The Curse of Oil
Crude World is a piece of firstclass reporting as well as an article of faith. Subtitled c, a more apt summation would be, “Oil is the devil.” In chapters named “Scarcity,” “Plunder,” “Rot,” “Greed” and the like, Peter Maass, a contributing writer for The New York Times Magazine, explicates the resource “curse,“ which posits that countries dependent on resource exports “are susceptible to lower growth, higher corruption, less freedom, and more warfare.” It’s counterintuitive, but Maass visits Nigeria, Ecuador, Kuwait, venezuela, Saudi Arabia, Russia, Iraq and Equatorial Guinea, among others, and shows that while the destruction wrought by oil differs in each place, the effect is the same: oil ruins.
The reasons are endemic to oil production.
Extracting and processing oil requires special facilities. Once they’re built, they employ few workers, and those workers are usually imported engineers rather than local labor. While the discovery of oil might pump money into an economy (causing inflation, among other effects), it won’t mean more or better jobs for citizens. Faced with the seemingly easy flow of petrodollars, governments often neglect other industries, such as agriculture or manufacturing, allowing unemployment to skyrocket. When the oil price dives or wells peak and production declines, the dependent economy goes into free fall, ending up worse off than it was before oil’s discovery.
Sometimes a country’s leaders just steal oil riches outright. One of the more sickening examples of kleptocracy is Equatorial Guinea, where Maass witnesses delegations from Exxon Mobil Corp., Halliburton Co., Chevron Corp. and Marathon Oil Corp. marching in a parade celebrating the country’s president, Teodoro Obiang. Obiang arrives in a Lexus amid what Maass describes as “chickensin-the-road squalor,” and observes Obiang’s exaltation a few hundred yards from a hospital equipped with nothing but a few bandages and aspirin. Maass notes, with the sad, ironic grace that typifies Crude World, “A place for dying rather than healing, the hospital had just received a dash of much-needed attention from the government: it had gotten a fresh coat of paint because it was visible from the reviewing grandstand and needed to look nice for the dignitaries.”
Maass points out that extracting oil in a foreign country practically begs for bribery. First, an oil company must be granted extraction rights, which requires currying favor with decision-makers. Then the oil company tries to pay as small a proportion of its revenue as possible to the host country, which usually means that leaders get personal bribes in return for favorable terms. The amount of the bribe, while extravagant for an individual, is nothing compared with what the oil company saves in royalties.
Everybody wins—except the populace.
In his fearless globetrotting, Maass meets as often with rebel leaders and persecuted protesters as with CEOs and heads of state. In every case, he seeks to find out how oil wealth can be used for the good of a whole country. Sadly, his answer seems to be that it can’t. Even in venezuela, where President Hugo Chavez ensures that oil wealth is redistributed not only to the people of venezuela, but also to the needy throughout South America and in the United States, Maass concludes that the volatility of oil’s price and availability means that Chavez’s populist vision is a mirage. Even when an oil-rich country tries to pass the bounty to its people, the result is dependency and economic frailty.
What’s Maass’s solution? Leave oil behind. We know how, he points out in his conclusion. We have the technology. It would be lovely if we weaned ourselves off oil instead of running out and crashing, as every addict eventually does. But this suggestion, coming after 200 powerfully researched and beautifully written pages proving the impossible seductiveness of oil, has never sounded more unlikely.