Courtesy Reuters

The Changing Oil Industry

Most of us think of the oil industry as a modern development, but actually its roots lie far back in history. Noah, the tourist from Ur, pitched his Ark inside and out with tar from the seepages near his native city, and Herodotus reports that Alexander was astounded in Kirkuk by natives who wet down the streets with naphtha and then set fire to them. Bricks from Ur tell us that the ratio between the price of wheat and of asphalt was much the same three thousand years ago as it is today.

But the modern industry really began with the invention by Colonel Edwin L. Drake of a steam-driven rig for drilling for oil, though in principle he had probably been antedated many centuries by the Chinese drillers for brine near Chungking. The impetus for Drake's venture was the pursuit of a source of light. Whales were getting scarce and the distillation of oil from shale in Scotland and New Brunswick was costly. Benjamin Stilleman, the Yale chemist, when asked to report on some samples of seepage from Pennsylvania, drew a glowing picture of the future of "rock oil"; and so in 1859 the search for it began and we were on the road to the oil industry as we now know it.

The commodity was new and different. It was liquid, inflammable, poisonous, explosive-in fact, it had most unpleasant characteristics, so that in its first years the industry spent a great amount of ingenuity in devising its own special means of refining and transporting its product. The tank car, the pipeline, the tank wagon, the tank ship were all gradually developed and there resulted that peculiar vertical integration of the industry by which the raw product was refined and then handled right through from the well to the ultimate consumer. This very integration has often been regarded by anti-trust lawyers as a sinister attempt at monopoly while really it was a natural response to the strange nature of the product

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