Part 4, Chapter 25 Summary

The oil industry calls a giant oil field an "elephant." There existed so many of these in the early 1950s that marketing became a problem. Through the late 1960s, availability of supplies outpaced sharp consumption growth. The U.S. share of total world production slipped from 64% in 1948 to 22% in 1972, while Middle Eastern production grew by 1,500%. While proven oil reserves grew nine-fold, the U.S. share shrunk to a mere 7%; 70% belonged to countries of the Middle East. The estimated reserve life was 35 years.

The postwar petroleum order rested on two foundations: 1) the great oil deals of the 1940s and 2) the 50/50 profit-sharing relationships between companies and governments. The companies wanted to maintain the status quo, as the arrangement seemed reasonable. To the countries, everything was subject to change. The Shah of Iran was determined to realize, with the help of oil, his country's...