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A Brief History of Oil, Pt 1
It all
started with a silly man.
History,
despite of being written by the winners, remains a brutal, bloody affair. Even
a cursory review of how we got to where we are today will show a preponderance
of wars, betrayals, and other horrors.
However, one
cannot say that these horrors have occurred without some sense of dark humor or
irony. Similarly, I cannot help
but find it comical that oil, the single most important commodity of modern
terms, the fuel that drives the global growth engine, and the primary source of
economic clout for most of the world, began its ascent as a commodity thanks to
the findings of a Yale chemistry professor named Benjamin Silliman, Jr.
The Lawyer, the Banker, and the Professor
In the
1850s, a small group of investors lead by George Bissell, a New York lawyer,
and James Townsend, president of a New Haven Bank, launched a venture that most
of their contemporaries would deem ludicrous.
Their goal:
to see if “rock oil” (as oil was originally called to distinguish it from the
oils produced from vegetables and animal fat) could be used as an illuminant or
fuel for light.
Today, this
idea seems too obvious. After all, oil and petroleum products literally make
the world economy go round; they are used in fuels, pesticides, fertilizer,
asphalt, machinery lubricants, plastics, pharmaceuticals and more.
However,
some 150 years ago, before mankind had dreamt up all of these uses for oil, the
notion of using it as an illuminant or light fuel was considered controversial
if not outright insane due to the fact that people simply couldn’t acquire
enough of it (more on this in a moment).
The idea was
deemed ridiculous for several reasons, the foremost of which was that in the
1850s, oil was already being used, not as a fuel, but as a medicine for
everything from worms to toothaches in the US. True, it was known to be
flammable, but the idea of establishing oil as a primary light fuel then would
be akin to someone trying to introduce antacids as a new source of fuel for
cars today.
Secondly,
oil discovery and production were hardly sophisticated processes in the middle
of the 19th century. Regarding discovery, most oil exploration
consisted of simply “finding” the stuff as it seeped into creeks or salt mines.
Production
was no more advanced, consisting of either placing cloths and rags into the
oily water and then wringing the oil out into barrels, or simply skimming the
oil off the top. At best, these methods could produce a few gallons of oil per
day, hardly the amount needed to vault oil as a primary source of light fuel.
Finally,
Bissell and friends also had “the competition” to consider. According to Daniel
Yergin in The Prize, the light fuel
market in 1850 was already dominated by oil from sperm whales (as it had been
for several centuries).
At $2.50 a
gallon (the equivalent of $63.38 in today’s dollars), the stuff was not cheap,
and a number of would-be entrepreneurs were attempting to create a cheaper,
more available fuel source (by 1850 the whaling industry had wiped out most of
the Atlantic schools resulting in whalers venturing further and further away to
produce new resources).
Yergin notes
that all of these alternatives were inferior in quality. Camphene, which was
derived from turpentine, tended to explode. “Town gas,” a coal derivative, was
expensive. Kerosene, which was first extracted from asphalt by a Canadian
geologist Dr. Abraham Gesner, was fast becoming a primary alternative, but
often produced bad odors if the lamps were not kept clean.
Against this
backdrop of pre-conceived notions of oil as a medicine NOT an energy source,
the primitive means of oil extraction common at the time, and serious
competition from alternate illuminant fuels, Bissell and his group of investors
were determined to see if they might not break into both the illuminant and the
lubricant markets with some kind of “rock oil” derivative (the industrial
revolution was taking off in the US at the time, hence the second goal).
To do this,
they needed to accomplish the following:
1) Obtain
a credible scientific source to determine if oil or an oil derivative could be
used as a high quality fuel for light
2) Find
a means of producing vast quantities of oil
Regarding
#1, Professor Silliman, after some initial tests, assured Bissell and Townsend
that oil could be used as an illuminant. This discovery put the “credibility”
stamp on the whole project and allowed Bissell and friends to raise additional
capital from other investors.
Silliman’s
research also indicated that oil was in fact a high quality illuminant, equal to if not better that kerosene,
leading Bissell et al to believe they had the makings of an extremely
profitable venture (by 1859 kerosene was a $5 million industry in the US).
All Bissell
and his group of investors needed now was a means of getting large quantities
of oil out of the ground. They
decided to try drilling after Bissell saw an oil rock medicine advertisement
depicting several large drills of the sort used in boring for salt (oil was
often produced as a by-product of this process).
Now came the
issue of finding someone crazy enough to lead the drilling.
Good
Investing!
Graham
Summers
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Spindletop,Bitchez.
And this is relevant how?? Perhaps we could start a captive whale breeding program, and harvest them for oil. What is the oil equivalent break even for farmed sperm whale?
What's the going rate for krill?
And today a new chapter in the history of oil is written as the Brent/WTI spread in the futures market breaks above $10.00 /bbl – and sustains. So, how much does it cost to re-route shipments of physical oil from Houston to Rotterdam? I estimate less than $2/bbl . Nothing suspicious going on here, eh?
Better check on legalities of export of unfinished crude products.
I do believe in peak oil but run these numbers through your head to get a new perspective on it:
17,700,000 barrels [US, petroleum] per day = 0.00067513252496 cubic miles per day
1 divided by 0.00067513252496 cubic miles =
1481.1906744668354216509912877713 days of oil use to fill 1 cubic mile then divided by 365.25 =
4.0552790539817533789212629370877 years to fill one cubic mile.
So… if you had one cubic mile of oil you could supply the world with oil for about four years. Of course oil doesn’t exist in cubic mile “chunks” in the ground – just a tool to help you visualize.
If you had a cubic mile of oil at 60 dollars a barrel you would have 1,573,024,496,283.78 dollars worth of oil. The amount of energy in a cubic mile of oil? – I’ll leave that to an egg head smarter than me to figure out.
I used - http://www.onlineconversion.com/ to convert barrels to cubic miles, a handy site.
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thank you graham for the history lesson.....i look forward to more and understanding the origins of the vampire squid totalitarian state...although i have to admit the many benefits of oil there are ugly aspects of it which throw it into disgrace - namely the murder of iraqis, afghanis, and pakistanis for oil - the very murderous evil which st john the divine deplored.
Typical USA-centric view, not very accurate to reality.
http://en.wikipedia.org/wiki/Ignacy_%C5%81ukasiewicz
It is laughable, is it not?
I love "yanks" endlessly, but the stupidity knows no bounds.
Standard Oil, bitchez
Well we (USA) found the Nazi enigma machine. It was on an abandoned U-boat. I saw it on an old TV episode of McCale's Navy. They were patrolling the Solomon Islands in the Pacific and a German U-boat was scuttled and they found the Enigma machine. ;-)
The stupid Hollywood movie made the same claim. I think they at least got the ocean correct.
.