What has Petropulse been up in recent months?

Well, we’ve expanded our remit and have launched a new reporting service for business called The Climate Risk Report.

What is that exactly you ask?

Here’s a quick explainer:

The Climate Risk Report is a bespoke reporting service for companies who need an intelligent digest of the most important climate change, new energy and environmental news and commentary published online each week.

Climate change is the most important business risk facing companies and organizations today. The decisions a company makes today in shaping a climate and carbon risk strategy will affect its success and even its survival in the years to come.

In the new media world companies and organizations have the tools to choose from literally thousands of news sources. But most  executives don’t have the time to read all the information sent to them.

The Climate Risk Report cuts through the fog of this information overload to deliver an essential, weekly digest of the most important and relevant climate change news available.

Read more the Climate Risk Report site.

Creating an Islamic Monster

The fall of the Shah and the expulsion of US oil companies from Iran severely rattled the government of Jimmy Carter. Compounding America’s energy and security concerns, the Soviet Union had recently invaded Afghanistan in what many observers believed was a blatant first step in a push to control some part of the Persian Gulf. The US believed Iran, with its access to the Persian Gulf, could be the next target for the Soviet Union.

In his 1980 State of the Union speech, Democratic president Jimmy Carter confronted this threat. In what became known as the Carter Doctrine, he said, “Let our position be absolutely clear. An attempt by any outside force to gain control of the Persian Gulf region will be regarded as an assault on the vital interests of the United States of America and such an assault will be repelled by any means necessary, including military force.”

To back up the Carter Doctrine, the National Security Council headed by National Security Advisor Zbigniew Brzezinski created a new military unit that could be sent anywhere in the world at short notice. It was called the Rapid Deployment Joint Task Force and though originally conceived as a lighting force to assure the unimpeded flow of Persian Gulf oil it soon it evolved into a unified command for the all of the Persian Gulf, Central Asia and North Africa. In time it would be renamed the US Central Command.

The Carter administration also helped unleash another force that over the next decade would play a more profound role in Middle East politics than the US military. In a series of secret legal documents known as Presidential Findings, Carter authorized the Central Intelligence Agency to begin covert action against the Soviet army in Afghanistan. Carter could have had no idea just what he had set in motion but, for the best part of the next decade through two successive Reagan administrations, the CIA helped turn a ragtag group of Afghanistan resistance fighters into a well-trained and very well-armed Mujahadeen – or God’s Army.

It was a large and costly operation and to help fund it, the US turned to Saudi Arabia for help. The Saudi kingdom had already begun to transform itself into a forward base for the Rapid Defense Task Force. Convinced that the Soviets had designs on their oil supplies, the Saudis agreed to match the $15 million Congress had appropriated for the Afghan struggle in 1983. In time the budget would increase to $250 million and the Saudis matched it each time.

Thousands of young men from all over the Middle East made the journey to Afghanistan to take part in the Jihad – or holy war- against the Soviet infidel. Not only did they succeed in driving out the Soviets but they emboldened the cause of Islam and the growth of Islamic fundamentalism. Much of this new fighting force would return to the Middle East and they would hold onto the weapons – notably the AK-47s, Rocket Propelled Grenade (RPGs) and Stinger anti-aircraft missiles – with which the CIA had supplied them. Before too long, this fighting force would turn against a new infidel – its old benefactor, the United States.

While the Soviets were suffering a slow Vietnam-style humiliation in Afghanistan, the Reagan administration continued to look after its interests in the Middle East. The US still maintained its good relations with Saudi Arabia but it was also eager to support the avowed enemy of its avowed enemy, Iran. His name was Saddam Hussein and to the US, his secular strongman regime in Iraq was a refreshing and stable counterpoint to the Islamic crazies next door in Tehran.

The Reagan administration dallied with Saddam Hussein for nearly three years, but by then, the Middle East had been replaced in importance by the administration’s anti-communist campaigns in Europe and Central America. One reason for this was that OPEC members had undercut themselves by over-producing oil and world prices had plummeted. The major consuming nations, meanwhile, began to cut their dependence on the Middle East by consuming less oil and turning to  new oil sources from the North Sea, Alaska and Africa.

Not that Middle East oil could be ignored. In the late summer of 1990 Saddam Hussein once again delivered a shock to the world energy status quo when he invaded Kuwait in a grab for that nation’s oil fields. Many observers believed the US had not done enough to dampen Hussein’s territorial ambitions in the months leading up to the invasion, but once Iraq attacked, President George Bush moved quickly to assemble an international coalition to repulse Iraq. The coalition was formed in the name of restoring Kuwaiti sovereignty but no-one was in any doubt that the security of Middle East oil was the real concern.

Saudi Arabia was particularly worried about Saddam Hussein and it allowed US forces to set up staging bases on Saudi soil for a war against Iraq. The efficiency of the US deployment showed just how closely the two old allies understood each other. Since the Soviet threat a decade earlier, Saudi Arabia had built vast underground warehouses where US weapons and materiel could be stored as well as enormous aircraft hangers just in case the US needed to fly in.

The coalition forces were successful in expelling Iraq from Kuwait but the US left large numbers of troops in Saudi Arabia after the war to deter further Iraqi aggression and to guarantee the security of world oil. In doing so, the US once again stirred Arab resentment of the West and its historic meddling in the Middle East. Muslim anger at US forces staying in the land of Islam’s most sacred sites only grew with the return of thousands of well-armed fundamentalist Mujahadeen from Afghanistan. One such religious warrior was the Saudi billionaire Osama Bin Laden. He declared a holy war on the US for defiling Islam and for its continued support of Israel. As part of his new jihad, Bin Laden would target US interests in Saudi Arabia and Africa. Then, on September 11, 2001 he brought his holy war home to America.  Fifteen of the attackers that day came from America’s longtime oil ally, Saudi Arabia.

US forces have pulled out of Saudi Arabia but they now find themselves an occupying force next door in Iraq. The second Gulf War that drove Saddam Hussein out of power in March 2003 once again placed the United States front and center in the complicated world of Middle East affairs. It is a region that will only grow in importance as the world’s dependence on oil grows. And that means US forces will remain in the Middle East for a long time to come.

The Rise of Big Oil

The lessons of the First World War were all too obvious – the Great Powers needed oil to survive. And while new finds were being made in the US and Mexico, one region of the world was attracting more interest than any other – the Middle East. Pre-war the US had been content to develop its domestic reserves and leave foreign prospecting to the Europeans. Now, it was adamant that Britain and France should not carve up the Middle East alone.

Britain and France had agreed to divide up responsibility for the Arab lands of the Ottoman Empire, which had been allied with Germany during the war, but had now disintegrated.  Central to their ambitions was Mesopotamia, which Britain quickly renamed Iraq, and specifically the region around Baghdad and Mosul that were believed to hold huge oil reserves. Iraq’s potential had first been identified by a savvy Armenian oil prospector, Calouste Gulbenkian. In 1914 he put together the Turkish Petroleum Company, a syndicate involving Anglo Iranian, Shell, Deutsche Bank and himself, holding five percent of the concern.

After the war, Britain and France agreed to let the US companies, Standard of New Jersey (Exxon), Socony (Mobil) and five other US companies take Deutsche Bank’s stake in what was now called the Iraq Petroleum Company.  With Britain overseeing Iraq, the local puppet rulers rubberstamped a very favorable concession for the foreign companies - exclusive drilling rights in Iraq until the year 2000.

Gulbenkian, wary of being squeezed out by the major oil companies, was insistent on one condition in the contract: no member of the Iraq Petroleum Company would undertake operations anywhere else within the Middle East lands of the former Ottoman Empire without the joint cooperation of the other members. There was just one problem – no one was really sure just how far the Ottoman lands extended. So when the new members of the company came together to finalize the deal, Gulbenkian took a red pencil and drew a rough line on a map around what he understood to be the Ottoman lands. Inside the line lay all of Iraq and Saudi Arabia. Gulbenkian’s guess had fortuitously pinpointed the greatest oil fields in the world and it put them in the hands of Western oil companies. In establishing a de facto non-compete agreement between Shell, BP, Exxon and Mobil, Gulbenkian’s Red Line agreement, as it became known, created a cartel out of the world’s pre-eminent oil companies. As for Gulbenkian, he got to keep his original stake in the company. He would forever be known as Mr. Five Percent.

The Second Great Oil War

Twenty years after the end of World War I, Europe once again found itself facing war. This time, all the powers knew that oil would make the difference between victory and defeat. The US once again used its plentiful oil fields to supply its own war needs and those of Great Britain. But Germany, just as in the First World War, was forced to undertake a risky strategy to capture foreign oil supplies.

Germany believed that its key to victory was a series of short overwhelming mechanized attacks – the blitzkrieg – and at first it was very successful. One reason for the blitzkrieg was that Hitler knew he didn’t have enough oil to compete in long drawn-out battles. To counter this weakness, Germany had two goals in mind – its Panzer tank divisions would punch through Russia and snatch the Baku oil fields before continuing on to secure the grand prize of Iraq and Iran. But Operation Blau, as this grand oil grab was called, faltered before it could ever reach Baku. The German army had to travel thousands of miles to reach the Caucuses and the speedy Nazi tanks outran their own fuel supply lines. Short of gas, and caught in the heavily defended Caucasus mountains, the armored divisions had to be refueled by camel trains as their own trucks had run out of gas. In its desperation to capture Baku, Germany left its sixth army stranded and short of fuel outside Stalingrad. Surrounded by Soviet forces after a six-month siege, the Germans needed only to fight for 30 miles to escape. But their tanks only had 20 miles of fuel in them. The decision to strand the sixth army by refusing to divert the Baku-bound forces was taken by Hitler himself. “Unless we get the Baku oil, the war is lost,” he told his commander of the forces in the Caucasus.

Fuel shortages would continue to bedevil both sides as the war went on. General Erwin Rommel, father of the Afrika Korps, the most mobile and effective tank division Germany possessed was undone in North Africa when the allies destroyed his refueling lines of supply while the hard-charging American General George Patton and his rampant Third Army was prevented from what could have been an early and decisive invasion of Germany in 1944 by a lack of fuel. “My men can eat their belts” he said, “but my tanks have gotta have gas.”

The United States may never have entered the war were it not for Japan’s desperation to capture the oil fields of Indochina. As early as the mid-1930s, Japanese economic planners had come to the conclusion that Japan’s plans for the aggressive colonization of Southeast Asia would fail unless it controlled its own oil destiny. That meant invading the oil fields of the Dutch East Indies but this strategy risked an attack by the US, who already wary of Japan’s imperial ambitions, had recently moved the American fleet from California to Pearl Harbor in Hawaii. Faced with Japan’s invasion of Southern Indochina and its new alliance with Germany and Italy the US had frozen all Japanese financial assets cutting off its ability to purchase US oil.

It was at this point that Japan took its own fateful plunge – the pre-emptive attack on Pearl Harbor in an attempt to destroy US influence in the Pacific. To a degree they were successful. The December 7, 1941 assault decimated many ships in the fleet. But the Japanese also made a big mistake. They failed to hit the four and a half million barrels of oil stored at Pearl Harbor. If they had destroyed America’s Pacific oil reserves the whole fleet would have been immobilized.

Over the next four year, Japan would be methodically expelled by Allied forces from the Pacific islands and Southeast Asia. And with each defeat, it saw its access to oil dwindle. By the time the first atomic bomb was dropped on Hiroshima in August 1945, Japan was already a spent force. The US navy was sinking every Japanese oil tanker before it could return home from the Dutch East Indies and the Japanese Navy didn’t have enough fuel to leave its home base. The shock of the atomic attacks ended the war, but it was a lack of oil that defeated Japan.

Enter Europe

News of American oil quickly spread to Europe and soon Standard Oil was contracting more and more ships to meet this international surge in demand. In the 1870s and 80s, kerosene exports – most to Europe – accounted for half of all US oil production and provided the fourth largest US export in value. Ninety percent of that kerosene came courtesy of Standard Oil.

Europe also quickly realized that oil was not purely an American gift. For centuries, travelers had talked of flaming pillars that burned in Baku on the Caspian Sea and by 1871, the Russian town of Baku was dotted with oil derricks. Russian oil attracted the Rothschilds, a prominent French banking family, into the European Kerosene industry but it found its path blocked by Standard Oil. Undeterred, the Rothschilds decided to sell oil in Asia where Standard’s grip wasn’t as complete.

The man the Rothschilds found to successfully challenge Standard Oil in Asia was Marcus Samuel, a Jewish merchant from London who, thanks to his father, an import/exporter and trader of handmade seashell gifts, had strong shipping connections throughout the Far East. Samuel knew that to succeed against Rockefeller he would have to outlast Standard’s practice of flooding the market with cheap oil. To do that he would have to sell in all Asian markets at the same time ensuring that Standard couldn’t concentrate just on one market. But that meant Samuel would have to get his Russian oil to the Far East before Standard and its large network of international corporate spies found out.

In fashioning a solution, Samuel invented a new way of transporting oil and established one of oil’s most important companies. Rather than shipping barrels of oil, Samuel commissioned the construction of a new ship – one that carried the kerosene in an enormous tank. Second, he cut the sailing distance of these tankers in half by getting safety clearance from the British government to navigate the new Suez canal (kerosene shipments were banned due to the fear of the vessels exploding in the canal) thereby avoiding the long trip around Africa. In 1892, Samuel’s first tanker, the Murex, named for a type of shell, sailed through the canal. Within a decade, his new company, Shell, controlled 90 percent of the oil passing through the Suez canal.

The prospectors who descended on Pennsylvania’s Western hills in the months following Drake’s 1859 discovery of “rock oil” had no idea of oil’s true potential. They didn’t know that oil would dictate the fortunes of millions of people for the next 150 years. They didn’t know that the pursuit of oil would push great nations into war and they didn’t know that their initial wildcatting would propel the United States to become the most important nation on earth. All that mattered at the time was that there was a fortune to be made. Kerosene lamps were already being celebrated as “the new light” in cities up the Eastern coast and Pennsylvania oil promised a new abundant source.

Thousands of people – many of them Civil War veterans - flocked to stake a claim in the new oil regions. In January 1861, barely a year after Drake’s initial discovery, the price of a barrel of oil hit $10 (Drake had collected the first oil in whiskey barrels and the 42 gallon measure has remained the industry standard ever since). By the end of the year, however, as more and more wells were stuck and prospectors frantically offloaded their oil, the new pioneers came to realize just how fickle their fortune could be. Prices dropped to 10 cents a barrel and the oil industry confronted what would be the first of many gluts in its history.

Yet out of the Oil Regions’ chaos came order and control in the figure of John D. Rockefeller, owner of a small refinery in Cleveland Ohio. Rockefeller observed how the hundreds of Pennsylvania drillers were bidding against each other and so were driving down the cost of oil. Rockefeller realized the essence of making money in this new volatile industry lay not in producing oil but in controlling the transport and sale of oil’s refined products.

Though only 26 years old, Rockefeller bought out his refinery partners and started building up a strong cash position. This liquidity gave him the leverage he needed to buyout competing refineries when the next production glut sent oil prices plummeting and cut revenues for both producers and refiners.

Rockefeller soon began undercutting his rivals by persuading the railroads that carried the oil out of the Oil Regions to give him secret rebates on his shipments based on the volume of his business. By 1870, Rockefeller was able to establish a joint-stock company named the Standard Oil Company. After just seven years in the business, this company controlled one tenth of the US oil industry.

Standard Oil’s business methods were ruthless. The company tried to squeeze many competitors out of business by deliberately cutting its prices in one market, knowing all the time that with its superior cash reserves it could hold out until competitors folded. When Rockefeller bought these companies, he would keep the transactions secret so that his other competitors would not know which companies were owned by Standard and working against them.

By 1883, Standard was laying the foundations for what we now know as the vertically integrated company and the modern multinational. He owned refineries and the new pipelines that were transforming the transportation of oil. He had bought up oil fields. And he was opening up new markets for his products on the East Coast and Europe.

In 1906, following years of investigations and a series of damning newspaper and magazine articles on Standard’s predatory practices, the US government brought a massive lawsuit against the company under the statute of the 1890 Sherman anti-trust act. By now, Standard had recorded over a billion dollars profit since its inception 25 years before. The case dragged on for five years and Standard argued it all the way up the Supreme Court. But in May 1911, Chief Justice Edward White declared Standard Oil a monopoly and ordered that it must divest itself of all its subsidiaries.

By the end of the year, Standard had been split into 34 companies. The break-up destroyed Standard’s singular stranglehold on the oil industry but it didn’t destroy the strength of the Standard brand. On the contrary, Standard’s model was so strong and the US oil industry so vibrant that a number of the new mini-me Standard clones soon emulated Standard’s success. Three in particular, Standard Oil of New Jersey (later to be known as Exxon), Standard Oil of New York (Socony and later Mobil) and Standard Oil of California (Socal, later Chevron) quickly became global powers in their own right.

No nation uses more oil than the United States. The U.S. uses a full quarter of all the oil produced in the world. And even though it produces nearly eight million barrels of oil a day, it must import a further 12 million barrels just to meet its daily needs. Yet despite this amazing discrepancy, we still take oil for granted.

How could it be that a people whose way of live is so dependent on oil could be so naive in how we use it? The more I thought about it, the more I began to realize that America’s oil addiction runs deeper than a love for big cars and the open road.

Oil, I believe, has etched an indelible yet invisible mark on the modern American psyche. After all, America the birthplace of the oil industry. Cheap, plentiful supplies of U.S. oil propelled the United States to victory in two World Wars. Oil fed the post-World War II consumer boom that established a consumption-crazy Middle Class. And the oil industry helped spawn another industrial giant, the automobile industry. At every step of the way, oil has provided a blueprint for modern American life that the rest of the world eagerly copied. Americans, for their part, have embraced the spirit of self-confidence and invincibility that grew from knowing they controlled their own oil destiny. And that spirit continues today, even though America has long depended on others for oil.

One weekend last summer, I took a drive from New York to the rolling hills of Western Pennsylvania. I wanted to visit the birthplace of the oil industry. I wanted to see where the roots of modern life began. And I wanted to capture a bit of the old oil spirit.

Six hours west of New York, I pulled off Interstate 80 and headed north following the Allegheny River as it winds its way through some of Pennsylvania’s most rugged and beautiful countryside. Climbing up through the hills, I came to the small town of Oil City, its impressive late 19th century stone buildings a proud reminder of the time when this rural patch of Pennsylvania was the very heart of the world oil industry.

Oil City was once the most important boom town of what became known as Pennsylvania’s Oil Regions, a heart of oil exploration that sent crude oil north by rail to refineries in Cleveland, Ohio. In the early 1860s, 2,000 oil wells dotted the land around the town and the entire area resembled an oil derrick pin cushion. For a short time, Oil City was as famous as Houston.

In 1857, a small group of New Haven, Connecticut investors founded the Pennsylvania Rock Oil Company to tap into a flammable substance that seeped from the earth around the hills in this part of Pennsylvania. “Rock oil” was being used by the locals to clear headaches, toothaches and even upset stomachs.

The investors were interested for another reason. Global supplies of the whale oil that had long been burned in lamps were dwindling as sperm whales had been hunted to the point of extinction. Meanwhile, in Europe, a new process was being employed to dig this rock oil out of the ground by hand so that the stuff could be refined to make a new illuminant, kerosene.

The Pennsylvania Rock Oil Company had a better idea for extracting oil - it would drill for it using the same techniques already used at salt wells around the country. The man the investors chose to lead this venture was Edwin Drake. The 38-year-old jack of all trades was “between jobs” at the time, but he happened to be living in the same hotel as one of the main investors. The company decided on him partly because he portrayed himself as a can-do type of guy and partly because, as a railroad conductor, he could travel to Pennsylvania for free.

To bolster Drake’s credibility in Pennsylvania, the company sent letters ahead of his arrival addressed to “Colonel” E.L. Drake. The title stuck and, in 1858, the Colonel began drilling a few miles south of the little hamlet of Titusville, some fifteen miles north of Oil City. on a farm that contained a seeping oil spring. For over six months he had dug deep but dug dry. He was still searching for oil and had exhausted all the funds of the investors when, out of desperation, they mailed him instructions to abandon the operation. But the letter didn’t reach Drake until after he had tried one final well. This time, the drill bit sank 69 feet into the ground – then slid six inches more. Drake had hit oil and the industry that would change the world was born.

Soon thousands of prospectors – many of them returning from the Civil War - were flocking to the area around Titusville in search of their fortune. No place better epitomized the Oil Region’s frenzy of speculation than the town of Pithole, a few miles south of Drake’s first discovery in Titusville. At its peak in 1865, Pithole had 10,000 inhabitants, 50 hotels, two telegraph offices, and a post office that was said to be the third busiest in the United States. It was also a haven of prostitution packed with 50 “free and easy” brothels.

But Pennsylvania’s dominance was short-lived. Within a year Pithole was gone. The oil fields had been pumped too quickly by the prospectors, and once abandoned, Pithole’s wooden buildings burned to the ground in a fire. Soon, bigger and better oil fields were discovered in Texas, California and Oklahoma, then farther afield in Russia, Mexico and Venezuela and eventually, in the desert lands of the Persian Gulf. In the process, big oil companies – most of them American – would ride the booms and the busts and grow so rich that they often became more powerful than the countries where they drilled for oil.

Pennsylvania’s oil boom crashed almost as quickly as it began. But, in the 1920s, Oil City received a second lease on life when a company named Pennzoil relaunched the town’s oil business. Oil City became a company town – its livelihood totally dependent on Pennzoil’s business. Then, in 1995, the company pulled the plug on Oil City and moved to Texas where production costs were cheaper. Today, as you walk down the once vibrant Petroleum Street, you can’t help but notice that most of the stores have been replaced by boarded-up buildings. Even the town’s central landmark – the Oil City Savings Bank - now opens only for a weekend flea market. “This town used to be full of nice shops and boutiques,” said the owner of the Yellow Dog Lantern restaurant when I stopped by for dinner. “Now there is nothing left.”

Oil City discovered the perils of building a society that is totally dependent on oil. It is a lesson that America as a whole has yet to learn. Yet Pennsylvania’s problem wasn’t that it ran out of oil. There are still some 4,000 active small oil wells across the state. No, Pennsylvania’s problem, one that Oil City was able to delay, was that it could no longer compete against newer, cheaper sources of oil from other parts of America and the world. Oil fields rarely run dry, but as they get older - or grow more mature, as the oil industry calls it - the oil becomes more expensive to produce.

It wasn’t until the 1970s that the U.S. first realized it had an Achilles heel. The 1973 Arab oil embargo, coupled with a series of price hikes by the Organization of Petroleum Exporting Countries (OPEC), shocked the U.S. into realizing that its oil dependency had become a seriousness weakness.

Yet since that time, oil production in America has fallen rapidly. US oil fields in the lower 48 states are 25 percent less productive today than they were in 1985. And since 1990, proven oil reserves have dropped 20 percent. Unable to meet its own needs, and wary of being burned once more by OPEC, the US has made a concerted effort to spread its oil imports across a large number of producing countries. Winston Churchill once said that oil “security exists in variety and variety alone” and this has been the mantra of US governments since the end of the 1970s.

The US presently gets just 25 percent of its imported oil from the Middle East, and it has cultivated important relationships with Canada, Mexico and Russia as well as other producing nations in Latin America and Africa. Europe and Japan, with little oil of their own to draw upon, have also sought to diversify their oil imports, though they still rely more on Middle East oil than the US does.

But despite this emphasis on diversity, everyone associated with the oil business knows that the future of oil will be decided by one region, the Middle East. For all the new technology and all the financial resources that oil companies can call upon to find and drill oil around the world, the Middle East has not just the most abundant and deepest reserves of oil in the world but also the oil that is cheapest to produce. As the lessons of Pennsylvania’s oil regions show, it is only a matter of time before the rest of the world’s oil becomes uncompetitive compared to that of the Middle East. When that happens, Saudi Arabia, Iran and Iraq will be able to set their price.

* * *

For as long as we are dependent on oil, we will face a triple threat.

The first part of the threat is economic – As the balance of power once more shifts to the Middle East, America’s oil dependency is likely to leave the nation once again at the mercy of OPEC. At that point, oil prices are likely to start rising and that could threaten the jobs of millions of Americans and ultimately undermine the economic well-being of the country.

The second is geopolitical – the United States must protect its oil interests all over the world. That forces the US to get directly involved in those regions where oil is abundant, regions where the very power and allure of oil wealth breeds instability. The end result is that the US supports a host of corrupt autocratic regimes solely because they have oil. At the very least, this fosters anti-American sentiment. At its worst, America’s oil addiction has caused US governments to plot the overthrow of other countries’ governments. Increasingly, the US is shaping a military policy based on protecting strategic oil resources around the world.

Finally, oil dependence is sowing the seeds of a global environmental tragedy. Even if the US could produce enough oil to meet its own needs, or could solve all the problems of the Middle East, the rapidly growing demand for oil throughout the world will result in the large-scale release of greenhouse gases like carbon dioxide into the atmosphere. Global warming – an assault on the earth’s atmosphere the scale of which no one in the world’s scientific community can yet fully comprehend - could ultimately destroy the very planet that sustains us.

So is all lost? Should we just give up now, buy Hummers and drive off into the brightly glowing and rapidly warming sunset? Hardly. Our dependence on oil grew over just 150 years. That’s a mere speck in time in the history of our world and it is also the best indicator that our addiction may also be fleeting. Oil replaced our reliance on more polluting fossil fuels like wood and later coal. Now, having appreciated both the achievements of oil and also its risks, we can move to a new energy strategy that would both sustain us and protect us in decades to come. With global demand for oil likely to double by 2030, the time has come to develop a new fuel strategy that reduces the threat of global warming and eases the power struggles that threaten our security.

This strategy should be realized in three stages. First, we in America should reduce the amount of oil we consume by implementing new fuel economy standards for our automobiles. Next we should adopt a new generation of gasoline-and-electric-hybrid vehicles that can provide a bridge between the internal combustion engine and new, non-polluting forms of transportation. Finally, we should put our resources behind an aggressive plan to make hydrogen the fuel that powers our automobiles. Most important of all, this hydrogen needs be produced using non-polluting, renewable energy forms like solar, wind or hydro-electric power.

* * *

I’d been writing stories about oil for nearly a decade before I fully began to appreciate its power. At first, I viewed oil as just another big industry, albeit one ruled by some of the largest multinational companies on earth. But over time I started to realize that oil was a lot more important than just a business.

The main reason that it took me so long to appreciate the power of oil was because it flowed so deeply through my life. This was the industry that had built those super-cool supertankers that mesmerized me as a child growing up on the coast of Wales, and the same industry whose gas stations gave away coin collections commemorating all my favorite English soccer teams. For a while, my family even made special trips to one Esso gas station to collect free drinking glasses (I think my mother is still using them.) As a teenager, I was taught how North Sea oil was the lifeblood for a British economy that was sinking otherwise into a pit of moribund industry. And on my first visit at age 15 to the U.S. I fell in love with American cars and car culture. Life in America seemed so fast so supercharged compared to back home and it left an indelible mark on my teenage mind – so much so that I would later settle in New York.

At the same time, this was the industry that was responsible for an oil spill that wrecked the coast near my home. It was the industry that flooded Alaska’s Prince Edward Sound with millions of barrels of oil from the Exxon Valdez within months of my arrival in the US. Later, I would see the full extent of oil pollution and destruction when I traveled the fringes of the Amazon rainforest and met whole communities whose lives had been ruined by oil.

These contradictions had filtered through my brain for years as I followed the oil industry from afar, but it wasn’t until the months immediately following the September 11, 2001, terrorist attacks on New York and Washington D.C. that I started to consider the larger role of oil in our global society.

I started to notice how so many of the stories I read each morning in the newspaper were connected to oil. There were the obvious ties between Osama Bin Laden’s anti-US jihad and America’s military presence in Saudi Arabia – a hangover of the Gulf War and US commitment to protect Middle East oil supplies. And there was the increasing military deployment of US forces in the countries that surround the oil-rich Caspian Sea. Then there were the environmental and energy policies of the Bush administration, which sought to pump new life into America’s domestic oil industry while rejecting the environmental controls that the rest of the world seemed to agree could combat global warming.

And then there was Iraq and the US government’s bellicose drive to overthrow Saddam Hussein. Opponents of the Bush administration inside the US and all over the world were convinced this was a war over oil. At the same time, both the US and the UK government of Tony Blair were adamant that oil played no role in the push to putsch Saddam.

The Bush administration’s pre-emptive war seemed both preposterous and crass even without the benefit of hindsight that we now enjoy. But I couldn’t buy the No Blood for Oil argument. The U.S. had spent the last 20 years cultivating relationships with other producing nations and it didn’t have to invade Iraq just to satisfy its own oil needs. However, I was convinced that oil played some crucial role in the geopolitical maelstrom surrounding Iraq that neither the pro- nor anti-war crowd was addressing.

That was when I decided to undertake this journey through the world of oil. The purpose of the journey was simple – to understand and explain in straightforward terms the ways that oil has come to control our lives.

From the moment we wake in the morning to the moment we go to sleep, oil controls our lives. Its influence reaches far into politics, international affairs, global economies, human rights and the environmental health of our planet.

The most obvious way that oil dominates us, of course, is transportation. Oil powers 97 percent of America’s transportation needs and over half the oil we consume daily goes to keeping our cars and trucks on the road. That’s one barrel out of every seven used in the world. Not surprisingly, the United States has more automobiles than any other country; in fact, it has more cars and trucks than it has people.

But oil is far more important to modern society than simply as fuel for our automobiles and airplanes. Oil provides heat in the winter for millions of American homes and it accounts for 40 percent of our total energy needs. Without oil there would be no plastics, nor many of the chemical-based medicines we take for granted. Perhaps most important, America would go hungry without oil: commercial agriculture would grind to a halt without oil to run farm and food processing machinery or to make fertilizers, herbicides and pesticides.

To better understand oil’s impact on our lives, I devised a little experiment. I would spend a day without oil. How hard could that be? After all, I live in Brooklyn so I’d already won half the battle; I’d leave the car parked on the street and hope I didn’t pick up a parking ticket.

I began in the bathroom. I’d have to carry off the rough and ready look this morning as petroleum products play a role in my shampoo, shaving cream and deodorant. There was also going to be a lot of water to clear up – my shower-curtain is also an oil product.

Brushing my teeth became a far-less appealing experience without the benefit of toothpaste, whose ingredients include petrochemical-enhanced artificial coloring and mineral oils. (But at least I still had my own teeth. If I’d worn petroleum-based dentures, I’d be gumming my way through this particular day.)

As it was, I was going to have to make do with only limited vision as both my contact lenses and plastic lens eyeglasses came from petrochemicals. And I’d have to skip putting on lip balm; that’s petroleum oil. Worse still, I’d have to dress my six-month-old son in cloth diapers instead of the normal disposable ones. (What a day to have made the switch to solid food!)

Next came the problem of what to wear. Typically, I live in sneakers but not today – I had to search out an old pair of non-rubber soled leather shoes. It was raining outside but I had to forgo any waterproof outerwear. Goretex, it turns out, is yet another genius invention of the petrochemical industry.

I left my house and immediately encountered another problem. All New York streets are paved with asphalt, the sticky byproduct that remains after refining crude oil to extract its more lucrative properties, like gasoline and heating oil. Lacking powers of levitation, and with not an inch of grass in sight, I had to admit defeat on this point. I traipsed slightly forlorn to my neighborhood café for breakfast. Eggs and coffee came courtesy of a non-stick pan and a heat-resistant glass pot – products of the petrochemical industry. Defeated again. At least I could pay in cash. All credit and debit cards are oil products.

On my return home, I realized this wasn’t going to be the most productive day of my working life because I couldn’t use the computer or telephone, both of which depend on oil-based plastics to function. Neither could I kick back and listen to music or watch a movie - CDs and DVDs also contain oil. Perhaps then I could just go and play a round of golf? Stuck again: golf balls contain polybutadiene, another petrochemical.

The list of off-limit items continued. Bandages, blenders, garbage bags, glue, pacemakers and pantyhose (the latter two not being items I needed on this particular day) all got their start as oil. This whole day-without-oil thing was beginning to give me a headache. Perhaps I should just take a few aspirin and forget about the whole thing. You guessed it: Aspirin is another proud legacy of oil.

With Israel on the attack and tensions and violence rising across the Middle East, I thought it might be a good time to start putting the history and geopolitics chapters of Oil: Anatomy of an Industry online.

War in the Middle East is the nightmare scenario of all world powers - even though, given the wealth of energy resouces in the region, war seems an inevitability at some time.

Over the last 70 years, the major Western powers have worked overtime to dictate influence in the region. Today, more than ever, the fear of the US, Europe, Russia and China is that events escalating at a pace that will be difficult to control.
I’ll be splitting the chapters into a series of blog posts so that no one post is too unwieldly. Keep checking back or subscribe to the RSS feed for new installments of the book as I post them.

• FT.com / International Economy / Oil - Saudi fears over attacks drive oil prices higher
  (tags: saudi oil con)
• Guardian Unlimited | Special reports | New oil shock ahead as $100 spike looms
  (tags: oil iran conflict)

Big news from South America as new populist president Evo Morales brings all natural gas production under state ownership.

Call it the Chavez effect - national producers all over the world are realizing that their oil and gas supplies are a potent political weapon in these unsettled energy times….and they are adding to the uncertainty with their actions.

Bolivia’s actions follows Russia’s announcement last week that it may not give Western Europe a guaranteed market for its natural gas.

Couple these recent events with Venezuela flexing its petro-muscles, Iran adding it’s own cornered beast threats, and the continued role that China is playing in competing for world oil and you have petropolitics playing out on an unprecedented global scale.

Fascinating and horrifying to watch.

One major oil shock is likely to send prices over $100 a barrel, according to the London Observer.

Analysts and traders are all roiled up over Iran’s potential to disrupt global oil prices. $85 a barrel is the current inflation-adjusted all-time high price of crude - Petropulse will put good money on that benchmark being breached by the end of the summer.

Shell PR will be scrambling this morning over the story in today’s FT describing how the the Nigerian arm of the oil multinational has hired two companies linked to ethnic insurgents as subcontractors.

Ten years ago, Shell Nigeria relied on the Nigerian military to beat back the non-violent Ogani movement led by Ken Saro-Wiwa. The fallout from this resulted in Shell adopting a new corporate code of conduct and pledging to commit more resources to helping local communities in the Niger Delta.

Contracting with local companies that have strong ties to the armed militant Ijaw activists that have been the scourge of companies like Chevron and brought oil operations in the Delta to a near standstill earlier this year is certainly is one way of fostering community relations.

Whether you can call it a smart investment in bettering the lot of local Delta residents, or whether these deals smack of the same type of divisive pay-off tactics oil companies have long indulged in developing nations is a question that should keep Shell spinning for quite a while.

Time for a little bit of book promotion here.

I had the pleasure of chatting with Ramona Koval of the Book Show from Australia’s National Radio this week.

The folks at ABC radio have put the interview online and you can download it here as a podcast.

It seems like a suitable day to jump back into Petropulse blogging - what with oil prices hitting $74 a barrel this morning on the UK’s trading exchanges.

Iran, Nigeria, tight US gasoline inventories and continued high demand are all contributing the on-going price crunch.

Breaking news here on CNN

Lots of oil stuff happening but I, alas, am up to my eyes in another blogging project at the moment connected with my Custom Communication company.

Check out the blogging conference I am organizing for April 4th in London. I’ll be posting here on Petropulse when I have time but blogging with be light for the next couple of weeks.

Oil Leaps $1.50 After Nigeria Attacks Hit Output - New York Times

The enivironmental and social costs of climate change would wipe away the record profits recorded by BP, ExxonMobil and Shell in the last year reports BBC NEWS

The WSJ.com reports in a subscription only story that:

A new industry-backed report proposes to let the companies be the best judge of their own stores of oil and gas rather than use a strict formula imposed by the Securities and Exchange Commission. The companies argue that the SEC’s method — intended to provide investors with apples-to-apples comparisons — is archaic and arbitrary, and undercounts the amount of energy on tap for the future.

Accountability is so much easier when you are counting things yourself. Just ask Saudi Arabia and it’s oil reserve accounting.

• Carmakers’ Big Idea: Think Small - New York Times
  High gas prices = small cars. Let’s hope they can build them better this time around
  (tags: cars detroit demand oil)
• OPEC Chief Shrugs Off Oil Politics - New York Times
  (tags: OPEC oil saudi)
• Guardian Unlimited | Special reports | Iran taunts west on security council move
  Iran thumbs its nose at the UN
  (tags: iran nuclear conflict)
• The Observer | Business | Finland goes back to the future
  Nuclear the answer for Finland
  (tags: Finland nuclear)
• The Observer | Business | Fossilised myths: new thinking on ‘dirty’ coal and dwindling oil
  (tags: oil fossil fuels)
• Oilmen Meet With Cubans in Mexico, but U.S. Intervenes - New York Times
  (tags: cuba oil politics)
• Autopia
  (tags: autopia ethanol)
• FT.com / Markets - The Long View: The laws of supply and demand
  (tags: oil economy)
• FT.com / Markets - ICE goes online with West Texas
  (tags: oil exchange)
• globeandmail.com : World
  (tags: oil addiction)