Petroleum industry

“ No brief survey of the petroleum industry would be complete were reference not made to a few of those remarkable commercial undertakings in various parts of the world whose interests are not only closely associated with it, but to whose energies has been due much of the expansion that has been witnessed in every direction during the past few decades. ”

“ The Russian oil-fields have an output of, approximately, 10,000,000 tons annually, or, roughly, 15 per cent. of the world’s total production of crude oil. Since the time when the petroleum industry was placed upon a commercial footing, the Russian fields have produced 230,000,000 tons of petroleum. ”

“ If the same rate of production continues, we might expect our petroleum to last from fifty-five to one hundred and thirty-five years, according to the amount found; but tables of statistics show that throughout the life of the petroleum industry, as much has been produced each nine years as the entire product before that time. For example, up to the present, we have produced one billion eight hundred million barrels and if the present rate continues, in the next nine years alone we shall produce an equal quantity again. The causes of such rapid growth are many. ”

“ They eliminated the jaded horses, oil-boats, wooden tankage, and slow freights, tedious methods, and questionable practices of handling petroleum, and substituted therefor the stem pump, the iron conduit, the steel tank storage, and systematic and businesslike methods which soon commanded the confidence and respect of all oil-producers. They extended their pipe-lines to practically every producing well and established a transportation system which serves the industry to-day as no other on earth is served. The advantages of the modern pipe-line to the oil-producer are obvious. ”

“ The importance of gas in the oil-producing industry has, therefore, become a question of great concern to the industry itself and to government, to the end that its function may be fully utilized without waste. ”

“ Nor is it a mere collection of dry facts and figures, set forth to show that the oil business is a pretty big enterprise. But it is a sincere endeavor to print something regarding petroleum, based largely upon personal observation, which may be worth saving from oblivion. The purpose is to give the busy outside world, by anecdote and incident and brief narration, a glimpse of the grandest industry of the ages and of the men chiefly responsible for its origin and growth. ”

“ Petroleum is second only to coal as an energy resource. The rapid acceleration in demand from the automobile industry and in the use of fuel oil for power seems to be limited only by the amounts of raw material available.
Production and reserves. The distribution by countries of the present annual production of petroleum, the past total production, and the estimated reserves, is indicated in terms of percentages of the world's total in the table [19] on the opposite page. ”

“ That the combination had obtained control of the pipelines available for transporting oil from the oil fields to the refineries in Cleveland, Pittsburgh, Titusville, Philadelphia, New York and New Jersey. c. That the combination during the period named had obtained a complete mastery over the oil industry, controlling 90 percent of the business of producing, shipping, refining and selling petroleum and its products, and thus was able to fix the price of crude and refined petroleum and to restrain and monopolize all interstate commerce in those products. ”

“ The Russian petroleum industry is in the hands of a large number of operating firms, the majority of which work quite independently of each other, and these independent firms are responsible for more than one-half of the total output. The other production of the crude oil, representing certainly over 40 per cent., is in the hands of combines representing the large and middle-class firms, prominent among which we get the firm of Messrs. ”

“ The industry was speculative by nature because of the low cost of crude petroleum at the well and the high cost of delivering it to the consumer. Slight rises in price caused the market to be swamped by overproduction, and threw the control of the industry into the hands of those who controlled its transportation. ”

“ The earth is even being drilled, not for petroleum, but for its huge supplies of natural gas, and the huge reservoirs thus discovered are being harnessed to the thousand wheels of industry. We even find trains fitted with cylinders carrying natural gas stored under high pressure to furnish light for the convenience of passengers, and to enable dainty meals to be cooked in the kitchens of the dining-cars.
The oil refineries, upon receiving the crude petroleum, set out to recover as much paraffin as they could. ”

“ Taking first the methods of oil transportation by land, in no other oil-producing country do we find such an elaborate system for dealing with enormous quantities of petroleum as in America, for it is safe to say that at least 500,000 barrels of crude oil have to be dealt with daily at the present time. ”

“ And in no sphere of commercial and industrial activity has greater progress been made during the past few decades than in regard to the multiplication in the uses of the products of petroleum. The avenues for advantageous consumption are constantly increasing, and this to such an extent that the production of crude petroleum—enormous though this is—has been outstripped by the demands for the refined product. ”

“ Many years ago, fuel oil made its serious début, but at that time the supply of the product was very uncertain, and, consequently, progress in passing from the old to the new form of power-raising was slow. To-day, however, matters have materially changed. The crude oil output has been immeasurably increased, and many fields whose production of crude oil is essentially suited for fuel purposes have been opened up. ”

“ It has added untold millions to the wealth of the country and conferred incalculable benefits upon humanity. To-day refined petroleum lights more dwellings in America, Europe, Asia, Africa and Australia than all other agencies combined. ”

“ Already we are importers of petroleum. We are to be larger importers year by year if we continue—and we will—to invent and build machines which will rely upon oil or its derivatives as fuel. Our business methods have been and doubtless will continue to be developed along lines that make a continuing oil supply a necessity. Some of that oil must come from abroad, as nearly 40,000,000 barrels did last year, and for that we must compete with the world. ”

“ On the other hand, a system of pipes and pumps, and a limited quantity of skilled 278 labour to manage them, is all that is necessary for the transit and combustion of petroleum fuel; and it is certain that even in England will be found places which, from topographical and other circumstances, will use petroleum more economically than coal as fuel for manufacturing purposes under reasonable conditions of price for the fuel. ”

“ Given the one allowance that oil fuel can be procured at anything approaching a reasonable figure—and there is no reason why, in normal times, this reasonable price should not be prevalent all over the world—then petroleum offers many advantages over its older competitor, coal. The ease with which large quantities can be handled, the simple method of operating anything which is fired by petroleum as fuel, and the fact that its heat-giving units are far higher than those of coal, will ever be the chief factors governing its popularity. ”

“ As petroleum is being used as a substitute for coal—and inasmuch as the whole problem of fuel supply is one—we are ultimately compelled to an investigation of the ability of our petroleum supply to meet its present drain and to meet the expansion in its use, which is the most surprising development of our day in the study of power creation. ”

“ The tendency toward amalgamation of individual producing, transporting, refining and marketing interests into strong units capable of competition in domestic and foreign markets on relatively equal terms with each other and with pre-existing combinations of equivalent strength will doubtless increase, and with the growing strength of the several units will come an efficient and thorough quest for petroleum in all parts of the world. ”

“ The festive boys who painted the early oil-towns red are getting gray and wrinkled, yet they smile clear down to their boots as they think of Petroleum Centre, Pithole, Babylon, or any other of the rapid places which shed a lurid glare along in the sixties. The smile is not so much on account of flowing wells and six-dollar crude as because of the rollicking scenes which carmined the pioneer-period of Petroleum. ”

“ But a more interesting commodity which the U.S.S.R. has begun to put on the market in bigger quantities was oil.
In approximately the last half of 1953 the U.S.S.R. made agreements to ship to free-world countries about 3.5 million metric tons of crude petroleum, kerosene, diesel fuel, and other petroleum products. The countries due to receive the largest amounts—if delivered—were Finland, France, and Argentina. Other customers were Greece, Italy, Iceland, Denmark, Sweden, Israel, and the Netherlands. ”

“ I know that many of you have suspected that some supplies of oil and gas are being withheld. You may be right, but suspicions about oil companies cannot change the fact that we are running out of petroleum. ”

“ The principal uses of petroleum are for burning as crude oil in furnaces and under boilers, particularly in locomotives. The refined products have various uses. Probably the most important is the lubricating oil. This is necessary in the development of all kinds of power. At least one-half pint of lubricating oil is used for every ton of coal consumed for power. All engines, all street and steam railways, steamships, sewing-machines, clocks, watches, and automobiles, in fact all operating machinery requires its use ”

“ The case of petroleum is peculiarly instructive. When it became apparent, in the early years of the present century that oil burning ships, motor vehicles and air craft were bound to play a determining part in the economic life of the immediate future, various interests such as the Shell Transport, Royal Dutch and the Standard Oil, with the open or tacit backing of their respective state departments, entered on a campaign to secure the world's supply of petroleum. ”

“ In 1916, many plants shifted from coal to fuel oil, because of the inability of the railroads to deliver coal. We have developed an oil-burning navy and are rapidly developing an oil-burning merchant marine. Ships and factory furnaces are competing with the internal-combustion engines of millions of automobiles and the hungry lamps of the countryside for the diminishing reserves of petroleum. Already the supply of crude petroleum is hard pressed by the demand for fuel oil. Already approximately one-half of the original petroleum supply of the United States is gone. ”

“ The enormous wastage of a world's war, resulting in a cry for more production, a new level of high prices for crude, rumors of an alarming shortage of supply, the success of independent producers, large and small—all these, and other reasons, too, caused many people hitherto uninterested to turn their serious attention to petroleum. ”

“ Oils are also artificially produced from the so-called waste-products of the gas-works, but in some parts of the world the process of their manufacture has gone on naturally, and a yearly increasing quantity is being utilised. In England oil has been pumped up from the carboniferous strata of Coalbrook Dale, whilst in Sussex it has been found in smaller quantities, where, in all probability, it has had its origin in the lignitic beds of the Wealden strata. Immense quantities are used for fuel by the Russian steamers on the Caspian Sea, the Baku petroleum wells being a most valuable possession. ”

“ Just before the ranch fever began, we struck oil—struck it in such immense quantities, and also found men so competent to make it fit for general use, that petroleum in some of its forms promised to be the leading export article of the United States. There was not a civilized quarter of the world in which one couldn’t find the American kerosene oil can. ”

“ These "outsiders" shipped their oil largely in barrels because the trunk-lines had made it as nearly impossible as they could for them to ship in tank-cars. They, like all in the trade, could not live without access to the European market. Out of every hundred barrels of various kinds of products from the distillation of petroleum, forty are of an illuminating oil not good enough to be burned in this country. It must be sold in Europe or not sold at all; and a manufacturer who cannot get rid of 40 per cent. of his product must give up manufacturing. ”

“ An organisation to protect the oil capital is imperatively needed. Oil to yield a fair profit should be sold for twenty-five cents per gallon. That price would protect every interest and cover every outlay for getting out the crude petroleum, transporting by railroad, refining and the incidental charges of handling, etc. The foreign markets will regulate the price to a great extent, because they are the greatest consumers. The people of China, Germany, and other foreign countries cannot afford to pay high prices. ”

“ By its means we are now able to carefully study the nature of the ground at depths of 6,000 feet, and to extract from the deep lying strata a wealth of minerals; we are able, too, to transport thousands of tons of crude oil daily across thousands of miles of continent, while is it not the direct result of engineering science which allows over 15,000 tons of petroleum products to be carried across the oceans of the world in one vessel with the same ease that one would take a rowing boat from one side of a lake to another? ”