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

The Prize: The Epic Quest for Oil, Money & Power by Daniel Yergin is an examination of the global petroleum industry. The historical narrative begins in the 1850s and continues through 1990. This nonfiction work was released just months after Saddam Hussein’s order that Kuwait be invaded in a quest for oil, and a month prior to the United States entering the Gulf War in an attempt to remove Iraqi troops from Kuwait. Widely considered to be the definitive history of the oil industry, the book won the 1992 Pulitzer Prize for General Non-Fiction.

Oil is a key driving force behind the worldwide economy and the most important natural resource of the twentieth century. In The Prize, Yergin considers oil from political, economic, societal, and geographic (or geostrategic) perspectives. He goes back to the first oil well ever drilled. This occured in Pennsylvania and carried out by Colonel Edwin Drake in 1859. He speaks of the role oil has played in times of war and how the structure of the oil industry is in a state of constant flux. The text is considered a significant entry into the overall body of literature pertaining to business history. Yergin cites the contributions of innovation, strong entrepreneurial skills, and productivity.

In times of oil crises, Yergin argues, the markets eventually “adjust and allocate.” Early development of the system of oil pricing was a step toward forming the present day futures markets. Yergin writes, “Once it had been Standard Oil that had set the price. Then it had been the Texas Railroad Commission system in the United States and the majors in the rest of the world. Then it was OPEC. Now price was being established, every day, instantaneously, on the open market, in the interaction of the floor traders on the Nymex (New York Mercantile Exchange) with buyers and sellers glued to computer screens all over the world. It was like the late 19th-century oil exchanges of western Pennsylvania, but reborn with modern technology. All players got the same information at the same moment, and all could act on it in the next.” He adds, however, that in light of the wide negative effects of the 1986 price drops in the oil industry, market forces can themselves be both positive and negative.



Should the government control oil production? Yergin looks at both sides of the question. In the early years of Russian oil production, industry growth was slowed by the remoteness of the region, corruption, and incompetent Czarist powers which controlled the oil industry in a monopolistic manner. As the 1870s dawned, the government ended the monopoly system and allowed for free enterprise and competition. This led to a swift increase in entrepreneurship, resulting in technological advances. Oil wells were drilled starting in 1971 and within two years, there were more than twenty refineries.

The book goes on to examine the conflicts that may occur between national security and the market. It does not necessarily support one factor over the other but does suggest that it is necessary to consider both and how they relate and influence one another. Attention is given to OPEC, Standard Oil, and the Middle East. The strategies that Axis and the Allied forces utilized in World War II are considered, as well. Names like John D. Rockefeller, the Ayatollah Khomeini, and Winston Churchill are all part of the larger picture.

The chronology of the role oil has played in world events, conflicts, and politics is well covered in the book. The oil industry is fully connected to the major historic events of the last century. Oil is seen as a significant factor in the economic success stories of West Germany and Pacific Rim nations which are all major importers of oil. The author adds that in the contemporary world, oil will remain important but is likely to be surpassed in significance, and/or power by the information economy. The silicon chip, for example, is symbolic of an economy driven by creativity and innovation and not limited by a physical supply.



Commentary Magazine said of the book, “The Prize fares best as straight commercial history: the story of the great, globe-girdling enterprises built upon the discovery of the properties of long-dead plant matter. For roughly half its length, The Prize tells a fascinating and in many ways profoundly American tale of development.”