Energy under a Fence (Oil blog: Part one)

“The Stone Age didn’t end because we ran out of stones.”: – Sheikh Ahmed Zaki Yamani

Many of us might not have heard of this man called Yamani. I did not too, until a couple of years ago when I read a book by Girish Kuber called “एका तेलियाने”. He is the person who conceptualised this current structure of the oil world and how geopolitics functions today. We’ll find out more about him and current oil structure in a little time, but let’s start where it all began, The sleepy towns of Pennsylvania.

There were small marshes in Pennsylvania from which a sticky thick black liquid substance used to come out of the rocky lands. It was flammable in nature, local red Indians used to use that black liquid for medicinal use and in religious ceremonies. That was the unrefined crude oil as we know it today. Its use as a source of energy was not much popularised till then. It was filled with impurities in its original state, and other sources like wood were giving more power in comparison to it. But two events changed this scenario forever, first was the start of commercial extraction of crude and second the standardisation of the quality and form of oil. Early settlers in the USA fought to own these oil wells by hook or crook, which eventually led to a near extinction of the native people (How? Watch “There will be blood” and “Killers of the Flower Moon”).

Credit for the modern form of oil i.e. petrol, diesel etc goes to the standardisation of oil pioneered by Mr. John D Rockefeller and his company “Standard Oil”. Due to technological advancements in refining, the entire dynamics of the oil industry changed and we got addicted to this sweet-smelling, energy-rich and smoke-free drug/ fuel. He was controlling virtually the entire industry (as high as 90% one time). The end-to-end supply chain from extraction and refining to eventually delivering to consumers was controlled by standard oil. They had their own railways to transport the oil. It got so big that the US Govt feared him becoming more powerful. Such itching in the eye finally resulted in the formation of a legislature called “Sherman’s Antitrust Act, of 1890”. In 1911, Standard Oil became its first prey, The Company was sliced up into 34 different companies.

Along with these, a few catalysts contributed to the “rise of oil as a primary energy source” including the creation of the Suez Canal and the coinciding insurgence of gasoline as a transport fuel. This was the time when we were moving away from animal-operated vehicles like horses, with special mention to “The great horse manure crisis of 1894”. If we talk about which came first, surprisingly innovation of the Electric car (1880) was an earlier event, i.e. nearly 7-8 years before that iconic ride of Bertha Benz (1888) on a newly patented Benz Car by Carl Benz with a internal combustion engine (IC engine). But still, gasoline won the race and we can easily note down the reasons for EVs not becoming mainstream. Mainly it was the battery part of it. Too heavy to carry and very difficult to refuel (which is the case in modern times also). In comparison to this battery, using light gasoline is just more practical and consumer-friendly. But a few decades after that, when the consequences of oil consumption successfully destroy our environment, EVs are making a comeback. This destruction was a result of our inability to make proper and moderate use of this oil.

Till the conclusion of World War I, the USA was leading in oil production with most of the oil being produced in their fenced territory. This was about to change in just a decade or two. Western companies started exploring oil and gas reserves in the Middle East. Anglo-Persian oil company (Currently British Petroleum or BP) was the first to grab the rights in Iran. Subsequently, similar efforts happened in Iraq, Lebanon, Egypt, Kuwait etc.

But out of all of them, the most spectacular story was of a newly founded kingdom. This Kingdom was so early that they used to roam carrying their state’s entire treasury with them. That Kingdom has produced the most spectacular oil story of how oil came to be their main power source. The USA’s early oil story comes in second place. It is the story of the partial decentralisation of oil power!

Will meet you in the second part! This time next Saturday!

Image Courtesy: Britannica & Mercedez Benz South-west