THE OIL AGE ARRIVES33Socal’s concession would turn out to be worth upward of $1 trillion.
It was becoming clear that Saudi Arabia stood at the absolute apex of
the oil- producing world, a crucial cog in the global economy.
THE PERFECT SETTINGIn governance, geology, and geography, Saudi Arabia and the other Gulf
monarchies were ideal hosts for the oil business. In each of these sheikh-
doms, just one man called the shots. Autocratic governance was a huge
advantage. It allowed oilmen to deal directly with rulers or designated
subordinates. There were no legislatures to slow things down and no
other veto wielders in these highly centralized states.^8 The ruler’s diwan
was the only stop.
Neither were there any private claims on the oil, nor on the land above
it, which had been considered open grazing land until companies fenced
it off. Mineral ownership and surface rights were in the hands of the
state, personified by the ruling family. The ease of access allowed for
economies of scale. Companies amassed enormous concessions and
exploited them as they saw fit. Further, the geology was unbeatable. Mid-
dle Eastern oil lies comparatively close to the surface, just over a mile
below ground, on average.^9 Most of the big Gulf fields lie near the coast,
making field- to- terminal transport distances short. No long pipelines
were needed to bring the oil to port. Reservoirs also benefited from high
levels of underground pressure, which was sufficient to drive the oil to
the surface and out the borehole at prolific rates. In the 1930s, the aver-
age Gulf well flowed at 6,000 b/d, while the average US well managed
just nineteen barrels daily.^10 Most important, reserves were— and are—
enormous. The majority of the world’s “elephants”— its biggest oil and
gas fields— sit within a five- hundred- mile radius of Kuwait City. The
largest, Saudi Arabia’s Ghawar, produces 5.8 million barrels per day,
more than all but three entire countries.^11 Finally, Gulf geography
couldn’t be more convenient. The region lies at the center of the world,
between the big markets of eastern North America, Europe, and Asia.