Petroleum History

When Colonel Edwin Drake drilled the first successful oil well in Titusville, Pennsylvania in 1859, few had any idea of how petroleum would change the world. Drake and his backers were looking for a source of kerosene to be used for lighting fuel. For most of the 19th century, gasoline was merely a byproduct of the production of kerosene, with few commercial uses. The remarkable transformation in mobility of people and goods began only after the beginning of the new century.
The primary market for oil had begun to disappear when Thomas Edison invented the light bulb and created the electrical generation industry. In 1882, Edison threw a switch to start the first commercial electrical generating plant and, by the turn of the century, there were over 18 million lightbulbs in use in the U.S. alone. The oil industry lost its major market.
The invention of the automobile changed all that. At the beginning of 20th century there were about 8,000 registered vehicles, and by 1920 there were 23 million cars. However, it was not clear whether gasoline engines would be used to fuel the automobile. Early models were powered by steam and electricity as well as gasoline; in the early 1900s most were electric. Yet, gasoline-powered engines turned out to be the most practical design because battery-powered engines did not have sufficient range. With the construction of a network of gasoline filling stations, the infrastructure was put in place to ensure a consistent supply of fuel. Therefore, gasoline-powered automobiles captured the market.
World War I irrevocably changed the role of petroleum in the world. When the war began, military planning focused on the horse as the primary mode of transportation. It assumed that one horse was needed for every three soldiers, which provided a logistical problem since the horses required ten times as much food. When Britain entered the war, it had only about 800 motor vehicles, most of which were requisitioned from private citizens.
By the end of the war, Britain had 56,000 trucks and 36,000 cars. In addition, the U.S. shipped over 50,000 vehicles to Europe and, in one and a half years, built 15,000 planes. Motorized transport began to dramatically change the nature of war. The development of the airplane and the tank, which was first used at the Battle of the Somme in 1918, provided both mobility and power that was unprecedented in the history of warfare.
Oil began to provide a critical advantage that changed how nations regarded this natural resource. Previously, oil was seen as a commodity brought to market by a few entrepreneurs; after WWI, it was regarded as a strategic mineral for which supplies had to be ensured. During the war, Britain had converted their ships from coal-burning to oil-powered to give them increased speed and mobility. During this same time, Germany’s submarine attacks in the Atlantic cut off Britain’s oil shipments and nearly brought defeat.
After the war, one of the priorities of both Britain and France was to ensure their access to oil, particularly in Mesopotamia, where oil had been discovered in 1908. Division of spheres of interest in that region were heavily influenced by the potential of oil within the region. However, until the 1940s, the United States was the world’s leader in oil production, producing 65 percent of the world’s oil. In 1940, the Middle East accounted for less than 5 percent of total production.
This changed dramatically with the discovery of “supergiant” oil fields in Kuwait and Saudi Arabia in the 1930s and 1940s. Throughout the world, a growing reliance on Middle East oil became a serious concern. In the U.S., it was due to the oil shocks of the 1970s. The first shock occurred in 1973 after Egypt and Syria attacked Israel. The U.S. had furnished arms to Israel and the Middle Eastern countries responded by imposing an oil embargo on the U.S., which led to long lines at gasoline stations. The U.S., led by President Gerald Ford, launched a national effort to reduce dependence on Middle Eastern oil through “Project Independence,” a ten-year plan to build 150 coal-fired power plants and 200 nuclear plants, in addition to building synfuel plants. This project was meant to ensure that the U.S. had a domestic supply of critical energy supplies; however, after the oil shortages subsided, so did much of the interest in the new initiatives.
The second oil shock occurred during 1978-1979 after the fall of Iran. Panic buying drove up prices and depleted supplies, resulting once again in long lines at gasoline stations.

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