Course Title: The Political Economy of Oil and Natural Resources Instructor: Yahya Sadowski.
Number of credits: 2.
Teaching Format: 2-3 introductory lectures followed by 9 seminar discussions.
Semester: Winter 2015.
Class Times: Mondays, 9:00AM to 10:40 AM at Costa Coffee or equivalent.
Office Hours: 11:00-12:00 AM Mondays…or by appointment.
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Course Status: Elective.
Course Summary
A common—but controversial—idea in global policy debates is that the production of natural resources is associated with a whole host of political problems. These resources are supposed to be sources of domestic and international exploitation, civil and inter-state violence, corruption and crime, pollution and authoritarianism. There are now international public policy processes that focus upon these issues as they relate to water, wheat, bananas, coffee, timber, opium, copper, uranium, rare earths, etc.
In this course we will examine each of these debates, focusing the elaborate literature that has developed from analysis of the largest commodities—by value and volume—in world trade: the hydrocarbons crude oil and natural gas.
Learning Objectives
The first third of the course will supply students with an overview of the hydrocarbons industry, including some of the technological and economic particulars that set it apart from the production of other commodities. In the second third of the class, attention will shift to the role that hydrocarbons play in the political and economic development of individual countries. In the final third of the class, the subject will be geopolitics, and how hydrocarbons produce conflict or cooperation at the international level.
This course will not frame the controversies surrounding oil and gas in the conventional manner as matters of energy policy. Although reference will be made to the issues of energy security and global energy demand—and detailed attention will be given to energy events such as “fracking” in America and climate change worldwide—we will be looking at oil and gas not as two among a dozen different fuels used in generating electric and combustion power.
Plagiarism
Plagiarism (failing to credit a colleague for their work) will result in serious consequences, e.g. the grade of zero on an assignment, loss of credit with a notation on the transcript, and/or suspension or expulsion from the university. See www.plagiarism.org.
Cell Phones
Using cell phones during class disrupts the work of other students. Anyone using a cellphone during a class session will be counted as “absent without an excuse” for that day and will be asked to leave.
Grading
CEU uses a system of letter grades and grade points for evaluation:
A 3.68 – 4.00 A- 3.34 – 3.67 B+ 3.01 – 3.33 B 2.68 – 3.00 B- 2.34 – 2.67
C+ 2.33 (minimum pass).
Assessments
Individual presentations 35%
Class discussion 30%
Weekly reading summaries 35%
100%
Absences
Unexcused absences will be counted against the “class discussion” grade.
Individual Presentations
Each week one or more students will be assigned to make a class presentation. In these sessions, the student is expected to summarize two or three of the articles on the
“Recommended Readings” section of the reading list. AND they should show how these articles relate to the topic of discussion an the required readings for that week.
Presentations should be targeted to last around 20 minutes. Those presentations that successfully spur a class discussion will receive extra credit.
Readings
Each week we will be reading 50-150 pages of material, usually from online articles but also sections of Steven Coll’s Private Empire: ExxonMobil and American Power (Penguin, 2013). The latter text will be on reserve at the CEU library, but copies are also available for sale as an e-book for less the $10 at Amazon.com.
Reading Summaries
At the beginning of class each week, students are required to submit a summary of key lessons from their readings for the previous week. This summary
• Must begin with full identification: student’s name, instructor’s name, date of class
• Students should comment independently upon each of the readings for the preceding week
• Comments should take the form of either a series of bullet points which identify either a) original insights laid out in the readings, or b) student criticisms of the author’s main points.
Writing Requirements
Writing policy analysis demands a different writing style from that used among academics. Policy documents need to be readable for politicians, businessmen, and members of the educated public. Policy writing must therefore be lucid, logical and to the point.
Elegant examples of this type of writing can be found in British business journalism, particularly in The Economist (weekly) and The Financial Times (daily). The best single text for studying this writing style is The Economist Style Guide, available bookstores or online at http://www.economist.com/styleguide/introduction
The following webpages provide examples and instructions about how to write policy briefs in particular:
-‐ http://www.cpa.ie/publications/HowTo_DoPolicyAnalysis_2006.pdf -‐ http://www.csulb.edu/~msaintg/ppa670/670steps.htm
-‐ http://www.rff.org/RFF/Documents/RFF-IB-09-11.pdf
-‐ http://www.rhsupplies.org/fileadmin/user_upload/toolkit/B_Advocacy_for_RHS/Gu idelines_for_Writing_a_Policy_Bri ef.pdf
-‐ http://www.un.org/en/development/desa/policy/publications/policy_briefs/policybri ef24.pdf
Overviews of Non-Energy Natural Resources
• Bill Carter, Boom, Bust, Boom: A Story about Copper, the Metal that Runs the World (2012)
• Peter Eichstaedt, Consuming the Congo: War and Conflict in the World’s Deadliest Place (2011)
• Matthew Hart, Diamond: The History of a Cold-Blooded Love Affair (2002)
• Alfred W. McCoy, The Politics of Heroin: CIA Complicity in the Global Drug Trade (2003)
• Sidney Mintz, Sweetness and Power: The Place of Sugar in Modern History (1986)
• Dan Morgan, Merchants of Grain: The Power and Profits of the Five Merchant Companies at the Center of the World’s Grain Trade (2000)
• Jeffrey M. Paige, Coffee and Power: Revolution and the Rise of Democracy in Central America (1998)
• Michael Ross, Timber Booms and Institutional Breakdown in Southeast Asia (2012)
• Vandana Shiva, Water Wars: Privatization, Pollution and Profit (2002)
• Steven Solomon, Water: The Epic Struggle for Wealth, Power, and Civilization (2011)
• Steve Striffler and Mark Moberg, Banana Wars: Power, Production and History in the Americas (2003)
• Tom Zoellner, Uranium: War, Energy and the Rock that Shaped the World (2010)
Reading List
Learning to read quickly and in volume is one of the key skills in the information age. If you need help, consult MIT’s “Guide to Reading Social Science,” available online at http://ocw.mit.edu/courses/sloan-school-of-management/15-031j-energy-decisions- markets-and-policies-spring-2012/Syllabus/MIT15_031JS12_read_guide.pdf Revisions and Substitutions
Currently this course is very “text focused,” as most academic classes are. However, I am very happy to experiment with other forms if students are interested. For example, there are a large number of films covering aspects of the oil industry, including
everything from the documentary version of Daniel Yergin’s The Quest to classics like Giant and Wages of Fear. There are also a number of elaborate simulations or
“games,” some designed to train oil company managers, which give real insights into how the industry operates.
If students would like to add films or movies to the syllabus, I am very amenable. And, of course, if students would like to propose alternative readings to those currently assigned, I am open to that.
Part One: The Oil Business 1. Introduction
Students and the instructor will introduce each other, a survey of the issues to be discussed, an assessment of their importance, followed by an outline of the class’s objectives and mechanics.
Core Reading
There are no assigned readings for the first week. Familiarize yourself with the syllabus and then start doing the readings for week two. If you are at loose ends, try checking out the following resources.
• American Petroleum Institute, Understanding Crude Oil and Product Markets (2014)
• Carbon Tracker Initiative, Oil and Gas Majors: Fact Sheet (August 2014)
• BP Statistical Review of World Energy,
http://www.bp.com/productlanding.do?categoryId=6929&contentId=7044622
• EIA Chronology of Major Oil Events:
http://www.eia.doe.gov/emeu/cabs/AOMC/Overview.html
• EIA “Where Does My Gasoline Come From?”
http://www.eia.doe.gov/bookshelf/brochures/gasoline/index.html
• Financial Times: Articles about Climate Change http://www.ft.com/climatechangeseries
• International Energy Association, Key World Energy Statistics
• Peak oil bibliography
http://www.dynamiclist.com/?worldview/peakoil Recommended Readings: Energy Projections
These forecasts of energy trends are available online and are updated regularly (usually annually).
• British Petroleum, BP Energy Outlook 2035 (January 2015)
• ExxonMobil, Outlook for Energy to 2030
• Shell Oil Company, Shell Energy Scenarios to 2030
• U.S. Department of Energy/International Energy Agency, International Energy Outlook 2011
Recommended Readings: Journals about the Politics of Oil and the Environment Annual Review of Environment and
Resources Antipode
Capitalism Nature Socialism Climate and Energy Policy Ecological Economics Ecology and Society Ecology Law Quarterly Economics and Policy
Energy: The International Journal Energy and Environment
Energy and Environmental Policy Energy and Fuels
Energy Economics
Energy for Sustainable Development Energy Journal
Energy Policy Energy Sources
Energy Strategy Reviews
Energy, Sustainability, and Society Energy Systems
Environment and Behavior Environment and History Environment and Planning Environmental Ethics
Environmental History Review Environmental Politics
Environmental Science and Policy Environmental Values
Ethics in Science and Environmental Politics
Frontiers in Energy
Global Environmental Politics Geoforum
International Energy Association Series:
“Energy Policies of (country X)”
International Journal of Ecology and Development
International Journal of Energy Journal of Energy and Development Journal of Energy, Finance, and Development
Journal of Environment and Development
Journal of Environmental Economics and Management
Journal of Environmental Law
Journal of Environmental Management Journal of Political Ecology
Journal of Renewable and Sustainable Energy
Middle East Economic Survey Mineral Economics
Natural Resources Journal Organization and Environment Oil and Gas Journal
Oil and Gas Financial Journal Oil Review Africa
Oil Review Middle East OPEC Energy Review Oxford Energy Forum
Petroleum Intelligence Weekly Petroleum Review
Platts (various) Policy
Population and Environment Renewable Energy World
Resource and Energy Economics Resources Policy
Review of Environmental Economics and Policy
Rigzone Upstream
2. Energy, Resources, and Collective Action Problems
The lecture this week will introduce some of the special problems and paradoxes that surround the global energy system. For this week, students will start their reading of Steve Coll’s book about Exxon.
If you can find time early in the course to read Coll’s book in one setting, you should do it. It is actually a pretty interesting read: written by a talented journalist rather than by an academic. Although you might wind up reading a few chapters in the Coll book that are not assigned, there are also real advantages. You get to read the chapters in the sequence that the author’s intended, so you won’t be puzzled when events in other chapters are mentioned. You get it over with.
Core Reading
• Steve Coll, Private Empire: Exxon-Mobil and American Power, pp. 1-66, 177-193, and 576-600. (A total of 106 pages.)
Recommended Readings about the Oil/Energy Industry
• Jeffrey Baaderet al., The Global Politics of Energy (2008)
• Edwin Black, Internal Combustion: How Corporations and Governments Addicted the World to Oil (2008)
• Tom Bower, Oil: Money, Politics and Power in the 21st Century (2010)
• Brian C. Blick, Crude Reality: Petroleum in World History (2012)
• Gavin Bridge and Philippe le Billon, Oil (2012)
• Julian Darley, High Noon for Natural Gas (2004)
• Morgan Downey, Oil 101 (2009)
• Jeff Goodell, Big Coal: The Dirty Secret Behind America’s Energy Future (2006)
• Lisa Margonelli, Oil on the Brain: Petroleum’s Long Strange Trip to Your Tank (2008)
• Leonardo Maugeri, The Age of Oil: The Mythology, History, and Future of the World’s Most Controversial Resource (2006)
• Leonardo Maugeri, Beyond the Age of Oil: The Myths, Realities, and Future of Fossil Fuels and Their Alternatives (2012)
• Francisco Parra, Oil Politics: A Modern History of Petroleum (2009)
• Vaclav Smil, Energy at the crossroads: global perspectives and uncertainties (2005)
• Daniel Yergin, The Prize: The Epic Quest for Oil, Money, and Power (2008)
• Daniel Yergin, The Quest: Energy, Security and the Remaking of the Modern World (2012).
Part Two: Resources and Development
3. The Dutch Disease and Natural Resource Transparency
In part two of this class, we begin to look at the many ways in which natural resources can afflict the economic and political systems of a country: the so-called “resource curse.” The focus will be upon late-developing countries—including the BRICs, which are more vulnerable to these effects. We begin by looking at the effects of oil on the process of economic development.
Core Reading
• Nienka Oomes and Katerina Kalcheva, “Diagnosing Dutch Disease: Does Russia Have the Symptoms?” (Bank of Finland, 2007).
• M.L. Ross, “The Political Economy of the Resource Curse,” World Politics, 51 (January 1999): 297-322.
• Jeffrey Sachs and Andrew Warner, Natural Resource Abundance and Economic Growth (Harvard Institute for International Development, 1997).
• Michael Alexeev and Robert Konrad, “The Elusive Curse of Oil,” Review of Economics and Statistics 91:3 (2009):
4. Do Resources Trigger Civil and/or International Wars?
Oil is blamed for triggering a whole array of different wars: resources wars between states, civil wars within states, climate wars reacting to global changes, etc. In this session we will examine the major theories, their strengths, and esp. their weaknesses.
Core Reading
• David R. Hendersen 2012: Do Governments Need to Go to War for Oil?, in: Robert E. Looney (ed.), Handbook of Oil Politics, London: Routledge, pp. 121-145.
• Michael Klare, “Global Warming Battlefields: How Climate Change Threatens Security,” Current History (November 2007): 355-361.
• Michael L. Ross, “Why Oil Wealth Fuels Conflict,” Foreign Affairs, 87:3 (May-June 2008): 2-8.
• Michael J. Watts, “Righteous Oil? Human Rights, the Oil Complex, and Corporate Social Responsibility,” Annual Review of Environmental Resources, 30:9 (2005): 1- 35.
• Mattias Basedau and Jann Lay, “Resource Curse or Rentier Peace? The Ambiguous Effects of Oil Wealth and Oil Dependence on Violent Conflict,” Journal of Peace Research, 46:6 (November 2009): 757-776.
5. The Rentier State and Democracy
Many theorists claim that oil retards the development of democracy. Others go further, claiming that petrodollars breed rentier states or corrode the foundations of any and all social intitutions.
Core Reading
• Michael Herb, "No Representation Without Taxation?: Rents, Development, and Democracy,” Comparative Politics, 37 (April 2005): 297-316
• Terry Lynn Karl, “Perils of the Petro-State: Reflections on the Paradox of Plenty,”
Journal of International Affairs, 53:1 (Fall 1999): 31-48.
• Camilla Sandbakken, “The Limits to Democracy Posed by Oil Rentier States: The Cases of Algeria, Nigeria, and Libya,” Democratization 13:1 (2006): 135-152.
• Gray, Matthew. A Theory of" Late Rentierism" in the Arab States of the Gulf. (Center for International and Regional Studies, Georgetown University, School of Foreign Service in Qatar, 2011)
• Roiman Wacziarg, “The First Law of Petropolitics,” Economica (2012) 79: 641-657.
Part Three: Resources and Geopolitics
6. Resource Cartels: The Role of OPEC
In part three of the course, we begin to switch attention from the national to the global influences of oil. We begin with the entity many think of as synonymous with oil, OPEC, although in practice its influence is greatly diminished.
Core Reading
• Alfred Cavallo, “Elephant in the Room: How OPEC Sets Oil Prices and Limits Carbon Emissions,” Bulletin of the Atomic Scientists, 69:4 (2013):18-29.
• Songying Fang, et al., New Alignments?: The Geopolitics of Oil and Gas Cartels and the Changing Middle East (James A. Baker Institute, January 2012).
• Bassam Fattouh and Lavan Mahadeva, OPEC: What Difference Has It Made?
Oxford Institute for Energy Studies (January 2013).
• Llewelyan Hughes and Phillip Lipscy, “The Politics of Energy,” Annual Political Science Review, 16 (2013): 449-69.
• Eyal Dvir and Kenneth Rogoff, “The Three Epochs of Oil,” National Bureau of Economic Research (August 16, 2010).
7. The Global Energy System and U.S. Hegemony
The current global energy system is often portrayed as a pure product of market forces.
But the United States government plays the key role in defining and enforcing its rules.
Saudi Arabia enjoys its influence in the system because Washington protects and supports its policies.
Core Reading
• Steve Coll, Private Empire: Exxon-Mobil and American Power, pp. 93-121, 154-176, 227-279, 349-370, 394-434, 451-477,and 557-575. (A total of 204 pages.)
Supplementary Reading
• Raphael, Sam, and Doug Stokes. "US oil strategy in the Caspian Basin: Hegemony through interdependence." International Relations (2014): 0047117813517911.
• Michael O’Hanlon, ―How Much Does the United States Spend Protecting Persian Gulf Oil?,ǁ‖ in Carlos Pascual and Evie Zambetakis (eds), Energy Security:
Economics, Politics, Strategies and Implications (Brookings, 2010), Chapter 3 - pp.
59-72.
• John M Deutch., James R. Schlesinger, and David G. Victor, National Security Consequences of U.S. Oil Dependency: Report of an Independent Task Force.
(Council on Foreign Relations, 2006)
8. The Energy Insurgents: China and the Alternative Grid
China too finds the American-dominated global energy system unsatisfactory. It is seeking to construct a parallel system which does a better job of guaranteeing its own energy security.
Core Reading
• Bates Gill and James Reilley, “The Tenuous Hold China Inc. in Africa,” Washington Quarterly, 30:3 (2007): 37-52.
• Andrew Kennedy, “China’s New Energy Security Debate,” Survival, 52:3 (Jun-Jul 2010): 137-158.
• Ching Kwan Lee, “The Spectre of Global China,” New Left Review 89 (Sep-Oct 2014): 28-65.
• Evan Osnos, “Green Giant: China’s Crash Program for Clean Energy,” ¨The New Yorker (December 21, 2009).
9. The Energy Insurgents: Russia and Petropower
Russia is often portrayed as a “rogue” player in the global energy system. If so, it is a rogue not because it mixes energy economics with power politics—but because in the current system that practice is reserved for the United States.
Core Reading
• Thane Gustafson, “Putin’s Petroleum Problem: How Oil Is Holding Russia Back And How It Could Save It,” Foreign Affairs 91 (2012): 83-
• Philip Hanson, “The Resistible Rise of State Control in the Russian Oil Industry,”
Eurasian Geography and Economics, 50:1 (2009): 14-27.
• Treisman, Daniel. "Is Russia cursed by oil." Journal of International Affairs 63.2 (2010): 85-102.
• Rutland, Peter. "Russia as an energy superpower." New Political Economy 13.2 (2008): 203-210.
Part Four: Resources Solutions
10. The Private Sector and the Price Problem: Peak Oil, Cheap Oil, or What?
Over the past five years, arguments that the world faced a crisis by bumping up against maximum production (peak oil) have been driven from public debate by arguments that
“fracking” and other techniques for producing “unconventional oil” have led to an epoch of “cheap oil.” Can either be right?
Core Reading
• Christopher Bateman, “A Colossal Fracking Mess,” Vanity Fair (June 21, 2010).
• Heineman, Ben, “Can the Fracking Industry Self-Regulate?” The Atlantic Monthly 2011).
• Robert Hirsch et al., Peaking of World Oil Production: Impacts, Mitigation, and Management (U.S. Department of Energy, 2005).
• John Mitchell, What’s Next for the Oil and Gas Industry (Chatham House, 2012).
• Ed Morse, et al., Energy 2020: North America, the New Middle East? (Citi GPS, 20 March 2012).
11. Global Solutions: Climate Change Regimes
Climate change may be the ultimate problem facing the human species, or a long-term problem we will have plenty of time to adjust to. Is there any hope that the various companies, countries, and global stakeholders who are addressing this issue will find a common mechanism for cooperation?
Core Reading
• Steve Coll, Private Empire: Exxon-Mobil and American Power, pp. 67-92, 122-136, 331-348, 435-450, 494-507, 534-556, and 600-624. (A total of 118 pages.)
Supplementary Readings
• Naomi Klein, This Changes Everything: Capitalism vs. the Climate (book excerpt, September 2017).
• Kari Marie Norgaard, “We Really Don’t Want to Know,” Organization & Environment, 19 (September 2006): 347-370.
• “The Deepest Cuts,” The Economist (Sep. 20, 2014): 22-24
12. National Energy Transformations (esp. Germany’s Energiewende)
Can individual countries wean themselves from oil? We will examine the limits of attempts to trigger energy transitions by individual countries using Germany’s effort to substitute wind for nuclear power, its Energiewende.
Core Reading
• David Buchan, The Energiewende—Germany’s Gamble (Oxford Institute for Energy Studies Special Paper (Jun 2012)
• Anthony Giddens, The Politics of Climate Change: National Responses to the Challenge of Global Warming (Policy Network, September 2008).
• Thiemo Pesch et al., The German Energiewende—A Scenario Analysis (Institut fur Energie- und Klimaforschung, 2012).
• Andrew McKillop, “The Changing and Fading Dreams of German Energiewende,”
Energy & Environment, 24:5 (2013): 786-791.
13. (Optional) Can We Accelerate Energy Transitions?
Some optimists think that the world can rapidly shift to solar power or wind power or gas…so long as the political will is there. Others insist that such transitions only come about when innovations make new technologies cheap enough to displace old. Still others claim that energy transitions are always frightfully expensive and are, accordingly rare. Who is right?
Core Reading
• Vaclav Smil, “The Long Slow Rise of Solar and Wind,” Scientific American 310:1 (January 2014).
• Jan Rotmans et al., "More evolution than revolution: transition
• management in public policy", Foresight, 3:1 (2001): 15 – 31
• Aviel Verbruggen, et al., “Renewable Energy Costs, Potentials, Barriers:
Conceptual Issues,” Energy Policy, 38 (2010): 850-861.
