This document provides a summary of the history of oil from the 1850s discovery of oil in Pennsylvania through the 1973 oil crisis. It covers 3 phases: 1) the age of illumination until the rise of Standard Oil in the late 19th century, 2) two world wars where control of oil increasingly determined outcomes, and 3) the rise of OPEC and the Middle East leading to the 1973 oil embargo and price shock. Key events included Colonel Drake's 1859 well in Titusville PA launching the industry, Rockefeller consolidating refiners under Standard Oil, two world wars demonstrating oil's military importance, and OPEC actions in 1973 quadrupling oil prices.

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