Seven Elements That Have Changed the World (44 page)

65.
In
The Prize
, Yergin writes: ‘As the nineteenth century gave way to the twentieth, they looked to government to restore competition, control the abuses, and tame the economic and political power of the trusts, those vast and fearsome dragons that roam so freely across the country. And the fiercest and most feared of all the dragons was Standard Oil’, (pp. 80–81).

66.
The Seven Sisters were: Jersey (Exxon), Socony-Vacuum (Mobil), Standard of California (Chevron) and Texaco (the four Aramco partners) and then also Gulf, Royal Dutch/Shell and British Petroleum.

67.
Although OPEC nations still produce about 40 per cent of the world’s oil (and about 60 per cent of that traded internationally), as with any large and diverse group of nations, divisions and rivalry remain, and agreeing to production quotas works much better in theory than in practice. For example, Saudi Arabia, a member of OPEC, has a strong alliance with the US. Moreover, as global demand for oil surges, many oil-producing nations are struggling to keep up, leaving little spare capacity with which to control prices. Saudi Arabia has recently been the only nation with spare physical capacity to increase the amount of oil produced (potentially to lower prices). Coordinated cutbacks in production (potentially to increase prices) require significant cooperation.

68.
Browne,
Beyond Business
, pp. 24––42.

69.
Alyeska Pipeline Service Company,
http://www.alyeska-pipe.com

70.
BP had been kicked out of Kuwait when the government took complete control of the Kuwait Oil Company, part owned by BP, in 1975.

71.
Browne,
Beyond Business
, pp. 58–75.

72.
Carlos Andrés Pérez first came to power in 1974. Two years later he formed PDVSA during the wave of resource nationalisation of the 1970s. Oil prices were high and
many developing countries were taking the opportunity to use their oil wealth to accelerate development. But in the 1980s, when oil prices fell, so did state revenues. Pérez lost the 1979 presidential elections and spent the 1980s travelling the world, learning about the resource curse and alternative modes of economic growth. Returning as President in 1993, he sought to implement his new understanding of oil economics.

73.
Browne,
Beyond Business
, p. 125.

74.
David Ricardo.
On the Principles of Political Economy and Taxation
(London: John Murray, 1821. Originally published in 1817).

75.
Yergin,
The Prize
, p. 120.

76.
Algeria is a case a point. By leaving some business for the international oil companies to do, however small but with a promise that it might change in the future, they kept expertise in the country.

77.
‘The devil’s excrement’,
The Economist
, 22 May 2003.
www.economist.com

78.
Yergin,
The Prize
, p. xv.

79.
Thomas Friedman writes that, according to the first law of petropolitics, ‘the higher the average global crude oil price rises, the more free speech, free press, free and fair elections, an independent judiciary, the rule of law, and independent political parties are eroded’. With high oil prices, there is no need for citizens to pay the government taxes, but as a consequence the government becomes less accountable to its citizens. Oil wealth is then used for populist spending, relieving the pressure for democratic change, but is also spent on more forceful oppression, such as extra policing and intelligence services. ‘The first law of petropolitics’,
Foreign Policy
, 15 April 2006.

80.
Browne,
Beyond Business
, pp. 110–19.

81.
Diamonds are formed deep in the earth’s mantle where high pressures and temperatures of over 1,000 degrees Celsius force together small grains of pure carbon into a regular, almost unbreakable, lattice structure.

82.
A Rough Trade
(London: Global Witness, 1998).

83.
Ibid., p. 2.

84.
Following the publication of the Global Witness report, De Beers moved to guarantee that 100% of its diamonds are conflict free, and since its inception in 2003 has so certified them through the Kimberley Process.

85.
A Crude Awakening
(London: Global Witness, 1999).

86.
In 2003, shortly after the EITI began, a similar ‘transparency’ initiative was created specifically for the selling of diamonds. The Kimberley Process requires compliant nations to sell diamonds in tamper-proof containers with a document which certifies they were not mined to fund war. In doing so it hopes to help restrict the profits from mineral wealth being used to fund conflict in the Congo, Sierra Leone and elsewhere. However, in 2011, Global Witness withdrew from the Kimberley
Process saying that ‘the scheme has failed’. In particular they cited crimes against humanity committed in attempts to profit from diamond mining in Zimbabwe. The scheme only covers diamonds used by rebel movements or their allies, making it toothless against ‘legitimate’ regimes, such as Robert Mugabe’s ZANU-PF.

87.
In 2004, Angola began publishing data on its oil production and exports. Although the situation continues to improve, oil revenues are still not fully disclosed. A report published late in 2011 by Global Witness found a gap of $8.5 billion between the oil revenues reported by the Angolan Finance and Oil Ministries and what Sonangol (Angola’s national oil company) recorded in its accounts.

88.
As part of the implementation of the Dodd-Frank Act in the United States, the Securities and Exchange Commission ruled in August 2012 that all US-listed companies in the extractive industries must disclose details of payments made to foreign governments. At the time of writing, the European Union is on the path to a similar ruling.

89.
John Browne, ‘Europe must enforce oil sector transparency’,
Financial Times
, 25 April 2012.
www.ft.com

90.
Cannonball
was the first platform to be designed and constructed in Trinidad and Tobago, costing $250 million,
www.bp.com

91.
The energy equivalence of one barrel of oil in the form of natural gas would fill a volume of 160 cubic metres, almost the same volume as two Routemaster London double-decker buses.

92.
At first the technology was very dangerous. The first commercial LNG plant, built in Cleveland Ohio, suffered an explosion in 1944 that killed 128 people. LNG did not take off until the 1960s when technology for shipping LNG was developed. Before then, LNG could only be used as an expensive means of gas storage.

93.
In the middle of the nineteenth century, James Prescott Joule and William Thomson (later Lord Kelvin) studied the equivalence of heat and mechanical work. The cooling of gas in LNG trains works because of this equivalence. When gas is slowly forced from a container of small volume and high pressure into a container of larger volume and lower pressure, work is done by the gas on both sides (‘work’ is done when energy is used). But less work is done by the gas in the large-volume, low-pressure container than in the small-volume, high-pressure container. This difference in work (as long as the energy of the entire system remains constant) results in a temperature change in the gas.

94.
Trinidad and Tobago experienced sixteen consecutive years of real GDP growth previous to 2008 as a result of economic reforms adopted in the early 1990s.

95.
The price of natural gas may never converge to a single international price as, unlike oil, the costs of shipping natural gas in a liquefied state are likely to remain a large proportion of the overall price.

96.
In the US, about a third of natural gas in consumed to produce electricity. Slightly less is used in industry and the rest for heating and cooking in the homes and in the commercial sector.

97.
In 2011, Trinidad only exported 20 per cent of its LNG to the US, down from 70 per cent in 2007. It now increasingly relies on export markets in Europe, South America and Asia.

98.
Gasland
(2010), Josh Fox, New Video Group; and State of Colorado Oil and Gas Conservation Commission, Gasland Correction Document, 2010.

99.
Following the 1973 oil embargo Nixon announced Project Independence declaring: ‘Let us set as our national goal, in the spirit of Apollo, with the determination of the Manhattan Project, that by the end of this decade we will have developed the potential to meet our own energy needs without depending on any foreign energy source.’ Yergin,
The Prize
, p. 599.

100.
‘America’s New Energy Reality’,
New York Times
, 9 June 2012.
www.nytimes.com

101.
Thomas Malthus,
An Essay on the Principle of population
(Oxford: Oxford University Press, 2008), p. 62.

102.
The Limits of Growth
(1972), the Club of Rome, Earth Island Limited, London.

103.
The Green Revolution was a series of advances in agricultural technology, such as new high-yield varieties of wheat, fertilisers, pesticides and irrigation infrastructure, that swept through the developing world from the 1940s to the 1970s.

104.
The fourth IPCC assessment report, released in 2007, connected two stark and simple facts. First, the concentration of carbon dioxide, the predominant greenhouse gas, in the atmosphere is increasing because of human activity. Second, the temperature of the earth’s surface is increasing. It stated that these two observations, were ‘very likely’ (meaning greater than 90 per cent probability) to be linked: increased greenhouse gas emissions are ‘very likely’ to be increasing the average global temperature.

105.
Actual risk, as opposed to perceptions of risks, is simply the likelihood of an event happening multiplied by the damaging nature of the consequences of the event. Even if the chance of a catastrophic climatic event is very small, the consequences are so harmful that risk remains high.

106.
The IPCC was set up in 1988 to examine the current state of scientific knowledge on climate change and the potential future environmental and socio-economic impacts.

107.
‘IPCC Third Assessment Report, Working Group II: Impacts, Adaptation and Vulnerability’, Technical summary, Group 1, p. 79. Climate change results from an imbalance in the Earth’s emissions and absorption of carbon. While we understand the natural factors that alter this balance, the anthropogenic factors are not well understood. Greenhouse gases (GHGs) and aerosols have the greatest anthropogenic impact on the energy balance and have opposite effects:
GHGs lead to warming and aerosols (except black carbon) lead to cooling. The cooling effects of aerosols are much more uncertain than the warming effects of GHGs. Uncertainty about aerosols is so large that models do not exclude that their cooling compensates almost entirely the greenhouse warming. Even more uncertainty emerges when trying to model the future climate because of feedback effects. These result from changes to water vapour concentration, cloud and snow cover that occur as the Earth warms. Feedback effects are expected to multiply the effect of global warming, yet by how much is very uncertain.

108.
According to Popper, no single experiment can ever wholly prove a scientific finding; rather additional experiments that are in agreement with the finding serve to
corroborate
it. Conversely, if a new, and reputable, observation is in disagreement then the scientific finding is said to be falsified.
The Logic of Scientific Discovery
(London: Routledge, 2002. Originally published in German in 1934).

109.
Browne,
Beyond Business
, pp. 76–89.

110.
Addressing Climate Change
, 1997.
www.bp.com

111.
‘The Nobel Peace Prize 2007’. Nobelprize.org,
An Inconvenient Truth
, 2006.

112.
Leaders agreed that they would work towards a new global treaty agreement in 2015, to be enforced in 2020. This would replace the Kyoto Protocol. The new agreement will remove the division between developed and developing countries, who are currently under no obligation to cut emissions. A commitment was also made to the creation of a new climate fund to help developing nations develop clean energy sources and adapt to any damaging consequences of climate change.

113.
In
The Politics of Climate Change
, Giddens writes of the Giddens Paradox: ‘Since the dangers posed by global warming aren’t tangible, immediate or visible in the course of day-to-day life, however awesome they appear, many will sit on their hands and do nothing of a concrete nature about them. Yet waiting until they become visible and acute before being stirred to serious action will, by definition, be too late’.
The Politics of Climate Change
(Cambridge: Polity Press, 2011), p. 2.

114.
The percentage of Americans and Western Europeans who view global warming as a threat fell by 10 per cent during the late 2000s financial crisis. Gallup Poll, 20 April 2011.

115.
G. Hardin, ‘The Tragedy of the Commons’,
Science
162 (3859): 1243–8 (1968).

116.
China, and perhaps the US, are the only nations who could take unilateral action against climate change and see a noticeable and beneficial result as a change.

117.
Quoted in Shogren, ‘Kyoto Protocol’,
AAPG Bulletin
, October 2004, V. 88, No. 9, pp. 1221–2.

118.
This is known as the Jevons Paradox, first described by English economist William Stanley Jevons in
The Coal Question
(1865). Jevons was yet another reincarnation of Malthus, concerned that coal resources would soon run out because of
over-consumption. He warned against the idea that more economical use of coal would prevent this ‘Malthusian Catastrophe’; using coal more efficiently would conversely increase our consumption of it.