If you’ve ever sat at a gas station fuming over prices, you’ve probably cursed OPEC. Most people think of the Organization of the Petroleum Exporting Countries as a shadowy cabal of Middle Eastern billionaires. But the real architect? He wasn't a Saudi prince. He was a skinny, vegetarian Venezuelan lawyer who lived in a house without air conditioning and took the bus to work.
His name was Juan Pablo Pérez Alfonzo.
He is the most important man in the history of the 20th-century energy markets that you’ve likely never heard of. While the world saw oil as "black gold," he saw it as a curse. He famously called it "the devil’s excrement." Honestly, it’s a bit of a paradox. The man who organized the world’s biggest oil cartel actually wanted to keep the oil in the ground.
The 50/50 Formula That Changed Everything
Pérez Alfonzo didn't just wake up one day and decide to fight Big Oil. It was a long game. Back in the 1940s, while serving as Venezuela's Minister of Development, he looked at the books and realized something disgusting. Foreign oil companies—the "Seven Sisters" like Exxon and Shell—were taking almost everything. Venezuela was getting crumbs for its own resources.
He pushed for a radical idea: the 50/50 profit-sharing formula.
It sounds simple now. Half for the company, half for the country. But in 1948, this was economic heresy. The oil giants were furious. They threatened to pull out and move production elsewhere. Pérez Alfonzo didn't blink. He knew that if Venezuela stood alone, they’d get crushed. But if the producing nations stood together? That’s where the power shifted.
Then came the coup.
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The Venezuelan government was overthrown in 1948, and Pérez Alfonzo was thrown in jail for nine months before being exiled. He spent years in the United States and Mexico, but he wasn't just sitting around. He was studying. Specifically, he was obsessed with the Texas Railroad Commission.
Wait, Texas? Yeah.
Back then, the Texas Railroad Commission regulated oil production to keep prices stable. Pérez Alfonzo realized that if Texas could do it to protect their market, oil-producing nations could do it on a global scale. He was basically a business spy, taking notes on American regulatory tactics to use them against the very companies that had lobbied for his exile.
Why Juan Pablo Pérez Alfonzo Still Matters
In 1959, he returned to Venezuela as the Minister of Mines and Hydrocarbons. The timing was perfect—or terrible, depending on who you ask. The big oil companies had just unilaterally cut the "posted price" of oil, which meant the income for countries like Venezuela and Saudi Arabia plummeted overnight.
Pérez Alfonzo hopped on a plane to Cairo.
There, in a secret meeting during a yacht trip on the Nile, he met a man named Abdullah Tariki, the Saudi oil minister. Tariki was often called "The Red Sheikh" because of his radical views. The two hit it off immediately. They shared a vision: why should Western companies decide the price of their resources?
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In September 1960, in Baghdad, OPEC was born.
It wasn't just about greed. For Pérez Alfonzo, it was about conservation. He was a pioneer of "Anti-colonial Oil Conservation." He believed that oil was a finite resource that belonged to future generations. If you pump it all now and waste the money on shiny buildings, you leave your grandkids with nothing but empty wells and a broken economy.
The Prophecy of the Devil’s Excrement
This is the part most people get wrong. They think he wanted OPEC to make Venezuela rich. He actually feared the wealth. By 1976, near the end of his life, he was horrified by what he saw. Venezuela was drowning in cash, and it was rotting the country from the inside out.
"Ten years from now, twenty years from now, you will see, oil will bring us ruin... it is the devil's excrement."
He saw the corruption. He saw the "resource curse" before economists even gave it a name. He watched as his country stopped producing food and started importing everything because the oil money made everyone lazy and the currency too strong. He eventually resigned from public life, disgusted by the waste. He lived a life of extreme austerity, almost as a penance for the monster he felt he had helped create.
Real-World Impact and Misconceptions
There’s a common myth that OPEC was an Arab invention. It wasn't. It was a Latin American legal framework exported to the Middle East. Pérez Alfonzo even had his notes from the Texas Railroad Commission translated into Arabic so his counterparts could understand the mechanics of production quotas.
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Another misconception? That he was an anti-capitalist. He wasn't. He was a nationalist who understood market dynamics better than the CEOs he was fighting. He didn't want to destroy the oil market; he wanted to rationalize it. He wanted a "steady price" rather than the boom-and-bust cycles that destroy developing economies.
Today, Venezuela is a tragic case study in exactly what he feared. The infrastructure is crumbling, and the "black gold" has indeed brought ruin to the political system. He predicted the 1980s oil glut and the eventual collapse of countries that failed to diversify.
Actionable Insights for the Modern World
You can't change the history of oil, but you can learn from Pérez Alfonzo’s philosophy on resource management:
- Diversification is Survival: If your income (personal or national) depends on a single volatile asset, you aren't rich; you're just lucky for now.
- Study Your Competition: Pérez Alfonzo used the Texas Railroad Commission's own playbook to build OPEC. Learn the rules of the game to change the game.
- Conservation over Consumption: Real wealth is what you keep and grow, not what you extract and spend immediately.
- Beware of Easy Money: Whether it's a natural resource or a speculative bubble, unearned wealth often carries a hidden "social cost" that can be devastating in the long run.
If you want to understand why the global energy transition is so difficult, or why oil-rich nations struggle with democracy, start by looking at the warnings of the man who started it all. He wasn't just an oil minister; he was a prophet who was ignored by his own disciples.