Franks Sandy - Barbarians of oil: how the worlds oil addiction threatens global prosperity and four investments to protect your wealth

Contents

Copyright 2011 by Sandy Franks and Sara Nunnally. All rights reserved.

Published by John Wiley & Sons, Inc., Hoboken, New Jersey.

Published simultaneously in Canada.

No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, scanning, or otherwise, except as permitted under Section 107 or 108 of the 1976 United States Copyright Act, without either the prior written permission of the Publisher, or authorization through payment of the appropriate per-copy fee to the Copyright Clearance Center, Inc., 222 Rosewood Drive, Danvers, MA 01923, (978) 750-8400, fax (978) 646-8600, or on the Web at www.copyright.com . Requests to the Publisher for permission should be addressed to the Permissions Department, John Wiley & Sons, Inc., 111 River Street, Hoboken, NJ 07030, (201) 748-6011, fax (201) 748-6008, or online at www.wiley.com/go/permissions .

Limit of Liability/Disclaimer of Warranty: While the publisher and author have used their best efforts in preparing this book, they make no representations or warranties with respect to the accuracy or completeness of the contents of this book and specifically disclaim any implied warranties of merchantability or fitness for a particular purpose. No warranty may be created or extended by sales representatives or written sales materials. The advice and strategies contained herein may not be suitable for your situation. You should consult with a professional where appropriate. Neither the publisher nor author shall be liable for any loss of profit or any other commercial damages, including but not limited to special, incidental, consequential, or other damages. For general information on our other products and services or for technical support, please contact our Customer Care Department within the United States at (800) 762-2974, outside the United States at (317) 572-3993 or fax (317) 572-4002.

Wiley also publishes its books in a variety of electronic formats. Some content that appears in print may not be available in electronic books. For more information about Wiley products, visit our web site at www.wiley.com .

Library of Congress Cataloging-in-Publication Data:

Franks, Sandy.

Barbarians of oil : how the worlds oil addiction threatens global prosperity and four investments to protect your wealth / Sandy Franks, Sarah Nunnally.

p. cm.

Includes index.

ISBN 978-1-118-00182-0 (hardback); 978-1-18-08234-8 (ebk); 978-1-118-08273-7 (ebk); 978-1-118-08281-2 (ebk)

1. Petroleum industry and trade. 2. Petroleum industry and tradeEnvironmental aspects. 3. Petroleum industry and tradePolitical aspects. 4. Petroleum productsPrices. 5. Energy policy. I. Nunnally, Sarah. II. Title.

HD9560.5.F73 2011

338.27282dc22

2011004108

This book is dedicated to all Americans who envision a day when we are no longer the helpless victims of a barbaric oil industry that is blinded by dollar signs and driven by greed. The choices we make now and in the next few years will determine the energy future we hand down to our children and grandchildren. I hope we make the right choices.

Sandy Franks

For my family... all of you.

Sara Nunnally

Acknowledgments

I would like to thank Sara Nunnally, once again, for her continued hard work on this second book. She has proven herself a valuable researcher and writer. I hope we are able to continue this writing partnership for many more years.

I would like to also thank the many Taipan Publishing Group readers who wrote such wonderful congratulatory notes on our first book, Barbarians of Wealth .

I should again acknowledge members of the Taipan Publishing Group who have show their commitment and loyalty daily, including Jeanne Smith, Jeffrey Little, Amy Pflaum, Jen Cappe, Amanda Fowler, Emily Dobash, Adam English, Andy Snyder, Kelly Cunningham, Howie Ng, Joseph Hill, and so many others.

Of course, I want to thank my husband Mark, son Zachary, and daughter Rachael for their continued support. They keep me most grounded.

My list of acknowledgments will fill up several chapters; therefore, it is impossible to acknowledge everyone personally. But I thank everyone who provided tremendous support to me through this wonderful endeavor.

Sandy Franks

After writing Barbarians of Wealth , I was supremely content with the privilege of seeing my name in print with Sandy Franks, who has offered me countless opportunities and a wealth of encouragement. But when Sandy asked me to write Barbarians of Oil with her, I cannot voice how grateful I was to have this second opportunity. It has truly been an honor and a joy, and this achievement is only due to her faith and trust in me. I am thankful for the challenge and the support.

Sara Nunnally

Preface

When Sara Nunnally and I wrote our previous book Barbarians of Wealth , we concentrated our research efforts on Wall Street financial institutions, the banking industry, financial political lobbying groups, and the Federal Reserve. Little did we know that our search would lead us to the oil industry and the writing of a second book, Barbarians of Oil . Oil is a dirty business, literally and figuratively.

Theres not a politician alive who could deal cleanly with the oil industry, and the greasy fingerprints lead all the way to the White House. Oil has created multi-billion dollar businessesthe largest corporations on the planet. Money often changes peoples behavior, sometimes for the good, sometimes for the bad. Most often money is the oil industrys only allegiance.

As we looked deeper into industry, we saw how often money influenced the decisions related to this countrys energy policies. For example, as secretary of defense in 1991, Cheney gave millions of dollars worth of contracts to Halliburton, and when he left office in 1995, he served as CEO of Halliburton until he was chosen by George Bush to be the vice presidential candidate. Cheney resigned his post, but as vice president, he again gave hundreds of millions of dollars worth of contracts (sometimes illegally) to Halliburton during the Gulf War in 2003. If that wasnt enough, Halliburton was overcharging the government by as much as $61 million for transporting fuel from Kuwait to Iraq. Bunnatine Greenhouse, a whistle-blower in the Army Corps of Engineers brought the incident to the publics attention. She was fired for doing so.

But the dirty deeds continued. For example, in 2005, Bush asked Vice President Cheney to head up a special task force to help develop the countrys energy policies. Many of the components in the energy bill Bush signed were recommendations made by the task force. In addition to tax breaks for the industry, the task force did away with exemptions that the industry considered were not beneficial. In reality, the task force was a meeting of the big oil companies including ExxonMobil, ConocoPhillips, Shell, BP, and Chevron to enact regulations that favored their industry.

When information about the task force became public, many of the company officials denied they had attended any type of meetings. However, the Washington Post had obtained documents that showed that on April 17, the task force met with Royal Dutch/Shells chairman, Sir Mark Moody-Stuart and two other oil company executives. The group met again on March 22, this time with BP regional president Bob Malone, chief economist Peter Davies, and company employees Graham Barr and Deb Beaubien.