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Breakingviews

Breakingviews - Review: Oil historian of record drops his compass

Daniel Yergin, an energy historian and vice chairman of IHS Markit, attends a session of the St. Petersburg International Economic Forum (SPIEF), Russia May 25, 2018.

LONDON (Reuters Breakingviews) - If anyone should have a good handle on how to properly manage the transition to a low-carbon world, it’s Daniel Yergin. The prize-winning author knows both the traditional hydrocarbon industries and the wider energy business inside out. So it’s disappointing that his latest tome, “The New Map”, does not come with clearer signposts.

Yergin’s books are major publishing events. “The Prize”, his 928-page, 150-year history of the oil industry, justifiably won a Pulitzer Prize after it appeared in 1991 and remains the nearest thing the oil sector has to a secular bible. “The Quest”, at 864 pages, came out a decade ago and added a slightly less compelling but no less important view of the development of climate change and the provision of electricity.

At a mere 512 pages, “The New Map” is marginally less likely to inflict serious damage if you drop it on your foot. But its appeal will depend on what the reader is after. As a chronicler of the major geopolitical and energy events of the last 15 years, Yergin has few peers. As a radical thinker on where we go from here, he’s less forthcoming than he perhaps could have been.

Yergin understandably focuses most of his narrative on the United States, Russia and the Middle East, the world’s three biggest producers of oil, and China, the globe’s critically important consumer. Each get the deep-dive treatment. Anyone unaware of the energy-related origins of ongoing spats between Russia and its neighbours, the Sykes-Picot line between Iraq and Syria, and the geopolitical significance of the tiny Spratly Islands in the South China Sea, will be enlightened. There are intriguing chapters on the role played by container ships in China’s breakneck growth and the potential game-changing impact of gas discoveries in the eastern Mediterranean.

Yergin is also good on how America’s double-quick conversion from major importer of oil to net exporter has affected its mentality. “For many years we have been arguing with the Russians and the Chinese not to see energy trade in political terms,” the chief executive of one of the major oil companies tells him. “But now the U.S. president is doing exactly that, and the Russians and Chinese can say to us, ‘We told you so’”. The sight of an American president openly touting the country’s liquefied natural gas in Europe while trying to stymie the Nord Stream 2 pipeline between Russia and Germany is unknown territory for energy diplomacy. So are Donald Trump’s attempts to direct the Organization of the Petroleum Exporting Countries from his Twitter account.

Perhaps because the political figures that inhabit the book are already familiar, “The New Map” lacks the compelling pen portraits of John Rockefeller and his nemesis, the trust-busting journalist Ida Tarbell, that made “The Prize” such a diverting read. Yergin’s narrative-of-record approach has two other shortcomings. First, his treatment of the global pandemic feels perfunctory. That’s hardly surprising, given that the shock moment when the price of U.S. crude oil futures turned negative happened in April, presumably after he had completed most of the book.

A more frustrating omission is evident in the final chapters, which tackle the climate crisis. There’s nothing much wrong with Yergin’s canter through topics like the European green deal, the U.S. Democrats’ proposed equivalent, and the fast-evolving landscape of renewable energy. He’s entitled to point out that there’s a gap between how much wind and solar capacity exists relative to actual demand, and that Ursula von der Leyen’s European Commission may see green investment as, in the words of one businessman, “a new narrative for European ambition”.

Still, given the critical importance of managing the world’s transition from burning fossil fuels to other sources of energy, the informed reader might prefer a little less narrative and a bit more direction. How, for example, does Yergin think the gap between the production of low-carbon energy and ongoing demand should be filled? How should governments try to support the energy transition in an equitable fashion? And how much would a Joe Biden presidency change the game? These are real political questions, requiring expert answers. The author’s status as the energy sector’s historian of record ought to have emboldened him to be more prescriptive. Sadly, this destination is not yet on the map.

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