The Epic Quest for

Oil, Money, and Power

By Daniel Yergin

Simon & Schuster. 877 pp. $24.95

WHEN CHINA annexed Tibet, the United States yawned. When Vietnam occupied Cambodia, we sent faint diplomatic protests. When the Soviet Union invaded Afghanistan, we indirectly sent arms. But when Iraq invaded, occupied and annexed Kuwait, we sent 400,000 combat troops -- not because Kuwait was more democratic than these other victims of "naked" aggression, not because it was more committed to our foreign policy or under attack by a more dangerous regime, but primarily because Kuwait had one prize that the others lacked: oil.

Oil -- particularly Middle Eastern oil -- is the prize for which assorted countries, companies and kings have bled, bribed and beguiled for 100 years, as painstakingly recounted by historian and energy consultant Daniel Yergin in this timely, fact-packed book.

For most of this century, he notes, this energy-rich country was largely indifferent to its access to foreign oil reserves. In the 1930s, when Mexico expropriated its petroleum industry, Britain wanted to apply harsh economic sanctions, but the United States wanted no part of it. In the 1940s, when the Interior Department urged a $10 billion crash project for synthetic fuels, the Truman administration authorized $85 million. In the 1950s, when President Eisenhower suggested a national oil stockpile, his own administration rejected it. In the 1960s, when Iraq threatened to invade Kuwait, and Britain dispatched troops to the scene, the Kennedy administration barely noticed.

An even clearer indication of Washington's priorities occurred earlier, in 1956, when Egypt's Gamal Abdel Nasser seized the Suez Canal. The British, French and Israelis, calling Nasser another Hitler whose control of oil's jugular vein was intolerable to Western security, launched a military attack. But Eisenhower denounced our allies and forced their withdrawal. Throughout this period, confident that we were self-sufficient in oil, Washington preferred to focus on more important fish in the foreign policy sea.

But a sea change occurred in the early 1970s. U.S. excess capacity disappeared, as domestic reserves dwindled, environmental obstacles increased and the American public's appetite for ever more and larger and faster automobiles drove demand out of sight. The center of gravity of world oil production shifted to the Persian Gulf. Soon one shock after another rocked the American economy -- disruptions, embargoes, shortages, gas lines, 2,000 percent price increases. Seemingly distant events -- a revolution in Libya, a civil war in Nigeria, Arab hatred of Israel -- directly affected American lifestyles.

For the rest of the 1970s, Washington scrambled to fill the policy vacuum. An International Energy Agency was created to draft a common Western approach and emergency sharing procedures. A Strategic Petroleum Reserve was founded. Import quotas on foreign oil were eased, then abandoned. President Nixon called for Project Independence to restore the country's energy self-sufficiency. President Ford called for a long-term nuclear power, coal and synthetic fuel plan. President Carter called for a comprehensive new program of conservation and substitution. President Reagan called the whole thing off.

For the last 10 years, we have had no real national energy policy -- no leadership or incentives for conservation, reduced consumption, alternative fuels or renewable sources. Waste and profligacy returned, symbolized by the stretch limousines parked outside the Department of Energy with their chauffeurs napping and their engines running. The demand for oil rose once again. To meet demand, oil imports rose once again. The importance of the Persian Gulf to our national economy and security rose once again. We permitted ourselves to become so vulnerable to two-bit blackmailers and bullies in an inherently unstable region that Secretary of State James Baker identified the key issue in one feudal regime's takeover of another as American jobs.

But the first oil man to occupy the Oval Office still has no energy policy. Americans, George Bush apparently assumes, will give up their lives on foreign fields to protect energy independence before they give up their gas-guzzlers. (Years ealier, John Ehrlichman rejected several measures proposed to the Nixon White House with the reminder: "Conservation is not the Republican ethic.")

The Prize provides the historical context for this modern American tragedy, describing a past that all too frequently reminds us of the present. Unhappy with unauthorized presidential pledges to prop up desert potentates? With attempts by the Emir of Kuwait to set Saudis, Iraqis and Westerners against each other? With military maneuvers to keep Persian Gulf oil in friendly hands? With sharp changes in petroleum prices unrelated to the market? It has all happened before, writes Yergin.

Perhaps this century's story of mankind has not centered solely on oil to quite the extent his book indicates. No doubt the origin and outcome of World War I, World War II, the Arab-Israeli wars and various Middle Eastern monarchies and conspiracies involved some important causal agents other than "King Oil."

But there is no doubt about Yergin's basic thesis: Oil is power, big power. Big money also, but its power extends beyond money. The need to control it extends beyond greed. Clearly, in the eyes of those governments seen wheeling and dealing throughout this book, oil is too important to be left to the oil companies. To paraphrase Francis Bacon: "Oleum Potestas Est." BUT THE companies have not exactly watched from the sidelines. Often assuming quasi-governmental roles unequaled in any other industry, they coordinated Allied fuel supplies in wartime, allocated cutbacks on an "equal suffering" basis during the OPEC embargo, and urged a pro-Arab tilt in American foreign policy after the Arab-Israeli wars. They organized syndicates to acquire foreign resources at the behest of governments, informed those governments when they wanted domestic regulation or import protection, and notified them as well when those devices had served their purposes.

Like any other group, their ranks included geniuses and hustlers, patriots and scoundrels, all with colorful stories. Meet "Colonel" Edwin Drake, with his invented title, whose historic 1859 oil well near Titusville, Pa., sparked the first "oil on the brain" book; and a real colonel, Britain's John Norton Griffith, who destroyed Romania's Ploesti oil fields in World War I only hours before the Germans arrived. Meet John D. Rockefeller, who developed the first multi-national corporation and the first vertically integrated conglomerate to refine and distribute oil, becoming wealthy beyond comparison while still a young man, after buying out his first partner for $72,500; and his grandson, Nelson, who as vice president championed in vain a $100 billion government program to replace oil with synthetic fuel. Meet Jack Philby, father of Kim, who persuaded King Ibn Saud of the wealth beneath his land but unpatriotically helped American companies outbid the British for those concessions; and Ibn Saud himself, who with Franklin D. Roosevelt decided that their common ages, interests and infirmities made them "twins" (and who then received as a gift from FDR a twin version of his wheelchair that the king had admired). Meet Calouste Gulbenkian, the shadowy "Mr. Five Percent," who cleverly and profitably crafted the group forming the Middle East's first big oil company; and the CIA's Kim Roosevelt, the shadowy "Mr. Scar on Right Forehead," who worked with Britain's MI6 in 1953 to overthrow an unsympathetic prime minister of Iran and bring back that tower of democratic principle, the shah.

I could go on and on. The book, in fact, does go on and on. A tougher editor would have helped. But Yergin rightly has a lot to tell us, and attention must be paid. Today, in particular, the long and devious history of Britain as patron of Iraq and Kuwait should be studied by those now aspiring to that unhappy role. Every prize has its price.

Theodore C. Sorensen, who was special counsel to President John F. Kennedy, practices international commercial law in New York.