This program is about an hour here we are with the secret world of oil, your new book on the oil business. Im going to ask the first question that you are sick of answering. Why did you decide to write this book lacks guest well, ive written about the oil industry for a long time, for over a decade. And ive written about the corruption of the oil industry and the way the United States maintains Close Relationships with various unattractive regimes and the basis of the relationship so for example when i was at the Los Angeles Times back in 2002 thats when i first started writing about it and if the Equatorial Guinea which is a small west african country, nobody knew about it or cared about it. It was a pariah state, terrible dictatorship and dirt poor. And then in the mid1990s, exxon found a lot of oil and other American Companies poured in and suddenly the relationship changed and it was no longer a pariah. They had a friendly relationship because it was a little too embarrassing but there was a re approach meant and now he comes from washington to time to time. It was a coincidence and i was looking at another story whose firm got a private contracts to help develop a coast guard. I thought how interesting and i started writing about that and probably spent a lot of the past decade writing about the similar topics in kazakhstan. Like a lot of journalism stories you get onto a topic and you keep writing on it. Theres a lot of talk and economic developments and we saw that firsthand with the family and others that are discovered that discovered oil or natural gas or other resources. Can you talk about what does it do to a country, designate them better off or does it make them worse off because it frees up the brewers and any sort of accountability at all . Guest in general that has made countries worse off. If you suddenly find only all in a country where there is really no form of democracy, no history of democracy like Equatorial Guinea where they gain independence its like a colony of spain until the 60s, 1968 they gained independence and then theres literally character who was a complete lunatic takes power, terrorizes the country and then 11 years later his nephew executes them, overthrows them and has had power ever since there is no tradition of democracy so you can go in that environment when a government gets its hands on that sort of legal wealth that is almost inevitable that it leads to corruption and very little improvement for people. So, in nigeria for example, nigeria firms have been pumping oil for nearly half a century now and the country itself is certainly worse off, not better off. I remember talking to the former cia official who had traveled to nigeria. He wasnt stationed there at the perks of the office of transnational threats he went to nigeria and he said he concluded on the basis of conversations with people that the country would have been better off if they never discovered oil. So, in a lot of places, as i note in the book the former Vice President cheney once noted god didnt see fit to put put legal only oil only in democratic countries friendly to the United States where the boy was found in kazakhstan or azerbaijan or Equatorial Guinea or chad or cameroon the odds are that its not going to do people a lot of good. There are some countries, norway which has a long history of democracy norway has done pretty well on a legal. So its not automatic. It really depends on the context of the environment. The United States is a mixed bag in some ways. You know, certainly then again let me refer to a conversation with the former chevron executive who now i think is at the center for strategic and International Studies and he talked about the difference between development of Oil Resources and specifically about central asia and azerbaijan where they have enormous concessions and they obtain them when he was at chevron. He says both the difference between kazakhstan and the United States is in the u. S. , the Oil Resources are not owned by the state. The individual land owner in texas or louisiana gets royalties. The Companies Pump the oil and the landowner gets the money and sometimes there isnt a huge environmental footprint. The companies are making money and create jobs and create some wealth. The country has a lot of oil wealth but it hasnt been shared very well and in terms of social indicators louisiana runs pretty well on just about everything and in terms of health and education and per capita income. Host but they dont have a problem believing in the government, just broadly there is a lot of production and its very different from the rest. Its a political culture in louisiana and it does seem to be very different in other states in the u. S. So is it when you look at texas and in those places do you see the same level or is it no it is the political context. Louisiana has been the tory is us for some time. So, end of the United States we have all sorts of political problems that we are not kazakhstan just yet and so yes the wealth generated by oil has been better certainly than its been for the residents of legal rich west africa for the political context is very important for just love to say that its not created problems as well as everyone knows from environmental problems would be the main one people think about and i guess that would be the main one in the united United States but people worry about the most. Host you dont talk much about speedy web in which surprised me fracking which surprised me. Did you think about giving more on that order that the focus was on conventional legal . Guest the focus of the book is looking at the middleman because we are succeeding in some extend shining a light on the part of the oil industry and the Natural Resource industry that doesnt receive a lot of attention which is the role that the traders and intermediaries and the middlemen or whatever you want to call them, these are people that sort of our between the companies and the governments in some of these more corrupt countries where its not like you submit a bid and then the government needs access to see what is going to be the best deal. You have to grease the wheel and there is no other way of doing it. You cant make the Government Officials while v. The old model was lets transfer some money to the bank account and now it is a lot more complicated if the company is a sadly not correct in spirit, they are all corrupt but you know, you cannot do business in many races of the world and especially oriel is such a sensitive commodity. You know, oil and weapons are the two most important commodities to any government. You cant run your Economy Without Oil or defend without weapons and partly because of that there is a very centralized decisionmaking. Only a few people are in on that and again, because the countries i keep referring to in central asia and west africa where you have dictatorships or authoritarian governments, however you want to put it you have people making decisions and so, the key to getting the deal is often having the right fixture, having the right of middleman. You cant do business in some places without a door opener and the door openers typically a person who has over the years built up trust and confidence and access to senior Government Officials or the president often and can get you in the door. As i said, the old model was just what is your Swiss Bank Account and now in Equatorial Guinea exxon and chevron and other Oil Companies got deals over there and they were investigated by the u. S. Government and never charged for reasons that i find surprising because they enriched the government and the president. As far as i know they didnt simply by your cash but for example they bought land from the president. We want to build our compound but you owned the land. Is that right . They hired a Security Firm in several of the companies hired a Security Firm to guard their compounds and installations into the Security Firm is owned by the brother of the president who was identified in the report as a torturer. You know, several of the Companies Made him a partner on the business deals where he mysteriously didnt even have to put any money down. They said they will give you a cut i think exxon gave them a 20 cut of the oriel distribution business. But it wasnt there. It wasnt the Oil Concession itself but it was an Oil Distribution company. I think they gave him 20 for nothing down. After you pay for your share out of the prophet then itll just goes to you. Host i want to ask about this because these deals are being structured that way precisely and some people would say this is the price that we are going to pay and only always been discovered in more developing countries. In other places now with fracking it is less true true but you have true that you have the countries whose borders were drawn by colonial powers and no institution before the european powers pulled out. It was often with crosscultural borders that bisect ethnic groups and say in these weak institutions date you are going to get corruption and the price of getting the oil is being willing to pay, why should we hold that u. S. Companies accountable to the higher standard and let them go in and find anybody they want what would you say to this . Guest the question is fracking is now developing and it is a new form of development and there is is in the International Business as well but i was looking at those that are ranged between the oldest of which patterns that have never been boast of the industry now is expanding but a lot of the business is domestic. You dont have the middleman here at least not in the same way. In terms of the other question that you asked about why shouldnt we we just have to tolerate corruption because it is part of the environment. And to a certain extent that is true. There is no way unless you are willing to say we just wont, we will survive without that footage is not going to happen, you have to be practical and realistic to a certain extent. I am not saying and i dont think that anyone can argue lets just not do business anymore with saudi arabias host the french would buy the oil and we would buy it from them. Guest its not just a past relationship that we develop the fields and take the oil. Its much more complicated and entrenched than that. They come into sight in Equatorial Guinea where you come to a country like this which is dirt poor and you can say you cant do business there without somehow making the Government Officials happy. While committee made him very, very happy. Hes one of the richest in the world, one of the richest rulers in the world at this point. His son who has had a 30 milliondollar home in malibu there is an Asset Forfeiture in the u. S. Government and he commissioned at 350 million. He is like a 45yearold donothing kid whose father installed to head the department of the environment of people jokingly referred to as the department of chopping down trees so shes making money off of the timber trade and then the appropriating money from the oil well. So, you know you can say we have to tolerate a little bit of corruption but they are not just tolerating, they are facilitating mass corruption and beyond that, they then they hold their interest there and they didnt lobby for these governments. So you have the american Oil Companies that are actively promoting the beyond as a reporter that is just preposterous. They are trying to develop a relationship on the basis of fraud. He has held power since 1979. He has been reelected three times the last time i believed was 99 of the vote. Host i wonder why that one person. Why not just go all the way . Guest its just incredible. But you know, so you build a relationship and become a partner so it it isnt half the relationship. So thats part of it and i also think you see repeatedly time and time again, you know i dont reduce American Foreign policy. I think that is too simplistic. At the same time, anyone that looks at american American Foreign policy and ignores oil, thats equally preposterous. You look at u. S. History and the relationships we have developed and its not like there hasnt been blowback in some of these cases. We have a deep and long relationship. Post9 11 there was a reason we have to move away from the middle east oil because look at all the trouble its caused. We will look at central asia. Those are stable good governance. So if you think there is an ethical argument, honestly there is no way that one can simply say we have to have a perfectly Ethical Energy policy because assigning of their governments dont play that way but they are also practical considerations and its definitely been costly in many ways to the United States and the public to maintain these relationships with some of these countries. Host talk about some of the costs at what cost to the american public. Guest if you look at the middle east what is the basis of the relationship with these various middle Eastern Countries . Its pretty much all youll. Again i dont want to reduce that, but there is a former that is definitely part of the relationship that in fact it is our closest ally in the region that is oil rich so there is a Strategic Energy related hugh but it isnt strictly oil, definitely not. However, its important. Its very significant. You have a former Deputy Assistant secretary of defense whos at the center for American Progress who once said if the exported artichokes we wouldnt have a close relationship with them. That the war in iraq. Once again yes it isnt purely about oil but is there anyway that the architects of the war in iraq are sitting around the room thinking about whether to invade or not, well it is a major they do have major reserves. It would have to be almost because of course the original invasion of kuwait was about arguments over that reserve of who is draining too much from the reserve in the iraq border. So i agree it always does come back to the oil. What should we be doing differently . Guest while certainly there isnt a grand theoretical argument. Ive worked as an Investigative Reporter and i am not, you know, i dont want to promote myself as a huge thats what i like to do. I like to write about things i find interesting and i hope other people do, too but too mac but in terms of what we should be doing differently, obviously i dont think that anyone would say even the Oil Companies wouldnt say we are dedicated to the idea, but to the extent that we are reducing the dependence on fossil fuel its better. You have all sorts of reasons for the empire and mental global warming. There are all sorts of negativity from our dependence on oil. Everyone talks about it. Every time theres a president ial election, both of the candidates talk about how we have to reduce our dependence on foreign oil. And even in general, theres now a consensus that we should be using less fossil fuel. So coming you know, is that a cureall . Of course not. But i do think as i write about in the book, oil is certainly by almost any measure the most corrupt industry in the world. The Energy Industry theres a variety of reasons for that. One of them is as dick cheney pointed out theres a lot of oil that is in corrupt countries. Thats just the way that things happen. Or if you belief that god planned it, i dont know. But thats where a lot of it has traditionally been found. But also because oil is if you are looking at an oil company by american, chinese, french, whatever and youre looking at a deal in kazakhstan, its going to matter to the corporate bottom line for a long time and any significant way whether in a significant way whether you get the deal or not. Its not like we sold stock and lost that hell to provide 10,000 pairs of socks. An Oil Concession talking about tens of hundreds of billions of dollars, and so the incentive to get the deal is huge. And the incentive to maybe cut the corners oil but is also huge. So. So coming you see if you look at the number of foreign corrupt practices, but corrupt practices and cases by any measure the industries, p. O. Box weapons and oil. And partly because the deals are so huge and partly it is because as i referred to earlier, you typically have very few decisionmakers. You dont need it to gain the support you need to get the minister and the way to do that typically host it is so fungible and i was fascinated into getting out of the work on the economy and iraq after the invasion and the ways in which the pipelines were carried out and running at half normal capacity because they drilled holes in the pipeline and the oriole would disappear and what gets transferred somewhere else and of course it is theoretical possible to trace the chemical signatures to figure out where it came from but once you moved it out of the country and got it into the market is a valuable commodity that is pretty much untraceable. So youre always going to have quite a lot of incentive i would think. What is the most outrageous or interesting thing that you came about . Guest the most surprising thing talking to oil Company Officials with the middlemen who were focused at t