkian wanted it to remain intact, because IPC and its predecessor (Turkish Petroleum Co.) was his life's work. The book then details the formation of ARAMCO, a company that was totally American, with the concurrent dissolution of the RED LINE AGREEMENT (page 419). The book discloses the plan of STANDARD OIL OF NEW JERSEY and SACONY to merge with STANDARD OIL OF CALIFORNIA and TEXACO, in order to form ARAMCO. This merger agreement was signed on March 12, 1947. Aramco means, "Arabian-American Oil Co." Initially, Aramco was only Standard Oil of California and Texaco (p. 410), but later it consisted of the above four companies. The book highlights one aspect of the Aramco merger, namely, the opinion of KING IBN SAUD. King Saud was interested in only one thing, namely, assurance that none of these four companies was controlled by the British. In particular, he was worried about Jersey and Sacony being controlled by the British. But as it was, Aramco was 100% American. CRITICISM. A failure of this book is that it does not explain the practical consequences of dissolving the RED LINE AGREEMENT, and the expansion of Aramco into four companies. In other words, the reader is not told if Gulbenkian's access to particular oil fields, or if his fees and profits were changed. Also, we are not told if Aramco's access to particular oil fields, or if its fees or profits were changed by dissolving the RED LINE AGREEMENT. Please note the following general criticism of this book. If you ask a person who was "really there," and who experienced first hand the events in history that are disclosed in this book, it is possible that you will learn that some of the narratives in THE PRIZE are not accurate. But type of shortcoming typical of many newspaper reports, and it might also be expected to result in a book that is based on newspaper reports. It is thus the case, that THE PRIZE is mainly trustable as starting point -- good for initial orientation -- should one be possessed to embark on a career relating to the oil industry. SPINDLETOP. Patillo Higgins, a 1-armed mechanic and lumber merchant, noticed gas bubbling through springs at a hill called SPINDLETOP, near Beaumont, Texas. In 1892, he organized Gladys City Oil Co., but geologists investigating the area called it nonsense. Higgins found a partner (Anthony Lucas), and Lucas went to Pittsburgh, PA to attract the interest of wildcatters (John Galey and James Guffey). Galey was a geologist. Guffey was a politician and promoter who dressed as Buffalo Bill. On January 10, 1901, Higgins' team struck oil at 880 feet deep, and oil flowed at 75,000 barrels per day. Land that previously sold for $10/acre now went for $900,000/acre (page 85). The result of SPINDLETOP was that the focus of America's oil production moved from Pennsylvania to Texas and Oklahoma. Shell Oil. Co, located in London, and run by MARCUS SAMUEL, took an interest and signed a 20-year contract with Guffey for marketing oil from SPINDLETOP. REZA PAHLAVI and MOSSADEGH. At the halfway point in this book we find an account of goings-on in Iran. This part of the book is fairly dense, and so provide the status of things by way of these bullet points: (1) Reza Pahlavi (the father) (1878-1944) was pro-Germany. He died in exile in South Africa. (2) Reza's son, also Reza Pahlavi (1919-1980) became king at age 21. (3) Islamic fundamentalists led by Ayatollah Kashani hates all foreigners, and hates the fact that Reza allowed women to not wear veils. (4) Bribery is the rule among all politicians in Iran. (5) In Iran, it was almost universal to hate foreigners, especially the British. (6) Elevated hatred was directed against Anglo-Iranian Oil Co., a British company. (7) United States, represented by George McGhee, Asst. Secretary of State for Near Eastern Affairs, was afraid of Soviet's taking control of Iran, and in order to fend off the Communists, the US told Anglo-Iranian Oil. Co. to increase royalties to Iran. The result was a hike in royalties in the year 1949, paid by Anglo-Iranian to Iran. (8) US urged British government to pressure Anglo-Iranian to make Iran a bigger offer. But William Fraser (1888-1970), head of Anglo-Iranian (later named British Petroleum), had from experience realized that Iranian attitude was one of "ingratitude, deception, backbiting, and new demands." (page 420). (9) Fraser was aware that other oil producing companies were winning 50/50 agreements, and at that point (autumn 1950), decided to give more money to Iran. (10) Mossadegh became prime minister of Iran in April 1951, and nationalized Iran's oil, and declared that Anglo-Iranian Oil Co. to be abolished. (11) Britain made plans to attack Iran, but to limit its attack to the capture of ABADAN island. The US was against this, since this might inspire the Soviets to attack Iran from the north. (12) But Britain countered that if it did not attack, all middle eastern countries would begin to nationalize the work-product of foreign investments, e.g., Suez Canal (pae 458). (13) In July 1951, AVERELL HARRIMEN arrived in Tehran to act as a broker. Harrimen stayed in a mirrored room in Shah's palace. Harrimen tried to make Mossadegh understand the expenses entailed by Anglo-Iranian in marketing the oil, e.g., expenses for wharves, storage tanks, pumps, roads, rail tanks, and a fleet of tankers (page 462). But Mossadegh refused to allow Anglo-Iranian Oil Co. to resume business in Iran. (14) On Sept. 25, 1951, every last British employee of Anglo-Iranian escaped from Iran. (15) The British set up an oil embargo, preventing all Iranian oil exports, and within a few weeks, Iranian oil production dropped from 666,000 barrels/day to only 20,000 barrels/day. (16) George McGhee tried to persuade Mossadegh to allow ROYAL DUTCH/SHELL (not a British company) to operate what was formerly Anglo-Iranian (page 466). (17) At this point in time (1943), rule under Mossadegh involved murder, chaos, and poverty. (18) On August 18, 1953, Reza Pahlavi ordered Mossadegh out of power (details on this accomplishment not explained by this book), and Reza Pahlavi became extremely popular in Iran (for reasons not explained by this book). (19) On October 29, 1954, Reza Pahlavi agreed to let a consortium operate in Iran (page 476). This consortium consisted of *Anglo-Iranian, *Standard Oil of New Jersey, * Socony, * Texaco, *Standard Oil of California, *Gulf, *Shell, and *CFP (a French company).

What a book. I don't really enjoy reading super long and dense history books as they are typically boring and too many facts to digest. However the prize has been written in a way that captures your attention throughout. It's full of insights I certainly didn't realise about the role of oil in politics and war and it's was fascinating to me to have learned all this from this book. It's really a must read if you want to better understand geopolitics and the levers that drive them.

Yergin rewrites the history of the last 150 years through the perspective of the oil industry. Oil is the hidden hand that controls unfolding events. Is it any accident that the U.S. and Russia became the great powers of the 20th Century? -- they were the two early leaders in oil production. War machinery starts to shift to oil in World War I -- battleships goes from coal to oil; and the French and British pioneer the military use of automobiles and tanks. World War II is all about oil. Japan starts the Pacific War in response to American embargo of oil and with intent to seize the oil fields of the East Indies. Hitler strikes out for the Russian oil fields and overextends himself. By the end of the war he lacks the oil to feed his new jets, tanks, and armored divisions. An important front of the Cold War involves competition for the new oil in the Middle East. And finally, the history of the last 20 years is dominated by Hussein's attempt to get a corner on the oil market by seizing Kuwait and threatening Saudi Arabia. More fascinating than the wars is the lack of wars over this major commodity. As Yergin points out, the largest wealth transfer in history is the one to oil exporting countries in the late 20th century. The system of oil concessions that split profits with the host company is abandoned; host now takes all. These small, militarily weak producing countries were able to seize all of the profits and to reap extraordinary profit from the intense demand for this product. Remarkably (with the exception of Hussein's gambit) there is no assertion of military power to interfere with this. I suppose that too much is at stake for the big players to make a power grab -- it's in everyone's interest to cooperate so that we don't descend into international economic and political chaos. Yergin also sees the business cycle as driven by oil. The economy under Carter fails because of high oil prices. An oil glut in the 1980's explains the success of the economy under Reagan. The economy rebounds in the mid to late 1990s because of cheap oil. And the boom times of the early years of the 21st century is also explained by cheap oil. Supply and demand oscillate wildly over the years and the exporters and oil companies strive to stabilize the market. At present, demand is extraodinary given the emergence of China, India, and a host of other eocnomies. Conservation efforts have the effect of moderating demand, and at times the willingness of producers to cheat the quoata system combined with conservation efforts have led to boom times of cheap oil. As Yergin points out, fears that we will soon run out of oil have always been present. Certainly there will be a push to get oil from more difficult locations and a push for more alternative energy sources and conservation. So the oil won't run out, but the cost of it will spiral upwards and the ability of the world to sustain prolonged boom periods is doubtful. Yergin does a good job of making very dry material interesting. He explores the personalities of the men involved in this industry, and he writes well. This book will take you forever to read, but it will change your view of history.

In many regards this book deserves a big 5 star rating. Do you want to grasp how we got where we are today? Do you want to be informed before jumping to any political and idealogical opinions? Then you would serve yourself well to read this book. I did however subtract a star for not being pithy. -cons: This book could be condensed. There are many sections that become more lengthy than they really need to be. IT feels a bit aloof in an effort to be objective. The sentiments of various people and groups towards oil (good or bad) were negligible in the book which gave it almost a sterile feel. Perhaps some would argue that this is a pro, but I didn't care for it. The vocabulary was often distracting. A choice of wording that would be much more straight forward would be overlooked in order to use words that felt more "scholarly", but instead felt awkward. It also became distracting when awkward vocabulary was used way too repetitively, for example; his indefatigable use of the word indefatigable. -pros: Overall, it was very readable for such an enormous topic. It was orderly and clearly written. It read like a story and not like a textbook, which was quite a trick for such dense material. I liked how he would let a few years play out in the book then go back and replay those years, but in a different location. It broke it up into bite size digestible chunks. Most importantly, the content was fantastic. I now have a much stronger understanding of just how oil plays its enormous role in the global society. I can't say enough about how well this book informs its reader in an enjoyable and insightful way. Lastly, I found it relatively easy to comprehend. It may at points be dry material, but in no way did i feel like this book was written over my head. I suggest to others who might be wondering about this book not to be intimidated.

I am leaving a 5 star review, as I was extremely satisfied upon the content in the book and everything I learnt once I finished the book. The book is a descriptive, insightful, exciting and at times provocative view on the history of oil. While to book does well in explaining the scientific aspects of this history of oil (i.e. the evolution of the refining process), it focuses largely on the political and economic ramifications of the discovery of oil, the increase in productivity and consumption of oil and eventually the dependence of oil. It provided great insight in relation to the impact oil had on state (i.e Saudi Arabia) and non-State (i.e British Petroleoum) actors and the evolution of state sovereignty over the ownership of oil, especially in developing and third world economies such as Nigeria, Iraq, Iran and Venezuala. By large I am satisfied with the book, however I found faults with aspects of the book. While the author remains largely neutral in his evaluation and description of the history of oil, at times he seemed overtly sympathetic to the oil tycoons, to critical of states and heads-of-state who attempted to assert their sovereignty over the oil companies and at times even mocked leaders such as Mohammed Mossadeq. His description of the 1953 overthrow of Iranian Parlimentary Democracy and its replacement with the absolute monarchy of the Shah. He claims that the overthrow of Mossadeq had widespread public support and that Mossadeq's supporters were largely a band of thugs. Most history books will argue to the contrary and I suggest people attain a book in regards to the 1953 overthrow of Mossadeq that is not written by this author. Other than this however, the book is a great read. It is long and factual.

This is the definitive book on the "Age of Oil" and its journey from fruition to modern day. Incredibly well researched and insightful. The Prize describes how this once seemingly useless substance served as a platform for building global economies and increasing human productivity. Oil; money; power ... the terms are synonymous. Rockefeller, Getty, Rothschild, and others became the wealthiest to have ever lived at the time. You must read this book to understand the true nature of oil's impact on our society. """ 1853: George Bissel visits oil springs in western Pennsylvania. 1859: "Colonel" Drake drills first well at Titusville. 1861-65: American Civil War. 1870: John D. Rockefeller forms Standard Oil Company. 1872: South Improvement Company stirs war in the Oil Regions. Rockefeller launches "Our Plan". 1873: Baku oil opened to development. Nobel family enters Russian oil business. 1882: Thomas Edison demonstrates elec­tricity. Standard Oil Trust formed. 1885: Rothschilds enter Russian oil busi­ness. Royal Dutch discovers oil in Suma­tra. 1892: Marcus Samuel sends the Murex through the Suez Canal; begin­ning of Shell. 1896: Henry Ford builds his first car. 1901: William Knox D'Arcy acquires a concession in Persia. Gusher at Spindletop in Texas; be­ginning of Sun, Texaco, Gulf. 1902-04: Ida Tarbell's History of Standard Oil Company serialized in McClure's. 1903: Wright Brothers' first flight. 1904-05: Japan defeats Russia. 1905: Revolution of 1905 in Russia; Baku oil fields ablaze. Glenn Pool discovered in Okla­homa. 1907: Shell and Royal Dutch combined under Henri Deterding. First drive-in gasoline station opens in St. Louis. 1908: Discovery of oil in Persia; leads to Anglo-Persian (later British Pe­troleum). 1910: "Golden Lane" discovered in Mex­ico. 1911: Agadir Crisis. Churchill becomes First Lord of Admiralty. U.S. Supreme Court orders dissolu­tion of Standard Oil Trust. 1913: Burton "cracking" process for refin­ing patented. 1914: British government acquires 51 per­cent of Anglo-Persian Oil Com­pany. 1914-18: World War I and mechanization of the battlefield. 1917: Bolshevik Revolution. 1922-28: Negotiation on the Turkish (Iraq) Petroleum Company, leading to the "Red Line Agree­ment." 1922: Los Barroso discovery in Vene­zuela. 1924: Teapot Dome scandal erupts. 1928: World oil glut leads to meeting at Achnacarry Castle and "As-Is" agreement. French petroleum law. 1929: Stock market collapse heralds Great Depression. 1930: Dad Joiner's discovery in East Texas. 1931: Japan invades Manchuria. 1932: Discovery of oil in Bahrain. 1932-33: Shah Reza Pahlavi cancels the Anglo-Iranian concession; Anglo-Iranian wins it back. 1933: Franklin Roosevelt becomes President of the United States. Adolf Hitler becomes Chancellor of Germany. Standard of California wins conces­sion in Saudi Arabia. 1934: Gulf and Anglo-Iranian gain joint concession in Kuwait. 1935: Mussolini invades Ethiopia; League of Nations fails to impose oil embargo. 1936: Hitler remilitarizes Rhineland and begins preparations for war, in­cluding a major synthetic fuels program. 1937: Japan begins war in China. 1938: Oil discovered in Kuwait and Saudi Arabia. Mexico nationalizes foreign oil com­panies. 1939: World War II begins with German invasion of Poland. 1940: Germany overruns Western Europe. United States puts limits on gasoline exports to Japan. 1941: Germany invades Soviet Union (June). Japanese takeover of Southern In­dochina leads United States, Britain and Netherlands to em­bargo oil to Japan (July). Japan attacks Pearl Harbor (December). 1942: Battle of Midway (July). Battle of El Alamein (September). Battle of Stalingrad (begins Novem­ber). 1943: The first "fifty-fifty" deal in Vene­zuela. Allies win Battle of the Atlantic. 1944: Normandy landing (June). Patton runs out of gas (August). Battle of Leyte Gulf, Philippines (October). 1945: World War II ends with defeat of Germany and Japan. 1947: Marshall Plan for Western Europe. Construction begins on Tapline for Saudi oil. 1948: Standard of New Jersey (Exxon) and Socony-Vacuum (Mobil) join Standard of California (Chevron) and Texaco in Ar­amco. Israel declares independence. 1948-49: Neutral Zone concessions to Amin­oil and J. Paul Getty. 1950: Fifty-fifty deal between Aramco and Saudi Arabia. 1951: Mossadegh nationalizes AngloIranian in Iran (first postwar oil crisis). New Jersey Turnpike opens. 1951~53 Korean War. 1952: First Holiday Inn opens. 1953: Mossadegh falls; Shah returns. 1954: Iranian Consortium established. 1955: Soviet oil export campaign begins. First McDonald's opens in suburban Chicago. 1956: Suez Crisis (second postwar oil cri­sis). Oil discovered in Algeria and Ni­geria. 1957: European Economic Community es­tablished. Enrico Mattei's deal with the Shah. Japan's Arabian Oil Company wins Neutral Zone offshore conces­sion. 1958: Iraqi revolution. 1959: Eisenhower imposes import quotas. Arab Petroleum Congress in Cairo. Groningen natural gas field dis­covered in Netherlands. Zelten field discovered in Libya. 1960: OPEC founded in Baghdad. 1961: Iraqi attempt to swallow Kuwait frustrated by British troops. 1965: Vietnam War buildup. 1967: Six Day War; Suez Canal closed (third postwar oil crisis). 1968: Oil discovered on Alaska's North Slope. Ba'thists seize power in Iraq1969: Qaddafi seizes power in Libya. Oil discovered in the North Sea. Santa Barbara oil spill. 1970: Libya "squeezes" oil companies. Earth Day. 1971: Tehran Agreement. Shah's Persepolis celebration. Britain withdraws military force from Gulf. 1972: Club of Rome study. 1973: Yom Kippur War; Arab Oil em­bargo (fourth postwar oil cri­sis). Oil price rises from $2.90 per barrel (September) to $11.65 (Decem­ber). Alaskan pipeline approved. Watergate scandal widens. 1974: Arab Embargo ends. Nixon resigns. International Energy Agency (IEA) founded. 1975: Automobile fuel efficiency standards established in the United States. First oil comes ashore from North Sea. South Vietnam falls to communists. Saudi, Kuwaiti, and Venezuelan concessions come to an end. 1977: North Slope Alaskan oil comes to market. Buildup of Mexican production. Anwar Sadat goes to Israel. 1978: Anti-Shah demonstrations, strikes by oil workers in Iran. 1979: Shah goes into exile; Ayatollah Khomeini takes power. Three Mile Island nuclear plant ac­cident. Iran takes hostages at U. S. Em­bassy. 1979-81: Panic sends oil from $13 to $34 a barrel (fifth postwar oil crisis). 1980: Iraq launches war against Iran. 1982: OPEC's first quotas. 1983: OPEC cuts price to $29. Nymex launches the crude oil fu­tures contract. 1985: Mikhail Gorbachev becomes leader of Soviet Union. 1986: Oil price collapse. Chernobyl nuclear accident in USSR. 1988: Ceasefire in Iran-Iraq War. 1989: Exxon Valdez tanker accident off Alaska. Berlin Wall falls; communism col­lapses in Eastern Europe. 1990: Iraq invades Kuwait. UN imposes embargo on Iraq; mul­tinational force dispatched to Middle East (sixth postwar oil crisis). """

Reading "The Prize" is no easy feat, and it is certainly not your typical Sunday afternoon engagement. But the book's volume is testament both the complexity of the subject with which it is preoccupied as it is to the author's willingness to approach it with sufficient detail to do it justice (and the book's references are a great guide for further reading). After all, the story of oil begins in America almost a century and a half ago, and, in the meantime, fascinates entrepreneurs, politicians, strategists, economists, and, increasingly, consumers who care about the price on the pump and of the heating oil to keep the house warm. To put all this in a single narrative is no small task; and yet Daniel Yergin succeeds admirably, and it is no wonder that he was awarded the Pulitzer Prize for his effort. What makes "The Prize" a great book is that it is a great read; it is sufficiently attuned to the broader history that it gives the reader a sense of perspective and purpose--it offers a continuous idea of how the part fits in the whole. But Mr. Yergin's talents extend beyond his ability to make sense out of a complicated story; it is refreshing to read his book combine politics and economics in a coherent and understandable fashion; to read him navigate through various historical and political settings, whether that is turn-of-the-century America, conservative Saudi Arabia or revolutionary Iran. And yet the richness of the story is to be found in anecdotes--the brief glimpses which reveal so much in so little space, whether that is insight into a personality or a window into a historical moment. If making sense of a disparate story is the book's chief goal, the need to do so is the book's real significance. Our current preoccupations--whether regarding the price of oil, or the search for alternative energy sources, or the instability of the regions which produce oil--are rather old, about as old as oil itself. In a way, this offers comfort--it is always good to read that previous alarms have proven largely false. But it is also a warning to avoid simplistic ways out--if nothing else, "The Prize" offers a wealth of information which can put oil in a historic context. Reading it will prove not only educational, but it will also help a reader distinguish between the serious and the silly in the public debates on the future of energy in general and oil in particular.

Outstanding history of the best source of energy humanity has yet discovered: petroleum.