Figure 1.--The American oil industry was dominted by John D. Rockefeller's Standard oil monopoly for decades. It was brolen up by the Supreme Court in 1911. In addition, many new companies formed. Califirnia had a serious problem as oil priducts becsne increasingly important--until oil was disciovered in California and the state became a major producer. Signal was an important California oil company. (It eventually was merged into Allied and finally the modern Honneywell complex.) Signal advertising supported the Tarzan radio program. This photogrph taken about 1933 was rather remarkable because the boys are almost all wearing long pants. At ghe time knickers were still common in most of the country.

Oil drilling and petro-chemicals became a part of the American mining complex (mid-19th century). At the time, there was only a limited market for oil, but this changed as kerosene began to become an important home lighting product and then with the perfection of the internal combustion engine, creating a demand for gasoline and diesel. America and Russia were the only industrial countries with domestic oil resources. This would have a major inpact on the 20th century. A black gold rush began in Pennsylvania (1850s). It was part of a series of developments that would make America the most important industrial power by the turn of the 20th century. One of the titans of indudtry was John D. Rockefeller who created a vast mononoly--the Standard Oil Company. The United States controlled most (85 percent) of the world production and refining of oil. Much of this came to be controlled by Rockefeller's Standard Oil monopoly. Rockefeller's monopoly was not to sell gassoline, but primarily kerosene (paraffin) which became the primary home lighting fuel with the decline of the whaling fleet. Standard Oil began to face legal issues after the passage of the Sherman Antitrust Act (1890). The company also began to be criticized in the court of public opinion. Ida M. Tarbell, a McClure's Magazine begn to investigate. Standard Oil was forced to break up into 34 smaller companies (1911). [Standard Oil] Several of the derivative companies became oil giants in their own right. This changed after the turn of the century as America elecrtified and Henry Ford's Model T-Ford and internal combustion engine put America on wheels (1909). Gasoline and diesel replaced keroscene as the primary refinery products and the market grew far beyond that for keroscene. Gasoline had been nearly worthless up to this point. The perfection of the internal combustion engine chnged this. This process began in Europe, but Henry Ford's mass produced Model-T Ford was so inexpensive that even workers could afford it. This spawned a huge new industry that required vast quanities of steel, copper, and rubber. Nothing like this occurred in Europe where automobile construction remained a craft industry. The major source of oil in the early-20th century was the United States. European countries were developing oil fields, but except for Russia in their colonies or countries they influenced. Here the major British effort was in Iraq. The American oil industry shifted from Pennsylvania to the southern plains (Oaklahoma and Texas). California also became important. At the time of World War I (1914-18), resource challenged countries were dependant on the United States. This was not a major problem at the time as military technology did not yet rely heavily on mechanization. Armies moved long distanceds by rail and at the battlefield supplies and artillery were moved by horses. Major changes were underway. Oil was needed for aircraft and sunmaries. The new tanks required oil. There were advantage to shifting surface ships from coal to oil. The Royal Navy did it, the Germans did not because they had such limited sources of oil. America entered the War (1917). The United States did not have a sizeable arms industry and had to fight the War with British and French arms. What the Americans had were trucks which gave the Allies a major advantage in logistics. Oil was a factor in World War I. It was absolutely critical in World War II, the World's first mechanized war. The German Blitzkrieg required vast quantities of oil. The British in particular were developing oil fields. The United States still produced 60 percent of the world's oil. As one author quipped, the Allies would literally float to victoiry on aea of oil. The Germans and Japanese on the other hand were desperate to get oil. The Japanese attacked America, primarily as part of a vast military operation to get oil and other resources. The Germans attacked the Soviet Union for the same reason (1941). It would lead to national catastrophe. After the War, Americans came home and wanted homes in the suburbs and shiny new cars to get there. New highways criss-crossed the country. America had fallen in love with the automobile in the 1910s, but now Americans could aford far more luxurious cars (1950s). Vast quantities of oil were needed. To feed the insatiable demand and as existing oil fields declined, oil had to be imported for the first time. Oil imports increased 500 percent and came to supply most of the domestic demand. Arab countries attempted to change American foreign policvy through a oil embargo (1973). This did not work, but the dependence on foreign oil continued into the 21st century. Vast quantities of wealth were transferred to the Middle East and other oil exporters, including Russia. This suddenly changed (mid-2000s). President Obama as part of a green effort wanted to improve enviriomental conditioins by significantly increasing the price of oil which would have reduced consumption. It would have also caused a sharp recesion just as America was pulling out of a severe finncial criis. American oil men had other ideas. They developoed inovative new drilling techniques in shale areas (fracking and horizontal drilling). The result was aharp increases in dimestic unconventional shale oil and natural gas production. This brought oil and gas prices plummetuing and America is once a gain a major force in the world oil and gas industry. It also reduced oil prices, a major benefit for Europe abd refuced money flows into Russia, Middle Eastern, and other oil exporters.

Hydrocarbons

Hydrocarbons are organic compoundd consisting exclusively of hydrogen and carbon. Carbon has four electrons in its outermost shell and thus four bonds to make. It is only stable if all four bonds are made. The carbon atoms join together to form the framework of the compound, and the hydrogen atoms attach to them in many different configurations. The various hydrocarbon molecules contain different numbers of carbon anf hydrogen joined together in different patterns. There are two types: Aliphatic Hydrocarbon (open chain) and Cyclic Hydrocarbon (closed chain). Some of the important molecules include: benzene, butane, ethene, hexane, keroscene, methane, napthene, octane, propane, propene, and others. The most important fuels (diesel, gasoline, and aviation fuel) are not molecules, but are made up of a mix of hydrocarbon molecules. The exact mix defends on the crude oil and the refinery process. Oil drilling and petro-chemocals are sometime included within the mining sector. Drilling and mining are different and the product, oil and gas, is not a metal. Hydrocarbons occur in two primary forms: petroleum and natural gas. They at first were used fo lihting and lubricants. When the internal combustion engine was developed, it became a primary fuel. Chemists over time developed many othes uses for oil as a raw material to produce: plastics, fibres, rubbers, solvents, explosives, and industrial chemicals. Just as the 19th century was dominated by coal. The 20th century was dominated dominated by a whole new enery source--oil. Natural gas was at first flared, but by the late-20th century had becoming an increasinly important fuel and like oil as a raw material. Oil at first was used primarily to produce kersoscene for lighting as whale oil availability declined. It was also used as lubricants for industrial machinery. A major impetus for oil was the military competition in Europe leading to World War I. Navies began shifting to oil and airplanes and submarines could hardly be run on coal. The development of the intenal combustion engine also drove the demand of oil. Enviromentl concerns, especilly air quality, also drove the shift. This created a problem for Europe. The great powers (Britain, France, and Germany) had coal, but no oil. Russia had oil in the Caucauses, but was not yet industrualized, albeit rapidly growing. The one industrial power that had oil was the United States. And this made a major difference in World War I and II.

Kerosene: Home Lighting

Oil drilling and petro-chemicals became a part of the American mining complex (mid-19th century). At the time, there was only a limited market for oil. The primary home lighting product was whale oil. This changed as kerosene began to become an important home lighting product. Something was needed because populations were growing and whalers were depleting whale populations. At the time gasloine wasan unwanted byproduct of the refining process.

Gasoline and Diesel: Motor Vehicles

With the perfection of the internal combustion engine, creating a demand for gasoline and diesel. The demand was at first limited as automobiles were at first expensive luxury play things fpor the rich. Henry Ford and the Model-T changed this. Ford began to sell cars in huges numbers because they were cheap inexpensive enough that workers could aford them, at least American workers. And this dramtically increased the demand for gasoline and diesel.

Black Gold Rush

America and Russia were the only major powers with domestic oil resources. This would have a major inpact on the 20th century. A black gold rush began in Pennsylvania (1850s). It was part of a series of developments that would make America the most important industrial power by the turn of the 20th century.

American Oil Industry

One of the titans of indudtry was John D. Rockefeller who created a vast monopoly--the Standard Oil Company. Before Rockefeller becan fashioning the Standard Oil monopoly, there were large numbers of small companies. The United States came to control most (85 percent) of the world production and refining of oil. Much of this came to be controlled by Rockefeller's Standard Oil monopoly. Rockefeller's initial monopoly was not to sell gassoline for fuel, but primarily kerosene (paraffin) which became the primary home lighting fuel with the decline of the whaling fleet. Standard Oil began to face legal issues after the passage of the Sherman Antitrust Act (1890). The company also began to be criticized in the court of public opinion. Ida M. Tarbell, a McClure's Magazine begn to investigate. Standard Oil was forced to break up into 34 smaller companies (1911). [Standard Oil] Several of the derivative companies became oil giants in their own right. This changed after the turn of the century as America elecrtified and Henry Ford's Model T-Ford and internal combustion engine put America on wheels (1909). Gasoline and diesel replaced keroscene as the primary refinery products and the market grew far beyond that for kerosene. Gasoline had been nearly worthless up to this point. The perfection of the internal combustion engine changed this.

Economic Impact

Automobile production began in Europe, but Henry Ford's mass produced Model-T Ford was so inexpensive that even workers could afford it. This spawned a huge new industry that required vast quanities of steel, copper, and rubber. Nothing like this occurred in Europe where automobile construction remained a craft industry.

The 20th Century

The United States was the dominate country in world oil production for the first half of the 20th century. Henry Gord unleashed the Model T= on America (1908) and suddently a huge demand for fasoline wa screated. Oil was important in World War I and America provided all the oil the Allies needed (1914-18). Germany had very limited sources. American oil fields U.S. fields accounted for more than 70 percent of world oil production (1925). Even by the time of World War II and expanding Middle World production (Latin America, the Middl East, and Far East), America was still producing over 60 percent of world production. The United States and the Soviet Union were the only major beligerents with significant domestic oil production. Soviet production was asmall piortion of American production, bu it fully suopoplied the Red Anmy andc in German hands would have provided what the Germans needed it they suceeded in caoturing it. American production was still over 50 mpercent of world production (1950), but then began to decline as huge Middle Eastern field cane on line. As American poroduction began to decline, domestic fields could no longer supply domestic demand (about 1970).

Domestic Oil Fields

The major source of oil in the late-19th and early-20th century was the United States. Initally it was fields in Pennsylvania. The primary purose was to create kerosine for home lighting. Lubricatiion was also importabnt. European countries were also interested in oil for the same rasons. Oil production was a minor factor in the 19th century kerosene replaced whale oil and lubricants becoming essential un tghe undustrial revolution. With the develoment of the internal combustion engine and autmobile, oil became even more important. And European counties began developing oil fields as well. The oriobken here was that there was not much oil in Europe except for Romania and Russia. There was oil in European colionies and countries they inflouenced. Here the major British effort was in Iraq and Iran abnd Southeast Asia, esopecially British Borneo and the Dutch East Indies. The American oil industry with the discovery of the Spindletop field in Texas (1901) began a shift to the southern plains (Oaklahoma and Texas). his became the primary fields poducing oil. Pipelines would eventually be built to deliever oil to indystrial cities of the Midwest and Nirtheast. California also became very important, for a time supplying nearly 10 percet iof American production. Oil became a major California industry with the discovery on fields around Los Angeles and the San Joaquin Valley, and the huhge increase in demand for gasoline to fuel automobiles and trucks. Oil fields were also developed in Latin America, especially Venezuela. The break up of Standard oil spawned companies such as Cheveron, Esso/Exxon, Gulf Oil, Texaco, and others. The United States dominated the oil industry. And until after World Wat II, no matter where oil was produced around the world, the price was fixed at that of the Gulf of Mexico, today expressed as West Texas Intermediate (WTI). American production of oil would be a factor in World War I and a huge if no decisive factor in World War II. America had oil, the Axus (Germans. Italian, and Japanese) did not and needed it. And the war in many ways swirled arund the Axis efforts to obtain the oil neededv by the military abd industry.

Government policy

The American oil industry as a result of Americva's capitalist system operated in a uniquely favorable environment. There were huge rewards for the participants. Nineral resources including oil could be owned and developed by private individuals. The regulatory regime was minimal. There was favorable legal regime. Taxes were low. There was a cooperative system of national production control centered on the state of Texas which became the center of American production.

World War I (1914-18)

At the time of World War I (1914-18), resource challenged countries were dependant on the United States. This was not a major problem at the time as military technology did not yet rely heavily on mechanization. Armies moved long distanceds by rail and at the battlefield supplies and artillery were moved by horses. Major changes were underway. Oil was needed for aircraft and sunmaries. The new tanks required oil. There were advantage to shifting surface ships from coal to oil. The Royal Navy did it, the Germans did not because they had such limited sources of oil. America entered the War (1917). The United States did not have a sizeable arms industry and had to fight the War with British and French arms. What the Americans had were trucks which gave the Allies a major advantage in logistics.

American Companies

As a result of America's oil resources and vibrant capitalist economy, the first major oil compamy developed--the giant Standard Oil nonoply. The Federal Government broke up Standard Oil (1911), but the resulting components included some very bkarge comaonies. As a result, five of the seven great oil corporations (the Seven Sisters) that dominated the international oil industry after the break up of Standard Oil were American companie (Chevron/SoCal, Gulf, Esso, Mobil/Socony, and Texaco). These companies, along with the two British companies (Anglo-Iranian/BP and Royal Dutch Shell) also dominated the oil industries of the two main producing countries in Latin America (Mexico and Venezuela). The Seven Sisters supoorted by by their governments began obtining and developing oil concessions overseas in Latin Amnerica, the Middle East, and Southeast Asia. By the time of World War II, U.S. companies were responsibe for almost 4 percent of oil production outside the United States and the Soviet Union. British compsnies were resonsible for much of the rest. It was these companies that had the capital and adbanved technology needed to find and develop oil fields.

Inter-War Era (1920s-30s)

The Roaring Twenties ignited the American economy. Now more and more Americans had cars. And they wanted better cars, not just the venerable basic Model-T. The autiomobile industry boomed and the Tin Lizzie had all kinds of competition with heavier, more luxurios models and innovations like larger, more powerful engines, starter engines, enclosed cabs, chrom trim, apolstered comfortable seating, and much more. People had money to spend and cvars were a major way of spending it. This created a massive industry, exceeding the production of all of Europe. And it was a major factor in a massive industrial expansion that meant that by the time Hitler and Stalin launched World War II (1939), the American economy was comparable to that of Britain, France, and Germany combined. Americans had more and better cars and they wated to go places in them. This presented a problem--a national hoghway system id not exist. There were few improved roads beyond city limits. Outside the cities a btter desription was wagon trails, especially in the West. Many of the major routes which would become highways were the surviving vestiges of old historicv trails, such as the Oregon Trail or Santa Fe Trail. Automobile clubs like the American Automobile Association orhanized to lobby for better roads. We see the birth of named highays. The Lincoln Highway from New York to San Francisco was the first. Highway organizations were formed which placed and promoted their routes. Eventually there were over 250 named highways (1925). Colored signs marked these routes. Haphazard placement created motorist confusion. It became clear that the Federal Government would have tobecome involved to create a unified national highway system. Autmobile associations began demanding that the Bureau of Public Roads (part of the Department of Agriculture) study the idea. One idea was to give American highways a standard numerical designation. At the same time, road building technolgy was not only significantly improvbing and you begin to see improved roads at the Cajon Pass and over the Ridge Route. The Depression ended the car buying spree, but notably production coninued. Will Rogers quipped that "America was the first country to go to the poor house in the automobile." Refugees from the Dust Bowl heased to Califiornia in cars piled high with their belonings. All of this mean ever increasing quantities of oil was needed. And Texas oil men provided what was needed. The reprted important discoveries near Mexia in Limestone County and more in Navarro County. Oil was discovered in the Panhandle (1921). Major fields were developed all across Texas. The most important of all was found in East Texas. Other finfs included west-central Texas and more fields in the Gulf Coast. The Daisy Bradford No. 3 erupted blew in near Turnertown and Joinerville in Rusk County (October 1930). This was the beginnig of the vast East Texas field. Noted wildcatter C.M. (Dad) Joiner drilled the first East Texas well on land that had been ignored by the geologists wmployed by the oil majors. These would be the field that would fuel the Allied World War II effort. At the same time, the Majors (Gulf Oil, BP, Texaco, and Chevron) were awarded oncessions that made would eventually make major discoveries in Kuwait, Saudi Arabia, and Libya.

World War II (1939-45)

The automobile and the internal combustion engine appered in the late-19th century, first in Europe and then in America. It was a relatively small industry dominated by aarge number of smll companies, more craft shops than industrial comanies. The automobile was the play thing of the rich and well-to-do. Workers went to work on public transport, often horse-drawn trollies, and bicycles. Henry Ford changed everything, at least in America. The Model T Ford had been developed before the outbreak of World War I. The Model "T" brought the automobile within the price range of the average American. And Fordand other manufactures bgn to build cars and trucks in large numbers. One of America's contribution to the Allied World War I war ffort was trucks. The Allies were much more mechanized than the Germans by the end of the War. . This changed the face of America and cities as was a key step in creating the American car-culture. Not only was it amajor cog in expanding American industry, but it created greatly increased demand for oil to produce gasoline and lubricants (POL) products. The first oil was discovered in Pennsylvania, but vast new fields were developed in Texs nd Oaklahoma. Cities began to devlop around the automobile which became the very center of the country's econonomy and had profound consequences for the American life style, affecting work, leisure, sexuality, architecture, music, movies, and much more. Both the automobile and mass-consumerism played a key role in making modern America. It meant that the average American worker could aford an automobile and the Model T and other cars were built in the millions, it was an important factor in the expansion of American industry. And an oil industry was developed to supply the needed gasoline and other POL products. American oil production for military use by the end of the War was 18 times greater than in World War I. The productin of aviation gasoline about 80 times greater. Increadibly, about half the tonnage of supplies America shipped overseas was gasoline and other petroleum produvts. America was the largest producer of oil at the time of World War II. It fully supplies American needs as well as other countries. Japan was almost entirly dependent on American oil exports. Allied supremecy in World War II is commonly attributed to the industrial factories of America which overwealmed the Axis with an incrdible output of the instruments of War. They in many cases were not the best weapons, although quality rapidly improved during the War, but the sheer volume of procuction was decisive, arming not only American armies, but those of it allies. Sometimes neglected in this discussion is the important of American naturl resourcs. The Allies literaly floated to victory on aea of American oil. Even before America entered the War. American oil almost entirely supplied Britain in its life and death truggle with the Germans. And all the mecganized implements of war which flowed out of American factories were powered by American oil. The Soviets had plentiful oil, but needed American high octane aviation fuel. The British had Iraqi oil to supply the Desert Army. Other than this, it was primarily American oil that powered Allied armies.

Post-War Era

After the War, Americans came home and wanted homes in the suburbs and shiny new cars to get there. New highways criss-crossed the country. America had fallen in love with the automobile in the 1910s, but now Americans could aford far more luxurious cars (1950s). Vast quantities of oil were needed.

Oil Embargo (1973)

To feed the insatiable demand and as existing oil fields declined, oil had to be imported for the first time. Oil imports increased 500 percent and came to supply most of the domestic demand. Arab countries attempted to change American foreign policvy through a oil embargo (1973).

21st Century

The Arab Embargo did not work, but the American dependence on foreign oil continued into the 21st century. Vast quantities of wealth were transferred to the Middle East and other oil exporters, including Russia. This suddenly changed (mid-2000s). President Obama as part of a green effort wanted to improve enviriomental conditioins by significantly increasing the price of oil which would have reduced consumption. It would have also caused a sharp recesion just as America was pulling out of a severe finncial criis. American oil men had other ideas. They developoed inovative new drilling techniques in shale areas (fracking and horizontal drilling). The result was aharp increases in dimestic unconventional shale oil and natural gas production. This brought oil and gas prices plummetuing and America is once a gain a major force in the world oil and gas industry. It also reduced oil prices, a major benefit for Europe abd refuced money flows into Russia, Middle Eastern, and other oil exporters.

Sources

Standard Oil Co. of New Jersey v. United States (1911).

Created: 11:19 AM 4/15/2018
Last updated: 12:03 AM 1/6/202312:05 AM 1/6/2023