The Prize, Chapter 24 Overview

The Prize, Chapter 24 Overview

The Suez Canal is an interesting story in its own right, but it had and has important oil industry implications. Like the Nord Stream and Alaskan pipelines, sometimes efficiencies in moving oil changes the dynamic. So much so that markets become dependent on any “new and easier” way to get oil, and if it becomes threatened, it causes much angst. The canal’s significance was strategic, as it served as a lifeline of the British Empire. When, in 1948, India became independent, the canal lost its traditional rationale of being critical for the defense of India or the empire. It subsequently became a highway of oil and not of empire, as it cut the 11,000 mile journey of Persian Gulf Oil to Europe around the Cape of Good Hope to 6,500 miles through the canal.

In this chapter, you will read about the conflict over the canal, and how it nearly brought America, Britain, and France to blows. The Suez crisis taught the Western powers about the volatility of the Middle East and the need to work to achieve long-term peace and prosperity in the area. As a footnote, in 1970, fourteen years after the Suez crisis, at a dinner at 10 Downing Street in honor of Anthony Eden, then Lord Avon, Eden offered a special prayer for the British people to discover “a lake of oil” under the North Sea. Interestingly, that was exactly what they found shortly after. It would have been interesting what the British would have done in 1956 if they had known or even suspected they were sitting on such a lake. This is important because we will learn in later chapters how North Sea oil changed the global market in Europe’s favor. After struggling for so long to get oil from others, Europe would finally have its own treasure.

The Suez Canal crisis and Syria’s interruption of the oil flow through the Iraq Petroleum Company pipelines showed the vulnerability of oil transportation and opened up discussions on alternatives to the Suez Canal and pipelines. The safer alternative was with supertankers going around the Cape of Good Hope. This provided a lower political risk. The Japanese, with advances in diesel engines, and better steel, started to build supertankers capable of carrying a lot more oil.