Portraits in Oil : THE PRIZE : The Epic Quest for Oil, Money and Power <i> By Daniel Yergin (Simon & Schuster: $24.95; 781 pp.) </i>

Daniel Yergin’s massive volume “The Prize” is two books really. First, it is the story of the men who built history’s greatest private institutions, the giant multinational oil companies whose wealth and power exceed that of many nations. Second, it is a study of oil and international politics interspersed with social commentary. The former succeeds marvelously, but the latter, more important study falters.

Still, the story itself is fascinating, peopled with ambitious, strong men willing to gamble and lacking only a Mata Hari--and it is hard to believe there hasn’t been one somewhere--to distinguish it from one by Sidney Sheldon. (About the only female character is Ida Tarbell, author of the masterpiece “The History of the Standard Oil Co.” that helped force the break-up of the company in 1911.)

The first and strongest of these strong men was John D. Rockefeller, easily the single dominant character and single greatest architect in the history of oil. A measure of his accomplishment is that Exxon, Mobil, Chevron, Amaco, Arco, Conaco and Sohio all were once mere parts of the great octopus of a company he built, Standard Oil. His genius lay in figuring out how to rein in the boom-and-bust price cycle of oil, a cycle that has played havoc with the industry from its earliest days. Typically, soon after the first successful well was drilled in Titusville, Pa., one parcel of nearby land sold for $2 million; a few years later, the identical land was auctioned for $4.37.

Rockefeller sought to bring order to this cycle. By combining his almost totalitarian ruthlessness with calculated gambles, and by making lying a company policy (all while quietly worshiping his God as a regular church-goer), he succeeded. When his partner counseled caution, he bought him out. When competitors resisted him, he cut prices to, in his words, “give them a good sweating” until they buckled and he could devour them cheaply. When Standard’s name became anathema, he created new companies like Republic Oil, which advertised itself as independent. Rockefeller brought order to the oil industry; for his competitors, the oil business was as ordered as the grave.

His modus operandi at first was to let others take chances searching for oil while he seized control of the refining end. Standard Oil became virtually the only customer for hundreds of producers, and dictated the price. As Rockefeller’s successor, John Archbold, once observed, “We were not always entirely philanthropic.” Soon the company sought to control everything, including production and politics. Yergin notes that in 1900, one Republican senator was on retainer from Standard to the tune of $44,500 a year. (Yergin has an annoying habit of leaving the reader hanging, as in this case when he reports the fee but does not name the senator. It was Marcus Hanna of Ohio, the most powerful figure in Congress at the time and the king maker behind President William McKinley.)

Powerful as Standard was by the turn of the century, oil had grown too big to be dominated by any one company or man. Discoveries in Texas created domestic rivals Gulf and Texaco, while foreign companies, often supported by their governments and too strong to suffocate, also flourished. These companies were run by men almost as tough and ruthless as Rockefeller, particularly Henri Deterding of Royal Dutch. Adm. John Fisher, First Sea Lord of the Bristish Admiralty, described Deterding to Winston Churchill as “Napoleon and Cromwell rolled into one. He is the greatest man I ever met.” Deterding protected British interests in World War I; he later became a Nazi sympathizer.

And then there was the ultimate middleman and arranger in history, Calouste Gulbenkian, whose career began 1887 and ended in 1955. He received a commission of up to 5% on oil pumped from major concessions by such companies as Royal Dutch and British Petroleum--and even something from Aramco, the company in which Saudi Arabia participated. Such men make Michael Milken look like just another yuppie broker. Even the bit players in this book are fascinating, people like Jack Philby, a British expatriate who converted to Islam, advised the Saudis and fathered spy Kim Philby.

If there is a lesson in this book--and there is--it is to remind us of the validity of the cliche that the more things change the more they remain the same. Before the United States entered World War II, Americans were reacting with fury to conservation efforts, causing Interior Secretary Harold Ikes to complain, “It is impossible to carry the American people along with you on a program of caution to forestall a threatening position.” And free markets were abhorred and subverted first by Rockefeller, then by the great world oil companies--which in 1928 carved up the world’s markets between them--and finally by OPEC.

Indeed, the theme of this book, expressed in its subtitle “The Quest For Oil, Money And Power,” never really changes; only the names of the actors do, which rather drives home the point that current conflicts will not easily be resolved. Yergin deserves credit for providing this context, and he does it in greater detail and depth than the book with which this will surely be compared, “The Seven Sisters” by Anthony Sampson.

But as the story of oil evolves from the story of men building great companies to the story of producing countries seizing control of their resources, Yergin’s writing loses intensity, and the book loses focus and strength. Though it is virtually impossible to overstate the importance of oil in the industrial age, Yergin comes close, and this book is a little too encyclopedic. Yergin, an energy consultant employing a staff of experts, seems to have shoehorned everything he has ever learned about the oil industry into this volume. The detail occasionally becomes tedious, even overwhelming.

Large as the subject is, Yergin makes it larger yet by ruminating on such things as the growth of McDonald’s restaurants, which would be tolerable if its social analysis yielded something original or insightful. It does not. And, strangely, in places where he might appropriately shed light, he chooses not to. He gives only cursory treatment both to state-government agencies--especially the Texas Railroad Commission, which tried to control U.S. production--and to federal regulation. These were not insignificant factors on either pricing or production. And although he’s generally sympathetic to oil companies, he does not get much involved in the debate over whether they have gouged the public or simply reacted to market forces.

Lastly, although Yergin reports with thoroughness on the history of OPEC, which actually was the creation of a Venezuelan and not an Arab, his insights into the non-oil aspects of Middle East politics lack comparable depth. For example, he relies solely on Henry Kissinger’s assessment of the causes of the Yom Kippur War in 1973 and adopts this assessment as his own. Yet Kissinger by his own admission knew little about the Middle East until the crisis thrust him into it, and later Yergin quotes Saudi Arabian Oil Minister Zaki Yamani, whom Yergin otherwise treats with great respect, as saying that Kissinger misunderstood the region. And the few pages of the book that deal directly with Iraq’s invasion of Kuwait clearly are patched together in haste.

Still, if “The Prize” is uneven and at times frustrating, if it does not deliver quite what one hopes in some areas, it is nonetheless well written in the main, and at times quite compelling. If one is looking for a guide to the current Persian Gulf crisis or a deep understanding of the Middle East, this is not the book. But if one wants to understand the oil industry, it is.