Until the credit crunch sent bankers to the naughty step of capitalism, the spot was occupied by oilmen. The consequence is that an exciting tale of human endeavour — how the abundant resources of the earth have been harnessed to power an era of unimagined prosperity — is often obscured by hostile forces and, it has to be said, spectacular blunders by oilmen themselves.
However, it is, if you think about it, remarkable that in the 150 years since it all began when one Colonel Drake first struck oil in Pennsylvania, a global market — designed by no one individual or authority — has grown up which keeps the energy flowing even through wars and natural disasters. It ensures that billions of people can travel widely; that we are rarely too cold or too hot; and we have light even when it is dark outside. Our ancestors would surely marvel at such technological progress.
Not that you could tell from most books on the subject, typically rather predictable and called something like Robber Barons, or Climate Crisis. The classic exception is The Prize, by a former Reagan staffer, Daniel Yergin. First published 20 years ago, The Prize is still in print today and the accompanying television series transformed the author into a sort of Kenneth Clark of oil. Yergin is apparently writing a sequel, but Tom Bower has effectively beaten him to it.
The Squeeze hardly mentions climate change — a voluminous controversy where it is philosophically impossible to come down truthfully on one side or the other. Instead, Bower describes the last two decades, taking us from when oil rose from $10 a barrel, to a record $147, before falling back again earlier this year. Nor does it really look at the future. There is hardly any mention, for instance, of the new resources which could be safely extracted from the Arctic. The land-grab taking place there is examined sensibly by Roger Howard in The Arctic Gold Rush. Unlike the Antarctic, the Arctic is not a land mass, but sea and ice floe, owned by nobody. If its resources are to be tapped sustainably — and peacefully — the current treaty which governs it, the 1982 UN Convention of the Law of the Sea (never ratified by the United States) will have to be updated, and there is no sign of that.
Bower made his name exposing rogues like Robert Maxwell, and his real skill is bringing rich, powerful types into the daylight. For instance, he manages to get close to one of the most successful, publicity-shy oil traders and to show that oil has more than its fair share of unscrupulous speculators, many of whom operate in the London market.
He is also good on one of the biggest scandals of the last decade: the Shell reserves crisis of 2005. Calculating reserves has always been akin to alchemy. The rule used to be that, to qualify, oil must have a reasonable certainty of being brought into production. The Americans tightened up the rules and this caught Shell on the hop. It had been booking reserves too generously and, as a result, had to come clean and reduce the number by a fifth. There was a major rumpus.
Bower reveals brilliantly the drama behind the scenes, as the Dutch half and the British half of Shell feuded with each other. Nearly everybody put manoeuvring to their own advantage ahead of moral responsibility. The situation was aggravated by the fact that the chairman, Phil Watts, was not exactly user-friendly. Bower suggests that Watts’ enemies exploited the scandal to undermine him and then to oust him.
Walter van de Vijver, Shell’s head of exploration and production, was among the first to acknowledge the gravity of the crisis and he hoped to be given Watts’ job as a reward. Instead, he too was asked to resign by Lord Oxburgh, a wiley non-executive director. Van de Vijver apparently slumped over his desk, in tears. His wife arrived and ‘uttered grossly unfounded allegations’, before shutting herself in his office with him. The directors then sent in an emissary to threaten the broken prince with dismissal, before he finally agreed to depart. Watts subsequently embarked on a legal battle which culminated in US regulators declaring him innocent.
The man who really emerges as primus inter pares from the narrative is Lord Browne of Madingley, chief executive of BP. Towards the end of his regime, I was his speechwriter. This was what one might euphemistically describe as an interesting experience. I found myself in the midst of a court in turmoil. Browne hoped to postpone his retirement while the chairman, Peter Sutherland, wanted him to go. It was common knowledge that Browne wanted to pull off a mega-merger with Shell. This was opposed by Sutherland. A merger of Shell and BP would create the world’s largest company and is often cited as the greatest deal of all time, but has been a pipe dream since the 1920s, when Winston Churchill was hired to lobby the Prime Minister, Stanley Baldwin, for it.
You would have thought that this intrigue would be prime Bower territory. Perhaps because Browne is one of the few who would not talk to him, his account is a bit one-sided. He claims, for instance, that Browne was prone to shouting. But I never heard him raise his voice. And Bower strangely downplays the report by Senator James Baker into the catastrophic explosion at BP’s Texas City refinery as a whitewash. But the report came at a critical moment. Browne said sorry for Texas City and promised to do whatever it took to make amends. But it was not enough. Tony Hayward was named as his successor and with that the end was in sight.
Bower also has very little new to say about how a newspaper obtained various allegations concerning Browne’s personal life from a gay ex-lover, which resulted in a doomed fight through the courts. When the injunction was finally lifted and the fact that he had lied in court emerged, Browne at last realised the game was up and he quit immediately, foregoing £15m in potential pay and shares.
Like an impressionist painter, Bower has produced a work which will be popular and which gets the broad brush strokes right. But he does not always have Yergin’s touch or his strategic grasp. One has the impression that he doesn’t really like businessmen. Whatever Browne’s flaws, he deserves some credit for his sense of vision, his political dexterity and for his transformation of a mid- ranker — which nearly went bust in 1992 — into Britain’s greatest industrial enterprise.
It was quite something for a cultured 5’ 4” bachelor, brought up on a refinery in Iran, whose parents both worked at BP, who was put through King’s School, Ely, and Cambridge University by the company, and who lived with his mother until she died, to dominate a redneck business like the oil industry. It is not entirely surprising that Browne did not want to leave an organisation he had known, man and boy. We find writ large in his story something which Bower occasionally misses: even oilmen are human, after all.
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