History Of Oil
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History Of Oil

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Quick history of modern petroleum industry ( 1850s to 1973)

Quick history of modern petroleum industry ( 1850s to 1973)

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History Of Oil Presentation Transcript

  • 1. History of oil- a quick glance
    Subhra Ghatak
  • 2. Three phases in history of petroleum up to OPEC’s shock in 1973
    Age of illumination: till Standard Oil
    War of worlds: quartermaster decides the winner
    Rise of Middle-East and Arab oil
    Historical mentions
    WW I: oil goes to war
    Anglo-Persian
    Turkish Petroleum Company
    Modern development
    Period between the wars: US gets on car
    US story: Standard Oil
    Saudi story
    OPEC and the first shock
    Russia and Europe
    WW II: oil decides fate
  • 3. Oil was known to the east of Roman empire since ancient ages
    Baku 1264 AD
    Greece 800 BC
    Hit 3000 BC
    Dated map
  • 4. It all started here in 1850s
    Technology was already developed
    A kerosene lamp was already developed
    Refining technology was developed, thanks to coal oil
    George Bissell from Hanover
    1853: Noticed oil seepage in PA
    1856: Planned the drilling method
    1857: sent “Colonel” Drake to Titusville
    Discovery of oil
    August 27,1859: oil was found
    10 barrel/ day
    1871: Titusville Oil Exchange opened
    ‘Colonel’ Drake
  • 5. The ensuing rush resulted in extreme volatility
    Pithole, PA captures the time
    A parcel of land: 1865: $ 2M 1876: $4.73
    Everyone was drilling for oil
    In oil creek alone 75 functioning wells
    Refineries totally depended on middlemen
    Volatility was bad for refiners and consumers
    Oil business needed a structure
  • 6. John D. Rockefeller provided the much needed structure to the industry
    1870: Standard Oil was incorporated
    Name signified quality and consistency
    1872: Rockefeller devised “Our Plan”
    Consolidate ENTIRE refining business
    Standard way of “War or peace”
    Tools: flattery, putting stress, price-cut, creation of barrel-shortage, propping false independent companies
    Rebates and Drawbacks: most infamous of Standard’s practice
    1887: Standard entered oil production in Lima, Ohio
    1891: Standard gained control of > 25% of US production
    Possessed control of ~85% of US oil market
  • 7. A piece of investigative journalism by Ida Tarbell destroyed the giant
    1911: Antitrust lawsuit forced Standard to dismantled into seven separate companies
    Standard of New Jersey:
    Standard of New York:
    Standard of California:
    Standard of Ohio:
    Standard of Indiana:
    Continental Oil:
    Atlantic Oil:
    Exxon
    Mobil
    Chevron
    US arm of BP
    Amoco
    Conoco
    Sun
  • 8. Gusher at Spindletop initiated Texas oil boom
    Jan’1901: Spindletop was discovered
    75,000 barrels/ day: more than rest of US production combined
    Captain Lucas found the oil
    The real discovery was made by Pattilino Higgins
    Melons of Pittsburg took management control
    Shell from UK agreed to purchase output
    Gulf Oil was formed: the first totally integrated oil company
    From production to marketing
  • 9. Nobel brothers were the biggest player in Europe
    1871: Robert Nobel reached Baku to purchase woods
    Bought a refinery
    1873: Ludwig visits Baku
    Huge transportation problem: Ludwig designs world’s first oil tanker-Zoroaster
    Highly scientific: first oil company to have permanent geologists
    1884: production reached 10.8M barrel
    Total control of European market
    Standard tried everything to acquire
    Stalin started trade union movement from Baku in 1907
    1920: post-revolution sold to Jersey at $7.5M
    The next major player in Russia was Rothschild family
  • 10. Royal Dutch Shell emerged as the biggest European powerhouse
    1880s: Rothschilds needed market for Russian oil
    Marcus Samuel, a trader at London was tapped
    Received permission to pass oil tankers through Suez
    Successfully carved market share from Standard ( unexpected roadblock: packaging)
    Signed agreement to purchase Spindletop oil
    1885: Oil was found in Dutch East indies
    1890: Royal Dutch company was formed
    Henry Deterding, the CEO, realized importance of collaborating with Shell
    1901: Standard made an offer of $40M to purchase Shell
    Shell refused and created a marketing arrangement with Royal Dutch
    Spindletop , the Texas gusher, dried out and British Navy refused Shell’s proposal to convert to oil
    1907: Shell merged with Royal Dutch ( 40: 60 ownership)
  • 11. WWI: “The allied floated to victory upon a wave of oil”
    Sep’1914: Taxis of the Marne
    First instance of petroleum fuel in battle
    Britain identified oil’s importance before war started
    1912-1914: Navy switched to oil
    Purchased share of Anglo-Persian Oil Co
    War moved to air
    Jan’1915: 250 planes
    1918: 55,000 planes
    Germany did not have own oil
    British destroyed every refinery in Rumania just before Germany moved in
    Blocked Turkish attempt to invade Baku
    Oct’18: ran out of oil stock; Nov’18: Surrendered
  • 12. Period between WWI and WWII saw rapid shift to automobile
    US people moved from horse to cars
    1920: # of Automobiles in US < 100,000
    1929: # of Automobiles in US > 300,000
    Major oil reserves discovered in Latin America
    1921: Mexico became second largest oil producer
    1922: Shell engineer George Reynolds discovered oil in Venezuela
    1929: Venezuela replaced Mexico from second spot
    Dad Joiner discovered Black Giant in eastern Texas in 1931
    Daily production: 340,000 barrels ( more than 3 times that of Spindletop)
    Price of oil fell
  • 13. WWII: Lack of oil was the most important factor suffocating Japan
    1940: Advances towards Dutch East Indies
    Jul’41: US froze Japanese accounts
    80% of petroleum import was from US
    Till Nov’41 tried to remove embargo
    Dec 7, 1941: Pearl Harbor
    1942: Japan won Sumatran oilfields
    1943: Oil supply to Japan peaked
    1944: US started sinking Japanese tankers (86% ships were sunk)
    Dry Japan: 4% of 1940 consumption
    Direct warfare of Japanese
    Jun’44: Great Mariana turkey shoot
    Kamikaze warfare
    Pine root craze of 1945
  • 14. “If I do not get the oil of Maikop and Grozny then I must end this war”
    1930’s: IG Farben led the research in hydrogenation
    1939 Germany: 46% of national oil supply and 95% of aviation fuel was synthetic
    Located plants near Auschwitz to utilize slave labor
    Russian Front: 1942: Initiated operation Blau to get Caucasian oil
    Faced oil supply issues even before reaching oil field: captured Soviet supply was diesel
    Decisive battle at Stalingrad: surviving German troupes had fuel for 20 miles, escape was only 30 miles away
    African front : “The battle is fought and decided by quartermasters before shooting begins”-Rommel
    West Europe
    Dec’1944: Battle of Ardennes- caught allied by surprise but additional forces were stuck for lack of fuel.
  • 15. Middle-east: Initial years
    1901: D’Arcy bought Iran concession
    British government joined in
    1908: Oil discovered by George Reynolds
    1951-53: Nationalization and coup
    BP
    Turkish Petroleum Co: First cartel
    1912: Concession for Ottoman empire
    1912: Anglo-Persian, Deutsche Bank, Gulbenkian
    1920: Anglo-Persian, Shell, French, US consortium, Gulbenkian
    1927: Stuck Oil
    1928: Red Line Agreement
    1972: Nationalized by Iraq government
  • 16. There was no taker for world’s richest oilfield
    1925: Frank Holmes purchased concession: but negative reports
    1935: SoCal, not in red line, bought Saudi concession
    1938: discovered huge reserve of oil
    Formed partnership with Texaco: Casoc ( 1944: Aramoco)
    Feb’1943: started lobbying with US govt. to help Saudi royalty to keep British away
    18th Feb: First of many US assistance to royal family ( a year earlier Roosevelt commented, Saudi is of little importance)
    Roosevelt traveled to Egypt to meet King Ibn Saud
    Desperate Jersey and SOCONY lobbied to nullify red line agreement
    US government declared red line illegal, later bypassed the agreement
  • 17. OPEC: Events leading to the first oil shock
    1959: Wanda Jablowski arranged an undercover meeting of oil ministers
    OPEC: a “gentlemen’s agreement” was formed
    1973: US oil import rose 3 times that of 1967 after a decade of oversupply
    Oct-6: Egypt and Syria attacks Israel ( first time Israel is surprised)
    Oct-8: OPEC asked 100% price rise
    Oct-12: Nixon receives two letters
    1: CEOs of Exxon, Mobil, Texaco, Socal
    2: Golda Meir
    Oct-13: America sends secret supply to Israel that became open
    Oct-16: OPEC oil ministers declare 70% price rise ( from $2.9 to $5.12)
    Oct-17: OPEC oil ministers declare 5% production cut
    Oct-19: US announces $2.2B military aid to Israel
    Oct-20: Saudi stops export to US: first embargo
    Dec-22: OPEC meets again. Iran’s shah proposes $11.65 as price (based on an Arthur D. Little case)
    Price rises by 300% within two months ( Oct’73 to Dec’73)
  • 18. Appendix
  • 19. Detail of the investigative piece by Ida Tarbell
    Ida Tarbell wanted to do a story on the Trust
    Her father was an independent oilman
    Mark Twain arranged meeting with HH Rogers
    Hell hound Rogers: No. 2 at Standard
    Benefactor or Mark Twain and Helen Keller
    Rogers even arranged a desk for Ms. Tarbell at Standard office
    Nov’1902 first installment was published
    1905: ended with a virulent Personal sketch of Rockefeller