A Brief History of Oil

Today, every man woman and child in the United States is responsible for the consumption of over 3 gallons of oil every single day. This rate of consumption has farreaching implications for our security, our environment, and our relationship with the rest of the world. I want to talk a little bit about how we got here.

Let’s start at the beginning. Oil is the product of the decayed remains of billions of sea creatures that grabbed sunlight out of the air and turned it into living tissue. It is the concentrated essence of many millions of years of ancient sunlight. Our planet has borne somewhere around 2 trillion barrels of oil, that is 84 trillion gallons of oil, in an elaborate sequence of events taking place over millions of years, enlisting the carcasses of billions of creatures, the rising and falling of ancient seas, and the shifting of tons of rock.

Two-thirds of the world’s oil is trapped in the Middle East, making its presence known to the earliest humans who settled there by oozing slowly to the surface. Plumes of natural gas spurted out of the crust along with pools of oil, spontaneously burning, inspiring the fireworshipping religion of Zoroastrianism, the official religion of Persia for over 400 years. These were the everlasting fires of Biblical times.

The Mesopotamians dug up over 50,000 kilograms of petroleum sludge. The Persians filled pots with crude mixed with sulfur, which they’d set afire and hurl at their enemies. They gathered the strange liquid, divining the future from the shapes it would make when thrown into water. They gummed it onto their boats and houses to create watertight seals.

But it is here in the United States that oil extraction began in earnest, in 1859, when a former railroad conductor drilled a hole on a farm in Pennsylvania near where oil had been spotted seeping out of the ground. At 69 feet, the hole started, incredibly, to fill with dark fluid. By 1862, entrepreneurial oil drillers were bringing up 3 million barrels of Pennsylvania’s oil annually. Within 30 years, the better part of the state’s oil was gone.

Oil is a uniquely rich energy source. The amount of energy stored in a gallon of oil is equal to the amount in 5 kg of coal, more than 10 kg of wood, or more than 50 human slaves toiling the day away. The best oil is so energy rich that it can provide 100 times more energy than its extraction requires.

Crude oil, when it comes out of the ground, though, is a messy mix of different kinds of hydrocarbon molecules, all of which burn at different temperatures. But by distilling the stuff, certain fractions can be reliably produced, and their explosive energy can be reliably harnessed. In the late 19th century, only one fraction of crude was considered useful: kerosene, used for lighting.

The entrepreneur John D. Rockefeller built his fortune on the market for kerosene. But then, in 1879, Thomas Edison invented the incandescent light bulb, and demand for kerosene, and thus oil as well, collapsed. By then, Rockefeller’s Standard Oil Company had already moved on to the oilfields of Ohio and Indiana. The company was swimming in oil. A new market had to be found, and fast.

Cars were hardly popular when they first appeared on the scene less than a decade later. Here’s what the New York Times had to say in 1899: “There is something uncanny about these newfangled vehicles. They are unutterably ugly and never a one of them has been provided with a good or even an endurable name. The French, who are usually orthodox in their etymology…have evolved ‘automobile’ which being half Greek and half Latin is so near indecent that we print it with hesitation.”

Not only were cars ugly and indecent, they were inefficient compared to the trains and bicycles of the day—even today’s cars require three times more energy than trains and 30 times more energy than bicycles to transport people a given distance. And where could they be used? Roads for the cars to be driven on, where they existed, were mostly rutted and impassable.

But, unlike coal-powered trains and people-powered bicycles, the car needed oil, and only oil, to run. Within a decade of the invention of the internal combustion engine, gasoline sales had surpassed kerosene. Over the following decades, oil and car companies bought and dismantled the popular electric trolley system in 45 American cities, forcing consumers to opt for oil-burning buses or cars instead. They successfully lobbied the government to build a massive network of smooth roads and highways for gasoline-burning automobiles. The new roads sent American society sprawling across our giant land-mass, exploiting every last corner of its natural wealth. By 1955, Americans owned 50 million cars; 20 years later, they owned twice that number.

Investors abandoned the bicycle paths they planned to construct, such as one linking Pasadena to Los Angeles, halfbuilt. The vast amounts of oil needed to run the nation’s cars and trucks created a gigantic river of crude byproducts, which industry scientists fashioned into the petrochemicals and fertilizers that would find their way into every nook and cranny of society, our closets full of petro-polyster clothes; our medicine cabinets stocked with petro-plastic bottles of petrochemical-derived drugs; our refrigerators full of petro-fertilized foods brought to us on diesel-burning trucks. Now we were hooked for good, consuming crude about 100,000 times faster than it could possibly accumulate again.

It wouldn’t have seemed to matter back then. America was the land of oil plenty. The United States was home to the second biggest oil reserves in the world—more oil lurked underfoot right here than was under Iraq. When a crotchety geologist named M. King Hubbert warned that the American oil bonanza would come to an end within a couple decades, very few listened.

During most of the first century of global oil consumption, along with extracting crude from Texas and Oklahoma, Western oil companies drilled into abundant reservoirs in the Middle East, Russia, and Mexico.

By 1960, with the formation of OPEC, though, they’d been kicked out of all of these countries, and would find themselves shorn of access to more than half of the world’s oil and the vast majority of it that lies in easy-to-find and cheap-to-produce areas. By the early 1970’s, the predictions of that crotchety old geologist came true, and the flow of oil from the vast oilfields of the United States started to sputter.

And so when OPEC ministers voted to cauterize the arteries pumping oil to the United States in 1973, Americans were forced to ration their energy use. The Department of Energy was formed. Gas stations were banned from selling gas on Sundays. The first fuel economy standards were instituted on vehicles, and several billion barrels of oil were squirreled away in Louisiana’s salt domes, for safekeeping. After yet another oil shock in 1979, when Islamic fundamentalists overthrew the Shah of Iran, America’s shaking hand curled into a fist. From then on, President Jimmy Carter announced, the United States would smother any hostile act that might curb its flow of Middle Eastern oil, using “any means necessary.”

For, by then, Western leaders understood oil as essential to the economy and to their own military prowess. If in World War I the Allied cause had “floated to victory upon a wave of oil,” as one statesman famously put it, within a handful of decades oil would become so crucial to military might that US forces were mostly made of oil. Today, no less than 70 percent of the entire weight of all of the soldiers, vehicles, and weapons of the US army is pure fuel.

And so, having been shut out of oil’s most prolific reservoirs in the Middle East, Western oil companies—many of which are the progeny of Rockefeller’s Standard Oil—stepped up their hunt for oil in its more hidden corners, under the protective wing of US and British officials. They looked, for instance, in Alaska, where the ground was permanently frozen down to 2,000 feet, and in the North Sea, a sea so turbulent that one of its storms had vanquished an entire invading armada back in 1588.

When some 20-odd billion barrels of oil were discovered in these regions, the technology to pry the crude out barely existed. But with higher oil prices, public panic of dependence on “foreign” oil, and aggressive government subsidies, a whole new generation of technology was successfully forged in order to extract North Sea and Alaskan oil.

During the 1980s, the oil flowed profusely and American oil consumption proceeded unhindered, as the price of oil fell below the price of bottled water. The solar panels installed on top of the White House were ostentatiously removed. But it wasn’t long before the flow of oil from these two new oil patches had peaked, near the end of the decade. Leaving behind an unpaid $10 billion tab needed to rehabilitate the north slope of Alaska, and 300 million gallons of toxic sludge at the bottom of the North Sea, along with dozens of rickety, aging rigs, oil companies were forced once again to renew their hunt for more oil.

Oil in the earth’s crust is not unlike blood in our own bodies. If a body is pierced by a thousand holes, blood will gush out to begin with, and then, when about half of its volume has been spent, the flow will slow to a lazy dribble. That point, when about half of the world’s conventional oil supply has been spent, now approaches. According to industry analysts, the flow of oil and gas from the known oilfields around the world will decline at a rate of about 3 to 5 percent a year. These declines are hardly offset by new finds.

Meanwhile, global desire for crude only increases, marching ever-upwards at a rate of about 2 percent a year. While oil executives and government officials often paint this ever-increasing demand for oil as the inevitable result of human progress and development, it is also the result of years of hard work on the part of the oil and auto industries, advertising the joys of the petro-life in order to maintain strong demand for their products.

Today, the market in oil is like a jampacked highway. Sometimes the traffic moves freely, but even the tiniest anomaly—a driver taps on the brakes to change a CD—and the entire system backs up for miles. In 2004, we had the first of a chain of anomalies. China consumed a bit more oil than expected— not that much more, mind you: it was as if each person in China consumed one ounce more oil every day—while a series of hurricanes crippled oil facilities in the Gulf of Mexico. The jam-packed highway that is our oil market was thrown into pandemonium. The price of oil started to rise, and it hasn’t come down since. It doesn’t take much to send prices even higher—a burst pipeline in Alaska, a few riots in Nigeria. So far demand for crude has hardly dampened, despite it.

If global demand for oil continues to rise unabated, the industry will have to do more. According to the Institute of Petroleum, an industry think-tank in London, oil companies will have to invest no less than $1 trillion in new fossil fuel exploration and development in order to sate protected global demand. But they haven’t done it yet, essentially because they’re waiting to see what the rest of us will do. “We don’t want to build capacity,” said the Saudi Arabian oil minister, “without demand.” Will Americans pay $100 or more to fill up their tanks? Or will we start considering other options? Our as-yet-unformed energy future hangs on these and other still-open questions.

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