Oil pulses through our daily lives. It is the plastic we touch, the food we eat, and the way we move. Oil powers our cars, chainsaws, and tanks. Yet six generations back, oil was a bit player in an emerging lubricant market where it competed with the rendered bodies of whales, lizards, and fish. Oil’s brief and startling career – from small-town hustler to global kingpin – is one of spectacular boom and bust, extremes of wealth and poverty, and environmental ills ranging from local spills to global climate change. During the twentieth century, this complex hydrocarbon has been pulled from the earth and spread far and wide. The worlds made by and through oil, however, are anything but uniform. The international oil trade links every country on earth, but only a handful of countries hold the lion’s share of known reserves. Every minute, millions of dollars change hands through the oil markets as crude is bought and sold, but oil itself moves through pipelines and in tankers at a comparatively medieval pace. Oil provides an unprecedented freedom from geographical constraint for those who can access it, yet its record of pollution and distorted development cripples the lives of many others.
Creating wealth and power from oil is quite a trick. Crude hides below ground and must be hunted and captured. This raw oil is frequently in the wrong place – miles from markets, in places difficult to access or already used by others. Unlike the subterranean lakes of the imagination, crude inhabits tiny gaps in ancient sediments and often must be compelled to the surface. In the ground, oil takes on characteristics of time and place – local variations in viscosity and the content of metals and sulfur, for example – that must be erased by refineries if oil is to behave as required in engines, power stations, and production lines. In the search for value, refineries create fresh distinctions between grades of oil and different types of petrochemicals, producing a catalogue of products tailored for hundreds of specific uses. Most of these products are flammable, noxious, and difficult to contain, but must be transported, stored, and distributed widely if demand is to be created and sustained. Most oil is burnt to provide mobility via land, sea, and air, but the by-products of this combustion can be directly hazardous to health and livelihoods. Exchanges and final markets help lubricate the global movements of oil, yet speculation over oil’s future price can disrupt existing patterns and rates of oil movement by driving wild swings in price. There is, then, a savvy to the business of making money from and through oil that extends beyond oil’s physical properties to the economic and political structures that take shape around it. The popular fascination with oil’s tycoons, barons, and sheiks – Getty, Rockefeller, Abramovich, or the Sultan of Brunei – acknowledges how oil’s value can be captured to remarkable effect. Beyond the palaces, yachts, and gleaming towers, oil’s many other landscapes also reveal how its value evades a large proportion of the population in many oil-rich countries.
If we think of oil at all, we tend to think of it as a gift of nature – a natural endowment bequeathed by geology and time. Oil is indeed a legacy from the past, an accumulation of carbohydrates and proteins from the bodies of algae and plankton that has been trapped and cooked underground. But to think of oil in this way is misleading, as it gives nature too much of a hand. Where, how, and when oil moves within modern economies has little to do with nature or geology. The way we use it, who can afford it, where it is extracted, and even how we know how much is in the ground are determined by the actions and interactions of some of the most powerful actors and institutions in the global economy. Because decisions about finding, moving, and using oil bring together groups of people with different interests and agendas, oil is unavoidably political. Oil may be drawn from the earth but it is a very social resource.
This point is important for understanding what we mean in this book by the “politics” of oil for two reasons. First, the political character of oil is a normal and continuous state of affairs and not an aberration or interrupting event. We aim in this book to show how the politics of oil is changing, rather than to suggest oil is now becoming political (it has always been so). Second, we take the politics of oil to mean more than a zero-sum game over a fixed and declining resource – a scramble at the end of the “Age of Plenty” for nature’s unclaimed gifts. Instead, the politics of oil concerns the relationships of competition, conflict, and cooperation that define the social and geographical distribution of the various “goods” and “bads” that can be produced through oil. In the twentieth century, the politics of oil was about the management of abundance, state power, and market growth. The legacy of this “Age of Plenty” includes declining conventional oil reserves, volatile prices, climate change, and major political and economic distortions in most oil-rich countries. Our argument in this book is that a new geopolitics of oil is now emerging, centered on changes in the availability, accessibility, affordability, and acceptability of oil. The dynamics of competition, conflict, and cooperation associated with this new geopolitics point to the imperative for more effective global oil governance.
Our goal in the chapters that follow is to highlight the critical relationships – among states, firms, and society – that are key to understanding oil’s geopolitics, and their relationship to changes in the availability, accessibility, affordability, and acceptability of oil. It is not the characteristics of individual actors that matter to us, but the dynamic relationships among them and what these relationships mean for the governance of oil. In chapter 1 – “The Nature of a Political Resource” – we explore the origin of oil’s extraordinary utility and its potential for social conflict. We review the state of global oil reserves after more than a century of exploration and the shifting character of contemporary demand. Chapter 1 introduces six fundamental tensions that underpin the oil sector and that together make up the geopolitics of oil: these are then explored in chapters 2–7. In chapter 2 – “Capturing Oil” – we examine the structure, connections, and interactions between different parts of the production and consumption chain for oil. We move from a physical, metabolic process of refining crude to an understanding of the distribution of value along the chain. Chapter 3 – “Marketing Oil” – focuses on the politics of value creation, contrasting efforts to create new markets with contemporary attempts to reduce demand. In Chapter 4 – “Living With Oil” – we consider how working with oil and its products provides a livelihood for millions of people, and how the diversity and character of oil work influences the politics of labor in the sector. We examine too how the everyday experience of living with oil has profoundly shaped cultural practices and habits of mind, enabling deeply held cultural and political identities to take root within wider society. In chapter 5 – “Securing Oil” – we explore the political geography of oil’s winners and losers, and ask for whom oil is secure. Chapter 6 – “Developing Through Oil” – examines the social and environmental challenges associated with oil dependence. Chapter 7 – “Governing Oil” – shows how oil is in need of global governance, explains why, and proposes reforms to existing institutions. Chapter 8 – “Better and Beyond: The Future of Oil” – summarizes the “new reality” of oil as an apparently intractable challenge: efforts to sustain supply in the face of rising demand appear to only further exacerbate the economic, social, and environmental ills associated with capturing, producing, and consuming oil. We conclude that there is an imperative for better oil governance, and identify four priorities for improving oil’s economic, social, and environmental impacts and, in the longer term, moving beyond oil.