Book review: Ingenuity offers hope in energy challenge

Daniel Yergin. Photo / Supplied

Towards the end of The Quest, his sprawling book on energy, Daniel Yergin introduces an obscure 19th-century character named Sadi Carnot.

The son of one of Napoleon's ministers of war, Carnot was convinced that an important reason for Britain's victory over Napoleon was "its mastery of energy, specifically the steam engine".

In 1824 he published a study on this theme called Reflections on the Motive Power of Fire, which Yergin calls "almost certainly the first systematic analysis of how man had actually harnessed energy".

For more than three decades, Yergin has been Carnot's heir, cutting through fog and emotions to provide lucid analysis of energy issues.

He emerged on the public stage after the 1973 oil embargo and its gas lines, which sparked a persistent feeling of unease about energy security in the US.

He has been a consultant to industry and governments, most recently as chairman of IHS Cambridge Energy Research Associates, while continuing to address a wider audience through his writing.

Yergin is best known for The Prize (1991), his Pulitzer Prize-winning history of the oil industry. The Quest is in some respects a sequel, but it's not in the same league. The new book is too long and lacks a compelling narrative thread.

More worryingly, Yergin seems overly gentle with major oil-market players such as BP, which was at the heart of the 2010 Gulf oil spill.

In a section on the feverish oil bubble of 2008, those analysts predicting ever higher prices aren't identified in the main text, their names buried in footnotes. Perhaps Yergin's business interests are conflicting with his reporting.

The Quest is still worth reading for Yergin's erudition and insight. For instance, he debunks the peak oil theory, which says world gas and oil production may soon top out and then rapidly decline. (This idea helped lead to the price spike of 2008.) Yergin notes that such fears have cropped up before.

"This is not the first time the world has run out of oil," he writes. "It is the fifth."

Yergin is confident that the industry will be able to keep up with growing demand. He says an IHS CERA study of some 70,000 oil fields reveals that "the world is clearly not running out of oil. Far from it".

Supply is growing, not shrinking, Yergin says. This is the result not only of new discoveries but of an even more important source: additional oil found in existing fields. The big question, he implies, is not whether the oil is there but whether the political climate will foster the huge investment that is needed to satisfy demand over the next quarter-century.

Yergin concludes that rather than collapsing, world production is likely to grow about 20 per cent over the next two decades and that a plateau "is a more appropriate image for what is ahead than the peak".

Twenty years may not seem so far away, but Yergin believes that new energy sources such as shale oil will be found to keep pushing that expected plateau "into the horizon".

The central message of Yergin's book is reassuring. Yes, the world faces enormous challenges in finding ways to satisfy the demand for energy and tackling climate change. Yet human ingenuity offers hope.

Other parts of the book are less satisfying. His writing on climate change, probably the biggest energy challenge, lacks a punch line.

Yergin places his bets on a "globalisation of innovation" that will "fuel the insight and ingenuity that will find the new solutions". There is an old saying that "oil is found in the minds of men". Yergin is confident that the solutions to our energy conundrums will be found there also.

Daniel Yergin

* The Quest: Energy, Security and the Remaking of the Modern World by Daniel Yergin

* Published by Penguin Press and Allen Lane

* Reviewed by Stanley Reed

- BLOOMBERG