The Prize: The Epic Quest for Oil, Money, and Power

In this section of the book, Yergin addresses further conflicts associated with oil production and brings his analysis to bear on more recent developments. Thus, he relates that in the summer of 1990, the world enjoyed a sense of optimism following the end of the Cold War. The East-West confrontation had ended, communist regimes in Eastern Europe had collapsed, and democracy was taking hold in many places. Oil, once a focal point of global politics, seemed to have diminished in importance. However, the illusion of stability was shattered in August 1990 when Iraq invaded Kuwait, leading to a geopolitical oil crisis.

The narrative underscores The Economic and Political Significance of Oil through Yergin’s description of 1989 as “the annus mirabilis—the miracle year—in which the international order had been remade” (769). This phrase emphasizes the extraordinary nature of the geopolitical shifts that occurred, moving the focus from military to economic power, with oil playing a central role. The collapse of the Eastern Bloc and the end of the Cold War influenced the global oil market, with oil reserves increasing from 615 billion barrels in 1985 to 917 billion barrels in 1990, mainly concentrated in the Persian Gulf and Venezuela. This concentration underscored the geopolitical importance of these regions.

Similarly, technological and industrial advancements significantly impacted geopolitics during this period. Innovations in oil extraction and production improved efficiency but also highlighted vulnerabilities, such as the shrinking “security margin” between supply and demand. Yergin's summation illustrates the interdependence between oil producers and consumers, promoting global stability, for he states, “Oil needed markets, and markets needed oil; that calculation of mutual self-interest would be the basis of a stable, constructive, non-confrontational relationship that would extend into the twenty-first century” (769). However, the decline in U.S. oil production increased dependency on Persian Gulf oil, emphasizing the region’s strategic importance.

The Environmental and Social Implications of Oil Dependency continued to be a significant concern. While low oil prices benefited consumers, they also raised environmental issues related to overconsumption and pollution. The balance between economic benefits and environmental impacts became critical as long-term environmental challenges posed by continued oil dependency required careful management. These challenges highlighted the need for sustainable practices and policies to mitigate the adverse effects of oil reliance.

The geopolitical vulnerabilities of the global oil market were revealed by the Iraq’s invasion of Kuwait in August 1990. Saddam Hussein’s aggressive actions were designed to dominate the Persian Gulf and control a significant portion of the world’s oil reserves. Yergin thus provides context to explain the strong international response to this invasion as the United States led a coalition to oppose Iraq. The disruption removed four million barrels of oil from the market, causing prices to skyrocket and financial markets to plummet, and this dangerous development revealed the precarious nature of global oil dependencies. As Yergin’s analysis shifts from a retrospective to a speculative approach, he makes it clear that the potential for technological advancements, environmental concerns, and geopolitical shifts continue to loom large. While the importance of oil as a strategic resource and economic driver remains clear, the potential for surprises and crises is a significant factor in shaping the global landscape. The history of oil has been marked by triumphs and tragedies, and its future will likely continue to reflect this complex legacy. Thus, the epilogue of Yergin’s work underscores the ongoing significance of oil in shaping global relations and economic policies. The interplay between economic benefits, environmental concerns, and geopolitical vulnerabilities highlights the need for strategic management of oil resources to maintain global stability. As the world navigates the complexities of the oil industry, the lessons of the past will remain crucial in addressing future challenges and opportunities.