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

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