Taken from Answers.com
Gale Encyclopedia of US History:
History, Politics & Society
US History Ency
Petroleum, Latin for "rock oil, " fuels 60 percent of all
humans use. It also provides the
raw material for synthetic cloth, plastics, paint, ink, tires, drugs and medicines, and many other
Crude oil can be separated into many different parts called fractions, each of which boils at a
ture. As crude oil is boiled, the different fractions vaporize and rise to various
levels of the
tower, also called a still. Thinner oils boil at lower temperatures and
ch the top of the tower before they
. The heavier oils, which boil at
higher temperatures, do not reach as high before condensing. The lightest vapors, from the
thinnest oils, produce liquefied
can be changed into a variety
of products: plastics, clothes fabrics, paints,
food additives, lawn chemicals, and more than 6,000 other everyday products. The middle
vapors result in gasoline,
, and diesel fuel, as well as jet fuel (a form of kerosene). Next
come the fractions that make home heating oil and fuel for ships and factories. The heaviest oil
, which can also be turned into items such as candle wax. At
the very bottom of the distillation tower is the
sludge, also called bitumen, which is used
that makes roads and roofing.
At the beginning of the twenty
first century, 1.5 million people in the United States were
employed in the petroleum industry, which fueled 97 percent of American transportation. Oil
provided 38 percent of the country's energy, while natural gas, which is either mixed with the
crude oil or lying as a separate layer on top of it, accounted for 24
Petroleum's Commercial Beginnings
Although people knew of oil prior to 1850 and even had some uses for it, primarily as lamp fuel,
it was not a sought
after commodity. Oil bubbled to the surface in "seeps, "
and several of these
could be found along Oil Creek near
, Pennsylvania. No one was able to collect enough
oil to make it an economically sound venture. Titusville resident Joel Ang
ier transacted the first
petroleum lease in 1853 when he leased a portion of an Oil Creek seep from a local saw mill.
Although Angier's collection, like those before him, was not economically viable, enough of his
oil made it to commercial centers to
interest in its use and begin theories regarding its
extraction. Downstream, farmer Hamilton McClintock gathered enough oil from another
wenty or thirty forty
gallon barrels in a season. His was the largest oil operation of
its day, and it set the standard for measurement of oil. Although forty
gallon barrels are no
longer used, this is still the measurement used for oil production.
interest from an investment group from New York and Connecticut, but his $7,000 asking
Another group, the Pennsylvania Rock Oil Company of New York, later renamed the Seneca Oil
Company, purchased Angier's seep for $5,000. Company principals George H. Bissell and
an G. Eveleth hired Benjamin Silliman Jr., a professor of chemistry at Yale, to analyze the
crude oil from their seep. Silliman produced an 1855 report that determined crude oil could be
separated into fractions, each with a use. His report emphasized that
one of the fractions could be
useful as a high
quality illuminant. This report enabled Bissell to get additional financing for his
oil venture. The Seneca Oil Company hired Edwin Drake to extract the oil. His first attempt
of crude a day, which was not enough to provide a return on the
investment. Drake attempted to increase production by opening more springs and trying to mine
the oil, but neither met with
. He eventually settled on drilling. He hired salt well driller
Billy Smith, who drilled to a depth of 69.5 feet on 27 August 1859. The next day Smith looked
into the well and saw crude oil rising up in it. Repor
ts claim this well's productivity ranged
anywhere from ten to forty barrels per day, a minimum of a 400
fold increase in production. This
discovery of a method for extracting larger quantities of oil generated the first oil boom. People
nia, leasing the flats around Oil Creek. By 1861, the commonwealth's wells
were producing more than 2 million barrels annually, accounting for half the world's oil
Birth of the Modern Oil Industry
In 1900, worldwide crude oil production stood a
t nearly 150 million barrels. Illuminants served
as the primary product of the oil industry, but new inventions such as the automobile and the
airplane used petroleum as fuel. Gasoline was also used as an industrial
. Initially a barrel
of oil yielded eleven gallons of gasoline. Refining began in 1850, when James Young of England
patented the first oil refining process. Samuel Kier founded the first commercial refining process
in the United States
in the 1860s. In 1913, refineries achieved their first major technological
breakthrough, adding heat to the oil molecules, thereby "cracking" heavier molecules of
into lighter molecules. By the 1960s, a barrel of oil yielded more than 21 gallons
of gasoline, nearly double the production of the first two decades of the twentieth century.
Catalytic cracking in 1936 produced a higher
fuel as well as the lighter gases that
provided the first step in producing five major products: synthetic rubber, plastics, textiles,
detergents, and agricultural chemicals.
While Pennsylvania was initially the biggest oil produci
ng state, that didn't stop people from
hunting elsewhere. Independent oil prospectors, known as wildcatters, as well as oil companies,
discovered oil in Ohio, Indiana, Illinois, Oklahoma, Kansas, California, and Texas. Often oil was
discovered by people dr
illing for water, as happened with the Corsicana field in Texas.
Pennsylvania oilman John Galey and his partner, James Guffy, came to Texas at the
Anthony Lucas, an engineer and salt miner worki
ng for Patillo Higgins, who believed oil could
be found under salt domes. In particular, Higgins was eyeing Spindletop, a hill whose elevation
had increased over the centuries as the salt continued to rise under the surface. Galey had drilled
to 1,020 feet
by 10 January 1901. When the drill was pulled out to change equipment, mud began
to bubble up the hole, and the drill pipe was shoved out of the hole with tremendous force. Mud
followed by natural gas followed by oil shot out of the ground to a height of
more than 150 feet,
the first "
" experienced by the oil industry. The Lucas gusher produced at an initial rate of
100,000 barrels per day, more than all the other producing wells in the United State
In a matter of months the population of nearby Beaumont, Texas, swelled five times, to 50,000
residents, and more than 100 different oil companies put wells on Spindletop. The find was
instrumental in creating several large oil companies such a
s Gulf, Amoco, and Humble, which
became part of Standard Oil. It also gave rise to a new drilling technique, since drilling through
several hundred feet of sand had proved problematical. Driller Curt Hamill pumped mud rather
than water down the drill hole
to keep the rotary drill bit cool and to
out the cuttings. The
mud stuck to the sides of the hole and prevented the sand from caving. Since then, mud has been
used in almost every drill hole around t
While companies retrieved $50 million in oil from the salt dome, they had invested $80 million.
Consequently, the site was familiarly known as "Swindletop." It served to
in the modern
f oil, causing the industry to realize that tremendous potential existed for the vast amounts
that had barely been tapped. It became the fuel of choice for
ion, everything from ships and trains to cars and planes. Worldwide oil production in
1925 stood at 1
barrels and doubled fifteen years later.
Transportation of Oil
Horses served as the primary m
eans of transporting machinery to the oil field, as well as carrying
the product to refineries, in the early Pennsylvania oil fields. By 1865 horses had been
supplanted by the newly completed rail line, and tank cars, originally two open tubs, were
ed for rail transport. The first pipeline was developed in 1863, when Samuel Van Syckle
pumped crude through five miles of a two
inch pipe from the
field in western
Pennsylvania to a railroad ter
minal. In the 1870s a six
inch pipeline ran from oil fields to
, Pennsylvania, 130 miles away. Ten years later pipelines ran from Pennsylvania to
Cleveland, Buffalo, and New York City. At the end of the twentieth century, the United States
had over 1 million miles of oil pipeline in use. Most pipelines were buried, wi
th the exception to
Alaska pipeline, built partially above ground in the 1970s to prevent
damaging the fragile
The California oil boom in the 1920s gave rise to yet anot
her industry, that of the
Removed from the industrial centers in the East, California looked over
seas for its market. The
first tanker, the
took its maiden voyage in 1896
. From that beginning, petroleum
and petroleum products now account for nearly half the world's
trade. The materials are
hauled on supertankers, the largest ships ever built, a quarter mile lon
g and half a million tons in
weight, shipping 1 million barrels of oil.
The Politics of Oil
Attempts to control the oil industry began as early as the 1870s, when the newly
Standard Oil Company, established by brothers John D. and William Rockefelle
r, sought to gain
a monopoly in the industry. They made generous profit offers to companies that merged with
them and threatened those that didn't. Early success was recognized in the rapid rise of Standard
Oil's market share, from 10 percent in 1872 to 95
percent by 1880, but Standard Oil couldn't
control the rapid pace of discovery and development of new fields over the next two decades. By
the time the U.S. Supreme Court dissolved the Standard Oil Company into 34 separate
companies for violating the
Sherman Antitrust Act
of 1911, Standard's market share had dropped
to 65 percent.
By 1925 the United States was supplying 71 percent of the world's oil. Increased production in
Oklahoma and Eas
t Texas in the wake of the Great Depression, between 1929 and 1932, caused
, dropping the price of oil to a low of 10 cents per barrel. This resulted in the Interstate
Oil Compact of 1935, follow
ed by the Connally "Hot Oil" Act, which prohibited interstate
of oil produced in violation of state conservation laws. The intent was to coordinate the
conservation of crude oil production in t
he United States, and was the first attempt by the federal
government to control the supply and demand of the industry. The government stepped in again
in 1942, rationing civilian petroleum supplies during World War II. In 1945, the last year of the
third of domestically produced petroleum was going to the war effort.
Continual expansion of offshore drilling gave rise to the 1953 U.S. Submerged Lands Act, which
determined that the federal government's ownership of land extends three miles from the
coastline. That same year Congress passed the Outer Continental Shelf Lands Act, which
provided federal jurisdiction over the shelf and authorized the secretary of the interior to lease
those lands for mineral development.
Domestic production of crude oil
doubled after the war, but demand tripled. The United States
accounted for over half the world's oil production in 1950, but Americans were also using all
they produced and more, for the first time becoming a net importer of oil. Thirty years previously
e United States had imported only 2 percent of its total petroleum. Now imports accounted for
17 percent of the total. Thirty years after that, in 1980, the United States was importing 45
percent of its petroleum. By 2002 the United States was importing 56
percent of its petroleum,
and that figure was projected to grow to 65 percent by the year 2020.
Government regulation of the oil industry reached a
of invasiveness in the 1970s, as the
government sought to reduce import dependency, encourage domestic production, and stabilize
. These actions were largely a result of an embargo of oil exports by the Persian Gulf
nations of the Middle East. Reacting to the United States' support for Israel in the 1973 Arab
Israeli war, the
Organization of Petroleum Exporting Countries (OPEC) nat
ions withheld their oil exports,
driving the cost of petroleumfrom$5 per barrel in the late 1960s to $35 per barrel in 1981.
At the same time, domestic oil production declined from 9.6 million barrels a day in 1970 to 8.6
million barrels in 1980. To addres
s the demand and supply issue, President Richard Nixon
created what amounted to a paradoxical energy policy: to restrict imports and reduce
foreign oil, while at the same time encouraging im
ports to protect domestic reserves and
encourage lower prices for domestic use. He first imposed price controls on oil in 1971 and then,
two years later, abolished the import quotas established twenty years earlier by the
administration. Nixon's 1973 "Project Independence" was a plan to make the United States self
sufficient in oil by 1985 by increasing domestic supplies, developing alternative energy sources,
and conserving resourc
es. His successor, Gerald Ford, continued a program to reduce reliance on
foreign oil through reduction of demand and increased domestic production. Ford focused on
transporting oil from Alaska and leasing the outer continental shelf for drilling. He also
established the Strategic Petroleum Reserve, a federal storage of oil. By 2002 the reserve stood at
578 million barrels of crude, equal to a fifty
day supply of imports. President Jimmy Carter
created a National
in 1977. He wanted to increase taxes to reduce demand, impose
price controls, and shift consumption from imported to domestic sources. He also wanted to
direct the nation toward nuclear energy. Despite the attempts of
three administrations to reduce
national dependence on foreign oil, all of these policies had little impact on oil imports.
American imports from OPEC continued to increase throughout the 1970s. By the beginning of
first century OPEC provided 42
percent of the United States' imported oil and 24
percent of the total oil used in the United States. The 1979 revolution in Iran curtailed U.S.
supply from that country and drove prices to unprecedented levels for three years. The Iranian
tion eventually stabilized by 1982, and the oil crisis
for the first time in over
The American political policy toward oil under presidents Ronald Reagan and George H. W.
Bush adhered t
o a free
market philosophy. Reagan abandoned conservation and alternative
energy initiatives and deregulated oil prices, policies continued by Bush. One result of these
policies was an increase in imports from the Middle East, and by 1990 the Persian Gulf
were supplying 600 million of America's 2.2 billion imported barrels annually. President Reagan
also signed Proclamation 5030 in 1983, establishing the "U.S. exclusive economic zone, "
claiming U.S. rights 200 nautical miles off national coastlines,
in an effort to expand the search
A rift in OPEC in the mid
1980s over market share helped cause a collapse of oil prices. Prices
plummeted to as low as $10 per barrel, down from a high of $31. While a boon for consumers,
this caused a severe
in regions of the United States where much of the industry
revolved around petroleum. In 1983 Texas, Alaska, Louisiana, and California accounted for three
quarters of domestic oil production. Al
ong with Oklahoma, these states are still the top oil
producers in the nation.
The George H. W. Bush administration developed a comprehensive national energy policy when
the Gulf War of 1991 caused concern over the security of the long
term oil supply. How
legislation passed by Congress in 1992 did not really address oil and gas, focusing instead on
electric utility reform, nuclear power, and increased funding for research and development of
alternative fuels. During the 1990s the Clinton administr
ation generally adopted a "
approach to energy, with some exceptions. Clinton suggested the use of tax incentives to spur
conservation and alternative fuels, while also encouraging modest t
ax breaks to increase
domestic production. Clinton tightened pollution
reducing regulations on the petroleum industry.
Additionally, he closed off several areas of the United States to oil production, supported the ban
on drilling in the Arctic National Wi
ldlife Refuge (ANWR), and signed the Kyoto Protocol, a
worldwide attempt to limit the production of
. In contrast to the Clinton
administration, Congress sought to end restrictio
ns on Alaska North Slope exports and the lift the
ban on drilling in the
. Toward the same end, Congress also implemented
for projects in the Gulf of Mexico. Royalty relief was intended to provide incentives for
development, production increases, and the encouragement of marginal production. Deep
Gulf drilling leases more than tripled between 1995 and 1997.
In 2000 the
George W. Bush administration indicated a shift in U.S. energy policy. Like those
before him, Bush intended to increase domestic production and decrease consumption. His
conservation program proposed to study options for greater fuel efficiency from autom
create tax incentives for purchasing hybrid cars that run on gas and electricity. More
significantly, to increase production, Bush wanted to review, with the objective of easing,
pollution control regulations that may adversely impact the distri
bution of gasoline. He was
seeking to open the ANWR to drilling, despite the Senate's rejection of such drilling in April
2002. Incidents such as the 1989
on Bligh Reef off
shore, and the intent to drill in the ANWR brought opposition to the continued
search for oil. The
spilled 10.8 million gallons of oil into Prince William Sound in
Alaska, contaminating 1,500 miles of coastline
the largest oil spill in North America.
Demand and Supply
Despite the conservation efforts of repeated administrations, national demand for pet
products continued to increase. As the twenty
first century began, the United
States was using 19.5 million barrels of petroleum per day
an average of three gallons per
person. This usage rate meant America's entire production of oil comprised only
half its total
consumption. The other 50 percent came from all over the globe, half of it from other nations in
the Western hemisphere, 21 percent of it from the Middle East, 18 percent from Africa, and the
rest from elsewhere. Canada is the United States
' largest supplier, followed in order by Saudi
Arabia, Venezuela, and Mexico. The United States uses more than one
quarter of the world's oil
production each year. Initially, when oil was extracted and refined for widespread commercial
use in the United St
ates in the 1860s, national oil reserves increased as new fields were
discovered and better techniques for extracting and refining the oil were implemented. However,
the amount of available reserves plateaued in the 1960s and a decline began in 1968. The
iscoveries in Alaska temporarily alleviated the decline, but the daily output continued to drop
from 9.6 million barrels daily in 1970 to nearly 6 million barrels per day in 2002.
The hunt for oil continues. While Drake's original well came in at 69.5 feet
, current U.S. holes
are on average one mile deep, and at least one is seven miles in depth. Once natural pressure
quits forcing the flow of oil up the well, an assembly of pipes and valves called a Christmas tree
is used to pump additional oil out.
and other gases, water or chemicals are
injected into the well to maintain pressure and increase production. U.S. fields are among the
world's oldest continually producing fields. By 2002
, the Earth had yielded 160 billion barrels of
oil, with an estimated 330 billion barrels left in the ground. Some estimates suggest that at
current production rates the world's proven oil reserves will last until 2050.
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