How did you choose the approach of tracing the oil-supply chain in person?
I was flying over the Alaskan pipeline and thought, “What is going on here, and why do I have no idea?” I wanted to see how it got to my corner station. There’s this small crew of people who are interested in sitting down and reading a book about energy policy. I wanted to reach out to a larger group by making it real for people, by telling individual stories.
How did you hook up with New America?
What had started as a personal, quirky trip through the oil industry had turned into something where I saw obvious policy issues that weren’t being addressed. I came up with a proposal for them about how high prices in California for gas where an opportunity policy makers were missing, that they could change behavior and create jobs at the same time.
How did you end of feeling about Huge Chavez after going to Venezuela?
He’s very complex. He understands how to play the oil game at a very high level. The U.S. is only just beginning to recognize that. Is he doing what’s needed for Venezuela? I don’t think so. I did not come back with a warm glowing feeling about Chavez. He even scares some of his followers. But the buffoon act is incredibly useful. He plays really well to the cheap seats, and most of the world is the cheap seats.
What do you think of some of the Hubbert’s Peak, “end of oil” type nightmare scenarios?
There are so many players in this giant Rube Goldberg machine that it’s impossible to know how much oil there is. It’s a pretty archaic industry.
We’d assume Saudi Aramco knows what’s in their reservoirs, but some of the peak oil people might tell you either they’re not telling us the truth or they don’t know. If I was Saudi Arabia and my oil was running out, I’d want the price to be just as high as I possibly could. I would have it higher than it is now. But we’re seeing a changing of the balance of power between oil consumers and producers. National oil companies in particular are benefiting.
There’s a line in the book describing an strange confrontation you get sucked into in Nigeria: “Just because this is inscrutable doesn’t mean it won’t escalate.” That also seems to describe the world’s oil situation.
You don’t have to spend much time in the Niger Delta to feel that the nightmare scenario is already upon us. The cycle of money and political violence and oil and arms that is happening in the Delta is really scary. It’s also happening in Iraq, the militias and insurgents are fueled by it. We have the same thing happening in Chechnya, we have an oil-fueled situation in Colombia.
The higher the price gets, the more it is a prize for groups who are in some new middle space between politics and commerce. Oil is so fungible, you can attach any agenda you want to it. The way people talk about violence in Nigeria, it’s an everyday occurrence. Sooner or later, this is going to become more a part of our lives and we’re going to have to respond to it.