Simon Bromley, American Hegemony and World Oil (Pennsylvania State, 1991).
Daniel Yergin, The Prize (Simon and Schuster, 1990).
These two books present a historical account of the development of the international oil industry and the struggle for control of oil over the past century. Both authors take the position that oil is a strategic commodity which has played a critical role in the strategies of nations and multinational corporations, but their perspectives and conclusions are substantially different.
Bromley offers a macro view of the world of oil and the struggle for dominance. He provides an analysis rich in theoretical underpinnings, with references to the literature on international relations. His contribution to this body of literature is especially valuable given the dearth of studies combining geopolitical and economic issues.
Bromley’s key arguments expose some traditional myths about the oil market and the role of OPEC. He demonstrates that the popular media and the “oil experts” have both overestimated OPEC power and understated US hegemony over oil-producing states. He offers ample evidence that the US has used its influence over key OPEC producers through time to further US strategic goals.
Bromley emphasizes that mainstream accounts of international politics virtually ignored the dimensions of structural power in the global system, exemplified by the capitalist world economy along with the associated orders of military power and informational flows. He attributes the mistaken approach of traditional international affairs students to their misunderstanding of the notion of power.
Comparative power ranking among nations is too often focused on the military and economic resources of nations. Bromley argues that control over a crucial energy resource does not in itself result in the ability to project economic and strategic power across the world economy. He makes a strong case that the “realist” school of international affairs and orthodox economists have been unable to capture the qualitative reorientation of US hegemony, as opposed to its quantitative decline. “Although the material preponderance of the US may have eroded relative to other powers, its focal positions within the world economy and global military order may have more than compensated,” he argues.
Bromley emphasizes that the US was able to extend its influence in world oil because of: leverage deriving from its strategic and economic role in the Middle East; manipulation of the privileged, structural position of the dollar in the world market; the relative freedom of the US to maneuver due to the plentiful energy supplies of North America; and the Soviet failure to use its oil resources to global political advantage.
While Bromley fully illuminates the structure of world power and the role oil has played in world power relations, the major weakness of the book is its tendency to apologize for the policies of the Soviet Union. Bromley writes that “Soviet extension of its influence through the oil industry resulted not in the exploitation of others’ resources and the exercise of tutelage over allies, but in the strategically motivated subsidization of its clients.”
While Bromley is appropriately critical of Western exploitation of Middle Eastern oil resources, he finds mainly noble virtues in the policies of the Soviet Union. In fact, Soviet central planners exploited the resource-rich Asian regions to supply both their Eastern European allies and the Soviet European regions. The supply of cheap oil to the nations in the Eastern Bloc was of considerable strategic importance to the Soviets and their ability to influence these nations. Little of the value of extracted raw materials was reinvested in areas such as Kazakhstan. The oil workers lived and worked in deplorable conditions, which no doubt contributed to poor productivity and frequent disruption of production. Today, oil workers and their families live in abandoned oil storage tanks with no heat or running water — conditions unimaginable in other oil producing regions of the world. The Soviet oil industry also left a legacy of environmental devastation in the oil producing areas.
Bromley provides convincing arguments on the degree of US domination and influence in the world of oil, but the complexity of the analysis may confine the appeal of the book to those with a fairly sophisticated theoretical background. While the book may not sell as well as The Prize, this should not in any way reflect on the value of this work.
In contrast to Bromley, Yergin provides a micro-level view of the personalities who have played major roles in shaping the industry. No other book supplies such fascinating detailed accounts of the events and players in the industry. This book may remain a reference for students of the history of oil because of its comprehensive nature. The author provides an exhaustive history of the oil business and the evolution of the multinational oil corporations, with considerable attention to conflicts over the control of oil.
In narrating these numerous conflicts, Yergin seems to present facts without passing judgment on the parties. However, this apparently neutral position does not hold under scrutiny. For example, Yergin defines the conflict between the oil companies and the producer states in terms of a struggle over Ricardian rent — defined as the difference between the market price and costs of operation plus a “normal profit.” He calculates that oil selling for $2.50 a barrel, minus 25 cents for production costs, minus 50 cents for transportation, allowing 10 cents for profit, leaves $1.65 that constitutes the rent per barrel. The consumer government may capture an additional rent through taxation. According to Yergin, conflicts arise because of disagreements between the host country, the producing company, and the consuming country as to who would get how much of these rents. He implies all have a legitimate claims. But for decades the host countries received only 15 to 20 cents per barrel as their portion of the rents, while the remaining $1.50 per barrel went into the coffers of the companies. It is extremely difficult to accept that the oil companies had a legitimate claim to 90 percent of the rents generated from the oil.
The book tends to exaggerate the power of OPEC as a cartel. When discussing the influence of the major oil exporting nations, the author leans toward the dramatic, as in the section entitled “The Battle for World Mastery.” This sense of drama does create a mass market appeal, but serious students of the oil industry may prefer a deeper analysis rather than a simple chronology of events and dramatic depiction of personalities involved.
Although the two books differ in many ways, they are complementary. Yergin’s book offers the rich details, but Bromley’s analysis of the forces that shape the market provides the context.
