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Friday Fun: The History of Oil Production

The history of petroleum oil production is a long one, beginning in the late 1800s. Oil in both the developed and emerging markets continues to play an enormous role in the global economy and in energy and manufacturing industries.


The explorers of the Americas began documenting oil deposits in California as early as the 16th century, and there are documents of oil deposits along the east coast of the United States on a map from 1775.

Before petroleum was refined into gasoline, the most common form of energy was kerosene, which was distilled from rock oil shale, and used for lighting, medical uses, and lubricants. Whale oil, which was previously used in oil lamps, saw price increases and scarcity due to overproduction.

The first oil corporation was the Pennsylvania Rock Oil Company, which pioneered the technique of producing oil from the source using a drill in 1859.

The success of this endeavor caught the interest of J.D. Rockefeller, who soon became a leading figure in the oil industry when he created the basis of the Standard Oil Company in 1867. By 1870, Standard Oil was the leading producer of oil in Pennsylvania. Rockefeller’s model owed much of its success to the use of pipelines, which allowed cheap, efficient distribution of oil. The expanding United States railroad system made it even more lucrative to ship oil across long distances.

Product prices soon declined and Standard oil became a part of the Standard Oil Alliance, and invested in ways to make kerosene production easier and more efficient with the aid of chemists like Hermann Frasch II. Soon oil was being exported throughout the United States, and overseas to Europe.

Along the west coast of the United States, oil companies began to emerge.  In 1897, there were two hundred oil companies in the area around Los Angeles.

In 1901 a huge oil strike in Beaumont, TX sparked a huge increase in oil production. By 1902, there were more than 1500 chartered oil companies. Of those, the longest lasting were Gulf Oil Production, Magnolia Petroleum Company, and the Texas Company. The discovery in Beaumont was followed by more oil strikes, and by 1909, the United States produced more oil than any other country in the world combined.

In 1911 the Supreme Court declared Standard Oil a monopoly, and ordered the trust dissolved, which allowed more competition among the emerging oil companies of the early 1900s.

The oil industry became vital when gasoline was began to be used for fuel in early-model airplanes and vehicles. WWI proved how vital a steady supply of oil would become for future decades.

With the Great Depression came a sharp drop in oil prices, which were later stabilized in the New Deal, and further restored by the onset of WWII. Oil played a key role both during and after the war, and eased Europe through a coal shortage immediately after the war.

Oil became important to development of a Middle Eastern diplomatic policy in the 1950s, with the first Iranian crisis, and continuing on to the invasion of Kuwait in 1990. As  readily available oil reserves in the United States were depleted, oil was increasingly exported from outside sources such as the Middle East and Venezuela.

Cheap and plentiful oil became a way of life for much of the developed world. However, with lowered production capabilities, lower prices, and climate change concerns, the next few decades might prove to be a turning point in how oil is drilled and produced. The key to the future of oil is better efficiency in drilling and refining, combined with better methods of capturing and offsetting carbon emissions.

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