Although fourteen years old, The End of Oil offers an invaluable historical analysis about the absolute link between cheap fossil fuels and the development of industrial capitalism. Roberts starts his analysis with the first century Persians who first distilled surface petroleum for use as lamp fuel. According to Roberts, widespread use of oil as a fuel was impossible until drill technology became available in the 19th century to drill for it at deep levels.
Roberts identifies coal mining as the first really capital intensive industry requiring extensive external funding. Building the infrastructure to mine and process all three fossil fuels is always extremely capital intensive. The fact that a coal or gas-fired power plant takes three or four decades to pay off is one of the main reasons fossil fuel companies, and the banks and governments that subsidize them, are so reluctant to replace them with renewable energy infrastructure. The End of Oil also emphasizes the absolute importance of cheap fossil fuel to the economic health of industrialized countries, Between1945 and 2004 (when the book was published), there were six big spikes in the price of oil – each was accompanies by a major economic recession.
Roberts maintains the cheap, easily accessible oil is all used up, explaining its steady price increase since the late 70s. Russian oil, which is fairly costly to mine, only became economically viable when the price of oil hit $35 a barrel in 1980.
Prior to the final chapters, which review the economics of various forms of renewal energy, the book also discusses the geopolitics of oil. Roberts leaves absolutely no doubt that the US invasion of Iraq in 2003 was an effort by neoconservatives Dick Cheney, Donald Rumsfeld, Paul Wolfowitz et al to control the volatile price of oil and the devastating effects of this lability on the US economy. Although the US wars in Libya, Syria, Pakistan and Yemen occurred after the book’s publication, Roberts’s analysis left me with no doubt whatsoever they were driven by similar geopolitical objectives.
Roberts also discusses the geopolitical threats posed by China, India and Southeast Asian countries as their growing middle classes put pressure on a finite supply of oil. He also explores the threat the growing political/military alliance between Russian and Iran creates. Between them, the two countries control half the world supply of natural gas. He leaves no doubt, in other words, that the current US military threats against China, Russia and Iran are also about fossil fuel security, just like the war on Iraq.
Despite its length, this documentary should be compulsory viewing. Everyone with an IQ over 90 should see it at least once before they die. It was only in viewing this film that I fully grasped the insane, oil-inspired military aggression in the third world and the US fascination with despotic dictators.
The video below is actually an 8-part series shown over successive nights on Al Jazeera-English. I’ve summarized the highlights of each of the eight parts so you can fast forward to specific segments that interest you.
0.00 – 23.26
Part 1takes viewers from the founding of the secret Seven Sisters oil cartel in 1928 to the creation of the competing Organization of Petroleum Exporting Countries (OPEC) in 1960. The latter is made up of oil producing countries that have nationalized their oil industries.*
The film begins by describing the secret (illegal) cartel formed in 1928 by the Anglo-Persian Oil Company (which became British Petroleum), Standard Oil (which became Exxon) and Royal Dutch Shell. The goal was to end the cutthroat competition that was eating into profits. At a secret meeting in Scotland the three companies agreed to an orderly division of global production zones, as well as a process for fixing oil prices.
Later Mobil, Gulf, Texico and Chevron would join these three oil giants. The existence of the cartel remained secret until the 1950s, when it became known as the Seven Sisters.
This segment describes the totalitarian control BP exercised over Iran until 1951. A strike for higher wages led to a national uprising that overthrew the Shah and resulted in the democratic election of Mohammad Mosadegh as president. When the latter threatened to nationalize Iran’s oil industry, the British government requested CIA assistance to overthrow Mosadegh and restore the Shah to the throne. In return, the US government won the right for American oil companies to join BP in exploiting Iran’s oil resources.
In July 1956 after Egyptian president Nasser nationalized the Suez Canal (the main route for transporting Middle East oil to Europe), Britain, France and Israel declared war on Egypt. Nasser responded to an aerial bombing campaign by using concrete bunkers to blockade all Suez traffic. For once, the US and USSR collaborated to pressure the three aggressors to withdraw their forces and restore the transit of oil tankers through the canal.
23.26 – 46.00
Part 2 traces how the rise of OPEC worked to gradually erode the dominance of the Seven sisters – with violent repercussions.
In 1972 Saddam Hussein nationalized Iraq’s oil industry, with technical and military support from the Soviets and the French.
By October 1973, when Israel’s Arab neighbors launched the Yum Kippur War, OPEC members controlled 60% of the global oil supply. This enabled them to launch an oil embargo against the US in retaliation for their support of Israel in the 1973 conflict.
In 1978 Iran’s Ayatollah Khomeini, living in exile in Paris, called for a workers strike in the Iranian oil industry that caused a total shutdown of oil production. This, in turn, led the US to abandon their longtime support of the Shah and his secret police. The result was a national uprising, the forced exile of the Shah, the return of Ayatollah and the nationalization of Iran’s oil industry.
Determined to regain American corporate control of Iran’s oil industry, the US government backed Saddam Hussein’s invasion of Iraq in 1980. The sudden onset of peace in 1988 led to a period of “overproduction” and a dangerous drop in oil prices. In response, George Bush senior, whose Zapata oil company had made a fortune via offshore drilling in Kuwait, openly encouraged Saddam Hussein (through ambassador April Glaspie) to invade Kuwait. This would create a pretext for the first US invasion of Iraq in 1991.
In May 2001 (20 months before the US invasion), a secret energy task force headed by former oil executives Dick Cheney and Condoleezza Rice, drew up a plan whereby Exxon, Shell and BP would divide up US occupied Iraq into eight oil extraction zones.
48.00 – 61.00
Part 3describes the decision by the Seven Sisters to open up Africa to increasing oil exploitation due to their gradual loss of control over Middle East oil.
In 1970, Colonel Omar Gaddafi led a coup against a corrupt Libyan monarchy that was allowing the Seven Sisters to pay 12 cents a barrel in royalties to extract high quality Libyan oil. Gaddafi immediately nationalized the oil industry, raised oil prices 33% and used the funds to finance generous public services for the Libyan world and to fund freedom fighters all over the world (including the Palestinians).
This section also traces the history of the French oil companies ELF and Total in Nigeria. After Algeria won independence from France in 1971, they nationalized their oil industry, and ELF began exploiting oil resources in Nigeria, Chad, Congo, Cameroon, and Angola, where they financed guerrillas and despotic regimes and participated in bribery and embezzlement schemes that massively increased the international indebtedness of these countries. In 2003 the CEO of ELF was sentenced to prison and the company was bought out by Total.
61.00 – 95.00
Part 4 covers the role of the Seven Sisters in stoking Sudan’s civil war (most of Sudan’s oil comes from South Sudan) and the role of Shell Oil Company in Nigeria’s trial and execution of environmental activist Ken Saro-Wiwa.
95.00 – 118.00
Part 5 traces the longstanding battle between Russia and the US oil industry over control of the Baku oilfields on the Caspian Sea. It begins with Lenin’s capture of the oilfields in 1920. Hitler’s primary reason for attacking the USSR in 1941 was to gain control over Baku.
This section also details how a US-Saudi conspiracy to flood the market with oil in the late eighties (dropping the global oil price to $13) ultimately led to the Soviet collapse in 1989. At the time revenue from oil sales was the Soviet’s sole source of foreign currency.
118.00 – 142.00
Part 6 concerns the role of the color revolutions in Georgia, Armenia and Azerbaijan in keeping Caspian Sea oil out of Russian hands and under the control of US oil companies.
It briefly discusses the US role in Boris Yeltsin’s coup against the Russian parliament and his privatization of the Russian oil industry on behalf of the Seven sisters and a handful of Russian oligarchs (Putin has subsequently re-nationalized Russia’s oil industry).
Part 7discusses the concept of Peak Oil and the current dispute between the Iraqi Kurds and the Iraqi government over the control of the Bakr oil terminal near Bazra. At present it’s illegal for the Kurds to export their own oil. Eighty-five percent of Iraqi oil is processed at the Bakr oil terminal and Iraqi Kurdistan on receives 17% of this revenue.
165.00 – 190.00
Part 8 is about the Seven Sisters exploitation of Mexican and Venezuelan oil prior to the election of Hugo Chavez as president. It also summarizes that status of the countries (Saudi Arabia, Russia, Iran, Venezuela, Brazil, and Malaysia) that have nationalized their oil industry. At present these countries control one-third of oil and gas production, and more than one-third of oil reserves. Despite their role in instigating western military aggression, the influence of the Seven Sisters continues to declines.
At present they control 10% of oil production and only 3% of oil reserves. Their monopoly on exploration, drilling and refining technology gives them disproportionate control over the industry.
*Algeria, Angola, Ecuador, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, the United Arab Emirates, and Venezuela
The Role of CACI, Titan, Blackwater and Halliburton
Iraq for Sale: the War Profiteers (Robert Greenwald 2006) is about the privatization of the war in Iraq and four of the Wall Street corporations that endangered enlisted troops, committed war crimes and cheated taxpayers out of billions of dollars. The film has just become available for free viewing on YouTube.
The film’s most shocking revelation is that torture at Abu Ghraib was primarily the responsibility of two private corporations, CACI International and Titan. CACI was originally contracted to perform database services in Iraq. The contract was expanded to include army intelligence work and eventually the interrogation and torture of prisoners.
Titan was originally contracted to provide translation services. According to GIs interviewed for the film, Titan never assessed their translators for their language skills and provided no training nor supervision of their ongoing work.
The GIs who tortured prisoners at Abu Ghraib were ordered to do so by these civilian contractors. When the scandal broke, the GIs were court martialed and faced average sentences of eighteen years. The civilian contractors who ordered the torture were merely sent home. Many went to work for new contractors and returned to Iraq within weeks.
Gouging the Taxpayer
The role of Halliburton (the company Dick Cheney ran before becoming vice-president) and Blackwater in Iraq has been well publicized thanks to a series of high profile scandals.
Even before the war started, the Halliburton subsidiary Kellogg Brown and Root (KBR) was awarded a no-bid contract to provide meals, water and construction, laundry, repair and transport services. Because it was a no limit cost-plus contract, there was a strong incentive for Halliburton/KBR to add on and inflate billable services.
Specific examples include charging the Pentagon $45 for a can of Coke, $99 for a bag of laundry and $250,000 on a three year lease for a $25,000 SUV. Instead of repairing trucks and SUVs that broke down, KBR would order GIs to burn or blow them up so they could charge the taxpayer for new ones. Hundreds of millions of dollars simply disappeared.
n 2005, Pentagon auditors ascertained that Halliburton had overcharged them by more than $1 billion. Despite a high profile Congressional investigation, the Pentagon paid the $1 billion over charge. Not only was there no effort to prosecute Halliburton, but their contract in Iraq was expanded.
Placing GIs at Risk
In addition to gouging the taxpayer, Halliburton/KBR placed GIs at significant risk in the slipshod way they provided water and food service. Out of the sixty-seven water treatment plants they operated in Iraq, sixty-three were unsafe due to contamination with giardia, cryptosporidium and other infectious organisms.
The mess halls Halliburton/KBR provided ran also placed GIs at substantial risk because the company refused to provide a twenty-four hour food service. Iraqi insurgents were quick to learn the meal schedules and frequently attacked as GIs waited an hour in line to be fed.