The Prize
The Prize

The Prize

Table of Contents

On August 2, 1990, yet another of the century’s dictators, Saddam Hussein of Iraq, invaded the neighboring country of Kuwait. His goal was not only conquest of a sovereign state, but also the capture of its riches. The prize was enormous. If successful, Iraq would have become the world’s leading oil power, and it would have dominated both the Arab world and the Persian Gulf, where the bulk of the planet’s oil reserves is concentrated. (Location 155)

Tags: kuwait, iraq

Note: .iraq .kuwait

No other business so starkly and extremely defines the meaning of risk and reward—and the profound impact of chance and fate. (Location 174)

Tags: oil, risk

Of the top ten companies in the Fortune 500 global ranking in 2008, six are oil companies. Until some alternative source of energy is found in sufficient scale, oil will still have far-reaching effects on the global economy; major price movements can fuel economic growth or, contrarily, drive inflation and help kick-start recessions. (Location 177)

The second theme is that of oil as a commodity intimately intertwined with national strategies and global politics and power. (Location 181)

Tags: politics

...the United States, once the world’s largest producer and still its largest consumer, must import between 55 and 60 percent of its oil supply, weakening its overall strategic position and adding greatly to an already burdensome trade deficit—a precarious position for a great power. (Location 196)

Tags: us

Note: .us the us imports over galf its oil

A third theme in the history of oil illuminates how ours has become a “Hydrocarbon Society” and we, in the language of anthropologists, “Hydrocarbon Man.” (Location 202)

Total world oil consumption grew almost 30 percent between 1990 and 2008—from 67 million to 86 million barrels per day. Over the same time, oil demand in India more than doubled and in China, more than tripled.

Thus, the stage has been set for a great balancing between, on the one hand, environmental protection and reduction of carbon and, on the other, economic growth, the benefits of Hydrocarbon Society, and energy security. (Location 228)

Tags: china, india


CHAPTER 1 Oil on the Brain: The Beginning

The group thought that the rock oil could be exploited in far larger quantities and processed into a fluid that could be burned as an illuminant in lamps. This new illuminant, they were sure, would be highly competitive with the “coal-oils” that were winning markets in the 1850s. (Location 256)

...the use of petroleum had a long and varied history in the Middle East. Yet, in a great mystery, knowledge of its application was lost to the West for many centuries, perhaps because the known major sources of bitumen, and the knowledge of its uses, lay beyond the boundaries of the Roman empire, and there was no direct transition of that knowledge to the West. (Location 373)

Note: ALlthough petroleum was used in the middle east the europeans were Largely unaware of many of its uses

Dispatching Drake to Pennsylvania, Townsend gave him what turned out to be a valuable send-off. Concerned about the frontier conditions and the need to impress the “backwoodsmen,” the banker sent ahead several letters addressed to “Colonel” E. L. Drake. Thus was “Colonel” Drake invented, though a “colonel” he certainly was not. (Location 419)

Tags: status

Note: He sent letters ahead addressed to 'colonel', faking the title

...other wells were drilled in the neighborhood, and more rock oil became available. Supply far outran demand, and the price plummeted. With the advent of drilling, there was no shortage of rock oil. The only shortage now was of whiskey barrels, and they soon cost almost twice as much as the oil inside them. (Location 460)

Tags: supply and demand, favorite

Note: When everyone is driling for oil supply the whisky barrels to store the prize!

Production in western Pennsylvania rose rapidly—from about 450,000 barrels in 1860 to 3 million barrels in 1862. The market could not develop quickly enough to match the swelling volume of oil. Prices, which had been $10 a barrel in January 1861, fell to 50 cents by June and, by the end of 1861, were down to 10 cents. Many producers were ruined. But those cheap prices gave Pennsylvania oil a quick and decisive victory in the marketplace, swiftly capturing consumers and driving out coal-oils and other illuminants. (Location 509)

Note: The price drop of oil made it more favourable than coal alternatives

Pithole returned to silence and to the wilderness. A parcel of land in Pithole that sold for $2 million in 1865 was auctioned for $4.37 in 1878. (Location 545)

Tags: realestate

Note: The value of land jumped hugely when oil was diiscoovered and dropped aggin whhen it ran out

rule of capture,” a doctrine based on English common law. If a game animal or bird from one estate migrated to another, the owner of the latter estate was perfectly within his rights to kill the game on his land.

Similarly, owners of land had the right to draw out whatever wealth lay beneath it; for, as one English judge had ruled, no one could be sure of what was actually going on “through these hidden veins of the earth.” (Location 560)

Tags: oil extraction

Note: Anyone whose land had access to ann oil welll could extract as much oil as they wished, hence people were in a rush to extract as quickly as possible

Oil was bought and sold on three bases.

- “Spot” sales called for immediate delivery and payment.

- A “regular” sale required the transaction to be completed within ten days.

- And the sale of “futures” established that a certain quantity would be sold at a certain price within a specified time in the future. (Location 599)

CHAPTER 2 “Our Plan”: John D. Rockefeller and the Combination of American Oil

Maurice Clark, the more cautious partner, threatened dissolution. This time, the other partner, John D. Rockefeller, surprised him by accepting. The two men subsequently agreed that a private auction should be held between the two of them, the highest bidder to get the company; and they decided to hold the auction immediately, right there in the office. The bidding began at $500, but climbed quickly. Maurice Clark was soon at $72,000. Rockefeller calmly went to $72,500. Clark threw up his hands. “I’ll go no higher, John,” he said. “The business is yours.” (Location 618)

Tags: auction

Note: .auction have two people bid against each other for something they both want, with the highest bidder paying the other

Rockefeller devoted himself to strengthening his business—by expanding facilities and striving to maintain and improve quality, and yet always controlling costs.

He took the first steps toward integration, the process of bringing supply and distribution functions inside the organization, in order both to insulate the overall operation from the volatility of the market and to improve its competitive position.

Rockefeller’s firm acquired its own tracts of land on which grew the white oak timber to make its own barrels; it also bought its own tank cars, and its own warehouses in New York, and its own boats on the Hudson River. (Location 675)

Tags: rockefeller

Note: his company owned trees for the barrels, cars to transport,boats and warehouses

Rockefeller also established another principle, which he religiously stuck to thereafter—to build up and maintain a strong cash position. Already, before the end of the 1860s, he had built up sufficient financial resources so that his company would not have to depend upon the bankers, financiers, and speculators on whom the railways and other major industries had come to rely. The cash not only insulated the company from the violent busts and depressions that would drive competitors to the wall, but also enabled it to take advantage of such downturns. (Location 679)

Tags: cash, rockefeller

Note: strong cash reserves let you take advantage of downturns

“A friendship founded on business is better than a business founded on friendship. (Location 699)

Tags: friendship

Between 1865 and 1870, the retail price of kerosene fell by more than half. It was estimated that refining capacity was three times greater than the market’s needs. The costs of overcapacity were obvious to Rockefeller, and it was in these circumstances, with most refiners losing money, that he launched his effort to consolidate the industry in his own grasp. (Location 727)

Tags: consolidation

Note: like the diamonds industry. Rockefeller wanted to consolidate the oil industry

Many refiners never knew that their local competitors, which were cutting prices and putting other pressures on them, were actually part of Rockefeller’s growing empire. Through all the phases of the campaign, the Standard men communicated in code—Standard Oil itself was “Morose.” Rockefeller never wavered in his defense of the secrecy of his operations. (Location 798)

Tags: rockefeller

A wise old owl lived in an oak, The more he saw the less he spoke, The less he spoke, the more he heard, Why aren’t we all like that old bird? (Location 906)

Tags: newsletter, listen, wisdom

Note: .wisdom listen .newsletter

even while becoming the richest man in America, he maintained a curious frugality. He insisted, to the distress of his family, on wearing the same old suits until finally they became so shiny that they had to be replaced. One of his favorite dishes remained bread and milk. (Location 932)

He loved to sit with his children and their friends on the front porch and play a game called “Buzz.” You began to count and every time you came to a number with a seven in it, you were supposed to say “Buzz” instead; otherwise, you were out. Somehow, Rockefeller, despite his gift for mathematics, just could never get beyond 71. The children always found this hilarious. (Location 939)

Tags: rockefeller, buzz

Note: .buzz .rockefeller a game from 1870 which is still popular today

As early as 1864, a New York chemist described the impact of this new illuminating oil. “Kerosene has, in one sense, increased the length of life among the agricultural population,” he wrote. “Those who, on account of the dearness or inefficiency of whale oil, were accustomed to go to bed soon after the sunset and spend almost half their time in sleep, now occupy a portion of the night in reading and other amusements; and this is more particularly true of the winter seasons.” (Location 974)

Tags: oil, light

Note: .light .oil having light enabled people to use the evening better. In effect 'extending' the number od hours in their life

...poor quality and impure oils, which were responsible for “those terrible explosions.” In the mid-1870s, five to six thousand deaths a year were attributed to such accidents.

Regulation was spotty and slow in coming, which is why Rockefeller insisted on consistency and quality control, and why he had chosen the name Standard. (Location 980)

Tags: regulation

Note: .regulation poor quality kerosene killed aprox 6,000/year. Regulations were poor.

Kerosene was by far the most important product coming out of refineries, but not the only one. The other products included naphtha; gasoline, used as a solvent or turned into a gas for illuminating individual buildings; fuel oil; and lubricants for the moving parts in train engines and railway cars, agricultural implements, cotton spindles, and later bicycles. Other products were petroleum jelly, trademarked as “Vaseline” and made into a base for pharmaceutical products, and paraffin, which was used not only for candle making and food preservation, but also for “paraffin chewing gum,” which was “highly recommended for constant use in ladies in sewing circles. (Location 990)

Note: Vaseline comes from oil

But Standard had stayed out of one critical part of the business—the production of oil. It was too risky, too volatile, too speculative. Who knew when any particular well might go dry? Better to let the producers carry that risk and stick to what could be rationally organized and managed—refining, transportation, and marketing.

As one of the members of the Executive Committee wrote Rockefeller in 1885, “Our business is that of manufacturers, and it is in my judgment, an unfortunate thing for any manufacturer or merchant to allow his mind to have the care and friction which attends speculative ventures.” (Location 1003)

Note: Producing oil was risky and speculative. Standard oil focused on refining,transporting and marketing

one of Rockefeller’s great achievements. “He instinctively realized that orderliness would only proceed from a centralized control of large aggregations of plant and capital, with the one aim of an orderly flow of products from the producer to the consumer. That orderly, economical, efficient flow was what we now, many years later, call ‘vertical integration.’” He added, “I do not know whether Mr. Rockefeller ever used the word ‘integration.’ I only know he conceived the idea.” (Location 1072)

Tags: verticalintegration

Note: .verticalintegration had been no easy thing to get the first shipment of oil off to Europe. Sailors were terrified about the possibility of explosions and fires that might result from carrying kerosene as a cargo.

Finally, in 1861, a Philadelphia shipper obtained a crew by getting the potential recruits drunk and virtually shanghaiing them aboard the sailing ship. (Location 1109)

Note: People were afraid to sail with an exlosive cargo of oil to europe, so they got the crew drunk

Among the most promising markets for the “new light” was the vast Russian empire, which was beginning to industrialize, and for which artificial light had a special importance.

The capital city, St. Petersburg, was so far north that, in the winter, it had barely six hours of daylight. (Location 1134)

Tags: russia

Note: Cities further north require more illumination as darkness falls early. Obvious, I haven't considered how energy demands may vary by lattitude

Faced with the aggressive Nobel’s new sales campaign in Europe, and deeply alarmed by the growing production from Baku, Standard concluded that it would have to take actions beyond mere discussions. In November of 1885, it dropped its prices in Europe—just as it would when attacking a competitor in the United States.

Its local agents started rumor campaigns in various European countries about the quality and safety of Russian kerosenes. They also resorted to sabotage and bribery. (Location 1242)

Tags: damaging competitors

In 1869, the Suez Canal was opened, knocking four thousand miles off the journey to the Far East. (Location 1296)

Tags: suez canal, canal

Note: .canal

“It’s a lovely day for the race.” What race? “The human race,” (Location 1315)

Tags: favorite, quote

Note: .quote

bulk tankers—the ship as a floating bottle, like modern tankers (Location 1325)

He recognized that there was no point in trying to break into the market unless he and his partners could undersell Standard Oil—or at least avoid being undersold by Standard Oil.

In order to assure that result, the campaign would have to be waged in all markets simultaneously; otherwise, Standard Oil would slash prices in markets where the Samuel group was competing and subsidize the price cuts by raising prices where they were not present. (Location 1330)

Tags: dropping prices

Note: They needed to combat standar oils tactics of reducing prices by launching in multiple markets at once

… If simplicity is an element of success, the scheme certainly seems full of promise. For instead of sending out cargoes of oil in cases costly to make, expensive to handle, easy to be damaged, and always prone to leak, the promoters intend to ship the commodity in tank-steamers via the Suez Canal, and to discharge it wherever the demand is greatest into reservoirs, from which it can be readily supplied to consumers. (Location 1383)

Note: Similar to containers, transporting oil is more efficient when there is less moving parts

By the end of 1895, sixty-nine tanker passages had been made through the Suez Canal, all but four in ships owned or chartered by Samuel. By 1902, of all the oil to pass though the Suez Canal, 90 percent belonged to Samuel and his group. (Location 1417)

Tags: suez canal

Note: .suezcanal

Standard’s attention turned to Sumatra, in the Dutch East Indies, from which the steaming time to Singapore, across the Strait of Malacca, could be measured in hours. And its eyes fell, in particular, on a Dutch company that, after years of struggle, had successfully carved out a profitable business from the jungles of Sumatra. This company was now beginning to make a sizeable impact on markets throughout Asia with its own brand, Crown Oil, and in so doing, it was opening up the world’s third major producing province. It was called Royal Dutch. (Location 1482)

“To stagnate means to liquidate.” (Location 1535)

CHAPTER 4 The New Century

in the United States, as well as in Europe, the horseless carriage quickly captured the minds of entrepreneurial inventors. One such person was the chief engineer of the Edison Illuminating Company in Detroit, who quit his job so that he could design, manufacture, and sell a gasoline-powered vehicle that he named after himself—the Ford. Henry Ford’s first car was sold to one man, who in turn sold it to another, one A. W. Hall, who told Ford that he had caught “the Horseless Carriage fever.” Hall would deserve a special place in the hearts of all future motorists as the first recorded purchaser of a used car. (Location 1629)

Tags: edison, henryford

Note: .henryford .edison henry ford was an engineer in teslas factory is detroit

there were doubts about the ruggedness and reliability of the car. Those questions were laid to rest, once and for all, by the San Francisco earthquake of 1906. Two hundred private cars were pressed into service for rescue and relief, fueled by fifteen thousand gallons of gasoline donated by Standard Oil. “I was skeptical about the automobile previous to the disaster,” said the acting chief of the San Francisco fire department, who commanded three cars for round-the-clock work, “but now give it my hearty endorsement.” (Location 1635)

Tags: disaster

Note: .disaster this is similar to shipping containers proving their value in the vietnam war. Prove your worth in times of need

the only geologist who could tell with certainty whether oil would be found was “Dr. Drill.” (Location 1727)

People did not want to waste time when there was oil business to be done, so spaces near the head of the long line at the outdoor conveniences went for as much as one dollar. Some people made forty or fifty dollars a day, standing in line and selling their spaces to those who didn’t have time to wait. (Location 1771)

Tags: queue

Note: .queue people paid to skip the queue

A host of industries in Texas converted almost immediately from coal to oil. The Santa Fe Railroad went from just one oil-fired locomotive in 1901 to 227 in 1905. Steamship companies, as well, rushed to switch from coal to oil. These conversions, the result of Spindletop, pointed to a major shift in industrial society. (Location 1808)

Three years after his discovery at Spindletop, he returned to Beaumont and surveyed the derrick-covered but now depleted hill, which had been so rapidly overproduced. After traipsing all over the oil field, he was moved to an epitaph. “The cow was milked too hard,” he said. “Moreover, she was not milked intelligently.” (Location 1906)

It built its own pipeline from the Glenn Pool in Oklahoma down to Port Arthur in Texas. It registered the name Texaco as a trademark in 1906, and came up with the green “T” superimposed on the red star as its symbol. It began manufacturing gasoline, and by 1907, only six years old, it was able to exhibit a full range of some forty different products at the Dallas State Fair. (Location 1980)

CHAPTER 5 The Dragon Slain

holding companies—corporations that could own stock in other corporations. (Location 2056)

Tags: entity

Note: .entity

when on registering at a hotel in Titusville, Rockefeller had seen a signature above his own. It was that of the young broker and refiner, who had signed in as “John D. Archbold, $4 a barrel.” Rockefeller was taken by such self-confident advertising—at a time when oil could not fetch anywhere near such a price—and made special note. (Location 2085)

“First, he avoids all worry. Second, he takes plenty of exercise in the open air. Third, he gets up from the table a little hungry. (Location 2104)

Tags: diet, health

Note: .health .diet dont eat until you are full

the great boom town of Pithole. When the field there suddenly gave out and the bustling little metropolis went to ruin, he paid six hundred dollars for the town’s leading hotel, which had just been built for sixty thousand dollars. He tore it down, piled up wagons with the French windows, the fine doors and woodwork, the lumber, and the iron brackets, and carried them all off to Titusville, ten miles distant, where he used them to build a handsome new house for his family. (Location 2152)

he sought to have the Government Printing Office adapt three hundred simplified spellings of familiar words—for instance, “dropt” for “dropped.” The Supreme Court refused to accept such simplifications in legal documents, but Roosevelt steadfastly kept to them in his own private letters. (Location 2263)

Tags: roosevelt

Note: .roosevelT simplifies spelling

“The maximum penalty, I believe—twenty-nine million dollars,” replied Rockefeller. Then, as an afterthought, he added, “Judge Landis will be dead a long time before this fine is paid.” With that single outburst, he resumed his golf, seemingly unperturbed, and went on to play one of the best games of his life. Indeed, Landis’s judgment was eventually overturned. (Location 2327)

The company transported more than four-fifths of all oil produced in Pennsylvania, Ohio, and Indiana. It refined more than three-fourths of all United States crude oil; it owned more than half of all tank cars; it marketed more than four-fifths of all domestic kerosene and was responsible for more than four-fifths of all kerosene exported; it sold to the railroads more than nine-tenths of all their lubricating oils. It also sold a vast array of by-products—including 300 million candles of seven hundred different types. It even deployed its own navy—seventy-eight steamers and nineteen sailing vessels. (Location 2353)

Standard Oil was divided into several separate entities. The largest of them was the former holding company, Standard Oil of New Jersey, with almost half of the total net value; it eventually became Exxon—and never lost its lead. (Location 2358)

Next largest, with 9 percent of net value, was Standard Oil of New York, which ultimately became Mobil. There was Standard Oil (California), which eventually became Chevron; Standard Oil of Ohio, which became Sohio and then the American arm of BP; Standard Oil of Indiana, which became Amoco; Continental Oil, which became Conoco; and Atlantic, which became part of ARCO and then eventually of Sun. (Location 2360)

Burton’s idea worked; the gas oil yielded up a “synthetic gasoline” product, which more than doubled the share of usable gasoline from a barrel of crude—up to 45 percent. “The discovery of this thermal cracking process was destined to be one of the great inventions of modern times,” wrote a student of the industry. “As a result the petroleum industry was the first big industry to be revolutionized by chemistry.” (Location 2393)

Note: WHhen standard was broken up people had more freedom to innovate. The output of gasoline increased from 20 to 40 percent of crude oil refinement

Burton had applied to Standard Oil headquarters in New York City for a million dollars to build a hundred stills for thermal cracking. But 26 Broadway had turned him down flat, without even an explanation. New York thought the whole idea was foolhardy. Privately, one director said: “Burton wants to blow the whole state of Indiana into Lake Michigan.” Immediately after dissolution, however, the directors of the now-independent Standard of Indiana, who had much more direct contact with and personal confidence in Burton, gave him the green light (Location 2397)

Tags: corporate

Note: .corporate getting approval from a distant committee is hard. Its much easier to get approval from those who know you and see your work

In 1910, gasoline sales had exceeded kerosene for the first time, and demand was galloping ahead. (Location 2402)

Tags: kerosene

Note: .kerosene

thermal cracking process introduced flexibility into refinery output, something the industry had never had before. The refiner’s output was no longer arbitrarily bound by the atmospheric distillation temperatures of the different components of crude oil. Now he could manipulate the molecules and increase the output of more desirable products. (Location 2408)

Tags: thermalcracking

Note: .thermalcracking thermal cracking enabled refiners to decide what products they would like to create from the crude oil

Within a year of the dissolution of Standard Oil, the value of the shares of the successor companies had mostly doubled; in the case of Indiana, they tripled. Nobody came out of this better or richer than the man who owned a quarter of all the shares, John D. Rockefeller. After the break-up, because of the increase in the price of the various shares, his personal worth rose to $900 million (equivalent to $9 billion today). (Location 2426)

Tags: rockefeller

Note: .rockefeller shares increased in value after the breakup

CHAPTER 6 The Oil Wars: The Rise of Royal Dutch, the Fall of Imperial Russia

Those in oil are always in quest for balance. An investment in one part of the business forces them to make new investments in another part, to protect the viability of the existing investment. Producers need markets if their oil is to have value. (Location 2442)

Note: balance of production,refinement and market

oil’s great future would be not as a source of illumination, but as a source of power. And Marcus Samuel was to become the most vociferous proponent of the conversion of shipping from coal to oil. (Location 2486)

“Simplicity rules everything worth while, and whenever I have been up against a business proposition which, after taking thought, I could not reduce to simplicity, I have realized that it was hopelessly wrong and I have let it alone.” (Location 2583)

Tags: simplicity

Note: .simplicity

despite extensive talks, the two sides could not agree on how much Shell was worth; Standard was skeptical of the value that Samuel set on his operations. Yet Samuel was not an entrepreneur for nothing. When he returned to London, he gave the impression of impending triumph, displaying great talent in stirring up enthusiasm about Shell, a company that was, in fact, in deep trouble. (Location 2614)

Tags: pr, shell

Note: .shell .pr

What Samuel wanted was equality. Standard could be very generous in terms of money, but it was insisting, as it always insisted, upon control, which would thus pass from a British to an American entity, and that, no matter how much the money, Marcus Samuel could not countenance. He was too much of a patriot. (Location 2634)

Stalin was among the many arrested after the strikes, the first of his eight arrests. He repeatedly escaped from exile, only to find himself landed again and again back in a Czarist prison. (Location 2818)

Tags: stalin

oil supply.11 The Czarist regime needed a diversion, and, as so many others have done before and since, it sought its diversion in a foreign adventure, hoping to unite the nation and restore the prestige of its rulers. And, like many others, it chose the wrong opponent—in this case, Japan. (Location 2821)

Tags: war

Note: .war war is frequently used as a poitical tctic to distract and unite people

Tatars rose up once more in an attack on the oil industry throughout Baku and its environs, intent on killing every Armenian they could find, setting fire to buildings where Armenians had taken refuge, pillaging every piece of property on which they could lay their hands. (Location 2841)

Tags: armenia

Note: .armenia

The acquisition of the Rothschilds’ interests, in turn, gave the Group a globally balanced portfolio of production—53 percent from the East Indies, 17 percent from Rumania, and 29 percent from Russia. (Location 2896)

Between 1904 and 1913, Russia’s share of world petroleum exports dropped from 31 to 9 percent. (Location 2901)

Tags: russia

Note: .russia

CHAPTER 7 “Beer and Skittles” in Persia

Even the estimate for expenditures was to be grossly understated. At the outset, D’Arcy had been advised that it would cost ten thousand pounds to drill two wells. Within four years, he was to be out of pocket in excess of two hundred thousand pounds. (Location 2999)

Tags: estimate, iran, persia

Note: .persia .iran .estimate

Confirmation came very shortly, and a few days later, while the first well continued to gush, oil was struck in the second well. Three weeks or so after that, Reynolds received the letter of May 14 from Burmah Oil, ordering him to begin winding down operations. It was a striking echo of the letter half a century earlier that had told Colonel Drake to quit his operations at Titusville, which arrived just as he struck oil. (Location 3205)

Note: Drilling for oil is like launching a startup.

CHAPTER 8 The Fateful Plunge

“As a coal ship used up her coal,” Churchill later wrote, “increasingly large numbers of men had to be taken, if necessary from the guns, to shovel the coal from remote and inconvenient bunkers to bunkers nearer to the furnaces or to the furnaces themselves, thus weakening the fighting efficiency of the ship perhaps at the most critical moment in the battle. … The use of oil made it possible in every type of vessel to have more gun-power and more speed for less size or less cost.” (Location 3410)

Tags: coal

Note: .coal

This liquid fuel problem has got to be solved, & the natural, inherent, unavoidable difficulties are such that they require the drive & enthusiasm of a big man. I want you for this, viz, to crack the nut. No one else can do it so well. Perhaps no one else can do it at all. (Location 3435)

Tags: flattery

Note: .flattery

Greenway’s recurrent theme, both in testifying before Fisher’s commission and throughout Whitehall, was that, without government aid, Anglo-Persian would disappear into Shell. If that happened, Greenway warned, Shell would be in a monopoly position and would extract monopoly prices from a hapless Royal Navy. He stressed Samuel’s “Jewishness” and Deterding’s “Dutchness.” Shell, he said, was controlled by Royal Dutch, and the Dutch government was susceptible to German pressure. Control by Shell, he told Fisher’s commission, would eventually place Anglo-Persian “under the control of the German Government itself.” (Location 3471)

Note: If shell was the sole supplier foreign interests would control the uks oil supply

Criticizing Churchill for raising the specter of monopoly and for “Jew-baiting,” he declared that the rising prices of fuel oil had resulted not from “the machinations of some trust or ring” but from the fact that an international market for fuel oil—as opposed to those for gasoline, kerosene, and lubricants—had only arisen in the “last two or three years, in consequence of these new uses which have been found for this oil. … There is a world shortage,” ... That is the reason why prices have gone up, and not because evilly-disposed gentlemen of the Hebraic persuasion—I mean cosmopolitan gentlemen—have put their heads together in order to try and force prices up.” (Location 3568)

matter of Deterding, Churchill was following Admiral Fisher’s lead. Fisher wrote to Churchill that Deterding, “is Napoleon and Cromwell rolled into one. He is the greatest man I ever met … Napoleonic in his audacity: Cromwellian in his thoroughness! … Placate him, don’t threaten him! (Location 3584)


CHAPTER 9 The Blood of Victory: World War I

The Great War would prove a disaster for the victors as well as the vanquished. An estimated 13 million people died, and many millions more were wounded and displaced. It was also a catastrophe for the political systems of much of Europe, and for the economies of all concerned. (Location 3623)

Tags: ww1

Note: .ww1

Horses were still the basis of planning at the outbreak of the war—one horse for every three soldiers. Moreover, the reliance on horses greatly complicated the problems of supply, for each horse required ten times as much food as each man. (Location 3634)

Tags: horses, war

Note: .war .horses

When the German High Command declared in October 1918 that victory was no longer possible, the first reason it gave was the introduction of the tank. (Location 3714)

Tags: tank, war

Note: .war .tank

Events thus proved Churchill and Fisher generally right in forcing the conversion of the Royal Navy to oil, for it did give the British fleet an overall advantage—greater range, greater speed, and faster refueling. (Location 3753)

Basra—a city of critical importance, as it guarded the strategic approaches from the West toward the Persian oil. Control of Basra also secured the safety of the local rulers friendly to British interests, including the Amir of Kuwait. (Location 3768)

In the midst of the world war, Greenway was positioning the company for postwar competition. His most important step was the purchase from the British government of one of the largest petroleum distribution networks in the United Kingdom, a company called British Petroleum. Despite its name, it had belonged to the Deutsche Bank, which used it as the outlet in the United Kingdom for its Rumanian oil; after the outbreak of the war, the British government had taken over the German-controlled company. Now, with its acquisition of British Petroleum, Anglo-Persian acquired not only a major marketing system, but also what would subsequently prove a most useful name. (Location 3781)

Tags: bp

Note: .bp

“You may have men, munitions, and money, but if you do not have oil, which is today the greatest motive power that you use, all your other advantages would be of comparatively little value.” In that same month, pleasure driving in Britain was summarily and completely banned. (Location 3858)

CHAPTER 10 Opening the Door on the Middle East: The Turkish Petroleum Company

The Great War had made abundantly clear that petroleum had become an essential element in the strategy of nations; and the politicians and bureaucrats, though they had hardly been absent before, would now rush headlong into the center of the struggle, drawn into the competition by a common perception—that the postwar world would require ever-greater quantities of oil for economic prosperity and national power. (Location 4030)

He and Deterding had looked at the original prospectus for the concession, promoted in Paris by the Armenian Kitabgi, but rejected it because, Gulbenkian later said, it was “a very wild cat, and it looked so speculative that we thought it was a business for a gambler.” Thereafter ruefully watching the growth of Anglo-Persian, he framed a motto—“Never give up an oil concession” (Location 4086)

The entire experience of wartime, beginning with the armada of taxis that saved Paris in the first weeks of the war, had convinced the French no less than the British that access to oil was now a matter of great strategic concern. (Location 4136)

Note: War drastically changed the worlds view on the importance of oil

Churchill went to work for Burmah and, more so, for Shell, the very same company that—while First Lord of the Admiralty, a decade earlier, engaged in his battle to bring the Navy into the oil age—he had so roundly castigated. Shell’s voraciousness, he had then insisted to the House of Commons, was the central reason for the government to buy shares in Anglo-Persian and guarantee its independence. Now he was prepared to undo all that, to persuade the government to sell those same shares in the cause of what he now saw as larger political and strategic interests. (Location 4231)

Tags: shell, churchill

Note: .churchill .shell

The leaders of engineering and scientific geology shared the fear. The director of the United States Bureau of Mines predicted in 1919 that “within the next two to five years the oil fields of this country will reach their maximum production, and from that time on we will face an ever-increasing decline.” (Location 4259)

Tags: oilshortage, us

Note: .us .oilshortage

Within the red line were eventually to be found all the major oil-producing fields of the Middle East, save for those of Persia and Kuwait. The partners bound themselves not to engage in any oil operations within that vast territory except in cooperation with the other members of the Turkish Petroleum Company. So the self-denying clause of the 1914 Foreign Office Agreement was reborn fourteen years later as the Red Line Agreement. (Location 4514)

CHAPTER 11 From Shortage to Surplus: The Age of Gasoline

Eisenhower was looking ahead. “The old convoy,” he recalled “had started me thinking about good, two lane highways.” Eventually, three and a half decades later, he would, as President of the United States, champion a vast system of interstate highways. But in 1919, Eisenhower’s snail-paced mission “Through Darkest America” signified the dawn of a new era—the motorization of the American people. (Location 4544)

Tags: esisenhower

Note: .esisenhower

“Villages which had once prospered because they were ‘on the railroad’ languished with economic anemia; villages on Route 61 bloomed with garages, filling stations, hot-dog stands, chicken-dinner restaurants, tearooms, tourists’ rests, camping sites and affluence. (Location 4557)

Note: The introduction of cars reduced the importance of rail transport and railway towns suffered

The impact of the automobile revolution was far greater on the United States than anywhere else. By 1929, 78 percent of the world’s autos were in America. In that year, there were five people for each motor vehicle in the United States, compared to 30 people per vehicle in England and 33 in France, 102 people per vehicle in Germany, 702 in Japan, and 6,130 people per vehicle in the Soviet Union. America was, indubitably, the leading land of gasoline. (Location 4563)

Tags: us, cars

Note: .cars .us

Before the 1920s, most gasoline was sold by storekeepers, who kept the motor fuel in cans or other containers under the counter or out in back of the store. The product carried no brand name, and the motorist could not be sure if he was getting gasoline or a product that had been adulterated with cheaper naphtha or kerosene. Moreover, such a system of distribution was cumbersome and slow. In the infancy of the auto age, some retailers experimented with gasoline wagons that delivered fuel from house to house. That idea never really caught on, partly because of the frequency with which the wagons tended to explode. (Location 4573)

He went into the newly discovered Oklahoma oil fields, awash in oil because of flush production and not yet connected to pipelines, and bought all the oil he could get at ten cents a barrel. He then threw up steel storage tanks, waited for the pipelines to be completed, and sold the oil for $1.20 a barrel. (Location 4683)

Note: Buy cheap,store, and then sell when the needed infrastructure arrives and peices go up

“The supremacy of nations may be determined by the possession of available petroleum and its products,” Coolidge declared. (Location 4893)

“Periodically ever since I was a small boy, there has been an agitation predicting an oil shortage, and always in the succeeding years the production has been greater than ever before.” (Location 4909)

Note: People have allwayys predicted an oil shortage

Shell grew rapidly in these years, in part through an aggressive campaign of acquisition. But it continued to abide by a policy of involving American investors as well, reflecting a dictum that Deterding had laid down in 1916. “It is, of course, always galling (apart from political considerations) in any country to see an enterprise doing well without local people being interested,” he had written. “It is contrary to human nature, however well a concern like that may be directed, or however much it may have the interest of the people at heart, not to anticipate there will be a kind of jealous feeling against such a company.” (Location 5016)

Note: People dont like to see foreign companies dooing well without locals involved

CHAPTER 12 “The Fight for New Production”

Mexico quickly became a major force in the world oil market. The quality of its crudes was such that they were mainly refined into fuel oil, which competed directly with coal for industrial, railway, and shipping markets. By 1913, Mexican oil was even being used on Russian railroads. During World War I, Mexico became a critical source for the United States, and by 1920, it was meeting 20 percent of domestic American demand. By 1921, Mexico had, with rapidity, achieved an astonishing position: It was the second-largest oil producer in the world, with an annual output of 193 million barrels. (Location 5109)

Tags: mexico

Note: .mexico

Venezuela itself was an underpopulated, impoverished, agricultural nation. Ever since the country’s liberation from Spain in 1829, local caudillos had governed the various regions. Of the 184 members of the legislature in the mid-1890s, at least 112 managed to claim the rank of general. Seizing power in 1908, Gómez set about centralizing power and turning the country into a personal fiefdom, his own private hacienda. Barely literate, he ruled through his cronies and family—by one count, he fathered ninety-seven illegitimate children. He installed his brother as his vice-president, a post the brother held until he was murdered by Gómez’s son. (Location 5161)

Tags: venezuala

Note: .venezuala

Development proceeded at breakneck speed. In 1921, Venezuela produced just 1.4 million barrels. By 1929, it was producing 137 million barrels, thus making it second only to the United States in total output. That year, oil provided 76 percent of Venezuela’s export earnings and half the government’s revenues. The country had already become Royal Dutch/Shell’s largest single source of production, and, by 1932, Venezuela was also Britain’s largest single supplier, followed by Persia and then the United States. (Location 5217)

Tags: venezuala

Note: .venezuala

“Man is a strange being,” he replied, on Christmas Eve 1925, “and in spite of all disappointments he still starts every year with new hopes. So let us do the same.” (Location 5351)

when Jersey accused the two companies of betraying American principles, Vacuum’s president observed that American businessmen and farmers were busily selling cotton and other products to Russia. “Is it more unrighteous,” he asked, “to buy from Russia than to sell to it?” That would be a long-persisting question. (Location 5394)

Tags: russia

Note: .russia

CHAPTER 13 The Flood

working assumptions were central to the system. One was that the demand for oil would not be particularly responsive to price movements: That is, oil at ten cents a barrel would not mean a far greater demand than oil at a dollar a barrel. Demand could be taken as a given, and at least in the Depression, many found that a reasonable thing to think. (Location 5764)

CHAPTER 14 “Friends”—and Enemies

The expropriated companies joined in a united front and tried to negotiate—not about compensation, in which they had no confidence, but to get their properties back. Their efforts were to no avail. But beyond the specifics of Mexico, there was a much graver concern. If the expropriation was seen as succeeding, said one Shell director, “a precedent is established throughout the world, particularly in Latin America, which would jeopardize the whole structure of international trade (Location 6173)

Tags: precedent

Note: .precedent people are often afraid that one event or decision will enourage others in a similaar situation

CHAPTER 15 The Arabian Concessions: The World That Frank Holmes Made

the Guaranty Trust’s London office, acting on behalf of Socal, obtained thirty-five thousand gold sovereigns from the Royal Mint, and they were transported to Saudi Arabia in seven boxes on a ship belonging to the P&O line. Care had been taken that all the coins bore the likeness of a male English monarch, and not Queen Victoria, which, it was feared, would have devalued them in the male-dominated society of Saudi Arabia. (Location 6534)

Tags: saudi

Note: .saudi arabia saudi received gold which only had males imprinted on it

Kuwait’s number-one industry and principal source of foreign earnings. Whether or not he knew the name, Sheikh Ahmad had good reason to be intensely annoyed with a Japanese noodle vendor from Miye prefecture, one Kokichi Mikimoto, who had become obsessed with oysters and pearls and had devoted many difficult years to developing the technique for cultivating pearls artificially. Eventually, Mikimoto’s efforts paid off, and by 1930, large volumes of Japanese cultured pearls were beginning to appear on the world’s jewelry markets, practically destroying the demand for the natural pearls that divers brought up from the waters off Kuwait and elsewhere in the Persian Gulf. Kuwait’s economy was devastated... (Location 6573)

Tags: toexplore, diamonds, pearls

Note: .pearls .diamonds .toexplore pearls can be cultivated artificially, which flooded the market. more than 99% of pearls sold worldwide are cultured pearls


But Japan was resisting German pressure to move closer—chiefly, Tokyo explained to Berlin, because Japan’s dependence on the United States and the British empire for indispensable raw materials, and for oil in particular, meant that it “was not yet in a position to come forward as an opposer of the Democracies.” (Location 6892)

Tags: germany, japan

Note: .japan .germany japans reliance on the us for oil prevented it from geting to close to germany

Cordell Hull was a backwoodsman turned statesman. Born in a log cabin in Tennessee, he had become a circuit court judge, a volunteer in the Spanish-American War, and then Congressman and Senator. Cautious, careful, “given to sifting a difference into its smallest particles,” and in his own way implacable, he had devoted himself since becoming Secretary of State in 1933 to one central purpose: breaking down trade barriers in order to promote a liberal international economic order that would also serve the cause of world peace. (Location 6990)

Tags: trade

Note: .trade countries that trade are more likely too be at peace

Japanese Navy’s concern that the American fleet in Hawaii, if left unattended in the midst of an invasion of the East Indies and Singapore, could launch a dangerous flank attack. As a result, the Japanese Navy had begun to plan a daunting and high-risk project—a surprise attack on Pearl Harbor. (Location 7012)

Tags: pearlharbour, japan

Note: .japan .pearlharbour jappan was weary that the us would attack them if they attempted to get oil from the indies

international dateline. (Location 7243)

Tags: te

Note: .te

Most of the American officials seemed to have forgotten—or never knew—that Japan’s great victory in the Russo-Japanese War had begun with a surprise attack on the Russian fleet at Port Arthur. (Location 7275)

Tags: japan

Note: .japan japan repeated their trick of surprise attacking a home base at the start of the war

Every barrel of oil in Hawaii had been transported from the mainland. If the Japanese planes had knocked out the Pacific Fleet’s fuel reserves and the tanks in which they were stored at Pearl Harbor, they would have immobilized every ship of the American Pacific Fleet, and not just those they actually destroyed. New petroleum supplies would only have been available from California, thousands of miles away. (Location 7313)

Tags: oil supply, pearlharbour

Note: .pearlharbour the japanese could have taken out the entire fleet by attacking the oil supplies

Hitler had good cause to appear reasonable. A successful synthetic fuels program, he had quickly grasped, could prove very valuable, perhaps essential, to his overall objectives for a resurgent and dominant Germany. One of the major obstacles to the achievement of that goal, he knew, was Germany’s dependence on imported raw materials—and oil in particular. Domestic petroleum production was tiny; imports, correspondingly high. Moreover, much of the imported oil came from the Western Hemisphere. (Location 7343)

Tags: germany, hitler

Note: .hitler .germany hitler knew the importance of oil, and how vital producing their own suplly would be

it was decided that, appearances notwithstanding, security would not be better served with synthetic oil. A system based on the importation of conventional oil in many ships through many ports would be less vulnerable to air attack than one dependent on a few very large, easily identifiable—and easily bombed—hydrogenation plants. (Location 8219)

Finally, retiring from Shell at the end of 1936, Deterding acted on both of his new infatuations. He divorced his second wife, married his German secretary, and went to live on an estate in Germany. He also took to urging other European nations to cooperate with the Nazis to stop the Bolshevik hordes, and he himself exchanged visits with the Nazi leaders. By 1937, the Prime Minister of the Netherlands, a former colleague of Deterding’s in Royal Dutch, said that he “could not understand how a man, who had made his name and fortune in England and who had received certain assistance from the country of his adoption, should suddenly migrate to Germany and devote himself to furthering the welfare of that country.” His activities, the Prime Minister added disparagingly, were “infantile and leaving no doubt as to his feelings.” Deterding’s last years, not surprisingly, were to undermine what would otherwise have been a considerable reputation as an “international oil man.” (Location 8241)

Tags: nazi, shell

Note: .shell .nazi .

The one thing that Ickes did not do, and could not do, was explain the real reasons for conservation: the dismal effects of the German U-boat campaign in the Atlantic and the deplorable state of British oil supplies. He feared that if he publicized the severity of the situation, he would be passing on valuable intelligence to the Nazis. Nor did he want unnecessarily to rile the isolationists in the United States. (Location 8341)

Tags: politics

Note: .politics politicians cant always reveal all the info

Ickes felt that he was being made to look like a fool. “I would not again be in favor of putting on restrictions until the people had actually felt the pinch,” he angrily complained in private. “It is impossible to carry the American people along with you on a program of caution to forestall a threatening position.” Prevention, whether it be an ounce or a pound, was bad politics, he concluded. Thereafter, Ickes resolved never again to go too far out on oil issues. (Location 8359)

Tags: problemavoidance, politics

Note: prevention is bad politics. People will believe the measures were unnecessary

Onshore, American cities were making the job of sinking cargo ships even easier for the U-boats. They were brightly illuminated at night, thus providing perfect silhouettes of the tanker targets for the stalking submarines. Miami was the worst offender; six miles of its beachfront were lit up by neon lights. Hotel owners and the chamber of commerce insisted that the lights could not be doused; it was still the tourist season. Elsewhere along the coast, such as at Atlantic City, crowds would watch from the shore as the dark horizon at sea was suddenly illuminated. Another tanker had been hit. (Location 8376)

Tags: pandemic

Note: .pandemic businesses will put themselves first and tgeir judgement to doo whhats right cant be trusted

Rationing was supplemented by other measures, including a thirty-five-mile-per-hour speed limit. There was even more outrage, however, when “nonessential driving” was banned in January 1943. But since no one could come up with a good definition of “nonessential driving,” that particular prohibition was abandoned a few months later. The rationing system provided for five grades of allocation, depending on need and function of the vehicle and driver. The alphabetical stickers displayed on automobile windshields became a status symbol for the lucky motorists whose driving was considered essential. The most fortunate were those with an X—doctors, clergymen, some repairmen, and government officials—who had unlimited rights to purchase gasoline. A degree of shame was felt by those who fell into categories deemed less important to the war effort. (Location 8516)

Tags: pandemic, rationing, war

Note: .war .rationing .pandemic essential drivers were given greater driving freedom than others

Americans, who had balked at voluntary conservation, accepted enforced rationing of gasoline, along with restrictions on their consumption of sugar, butter, and meat. After all, as was said so often, “There’s a war on.” (Location 8525)

Tags: rationing, pandemic, war

Note: .war .pandemic .rationing enforced rationing worked far better than voluntary rationing

There was incomplete comprehension of how fundamental would be the difference between the First World War and the Second. The former was a static war; the latter, a war of motion. (It was Stalin who had offered a toast at a banquet in Churchill’s honor in the darkest days of the war: “This is a war of engines and octanes. (Location 8543)

Tags: war

Note: .war


American orientation toward Saudi Arabia and the Middle East was about to change. The trigger was much as it had been a decade earlier, at the beginning of the 1930s: another collapse in the pilgrimages to Mecca and a new financial crisis in Saudi Arabia. This time it was not an economic depression but the war that interrupted the flow of pilgrims. Things were made worse by a drought and the resulting crop failure. (Location 8789)

United States almost single-handedly fueled the entire Allied war effort, putting an unprecedented drain on its resource, a fear of shortage began to grow. (Location 8810)

“could not allow smoking or drinking alcohol in his presence.” Churchill would not be so accommodating as Roosevelt toward Ibn Saud. “I was the host and I said if it was his religion that made him say such things, my religion prescribed as an absolute sacred rite smoking cigars and drinking alcohol before, after, and if need be during, all meals and the intervals between them.” (Location 9056)

Tags: churchill

Note: .churchill

In 1945, 26 million cars were in service; by 1950, 40 million. Virtually no one in the oil industry was prepared for the explosion of demand for all oil products. Gasoline sales in the United States were 42 percent higher in 1950 than they had been in 1945, and by 1950, oil was meeting more of America’s total energy needs than coal. (Location 9134)

Tags: rationing, oil

Note: .oil .rationing demand for oil jumped when rationing ended after ww2

Ibn Saud was now in his mid-sixties, blind in one eye, and failing in health. His personal force and drive had created and held together the kingdom. But what would happen when that force was gone? He had sired upwards of forty-five sons, (Location 9187)

Tags: saudiarabia

Note: .saudiarabia the king had 25 sons

This unexpected shortfall of energy drove home the extent to which Britain had been impoverished by the war. Its imperial role had become an insupportable burden. During those few bleak, freezing, and pivotal weeks of February 1947, the Labour government of Clement Attlee referred its intractable Palestine problem to the United Nations and announced that it would grant independence to India. (Location 9452)

Tags: palestine, india, empire, uk

Note: .uk .empire .india .palestine the uk had an ennergy shhortage ann realised it couldnt prop up the empire

CHAPTER 22 Fifty-Fifty: The New Deal in Oil

oil already dominating Venezuela’s cash economy—accounting for well over 90 percent of total export value in the late 1930s (Location 9701)

Tags: venezuala

Note: .venezuala oil accounted for 90% of exports

As the result of those changes, plus the rapid expansion of production, the government’s total income in 1948 was six times greater than it had been in 1942. (Location 9755)

Tags: venezuala

Note: .venezuala the changes in law drasticaly increased the governments income from oil

Oil provided 60 percent of the government’s income; the economy was virtually based upon oil. “It would have been a suicidal leap into space to nationalize the industry by decree,” Betancourt said afterward. National objectives could be met without nationalization. With some pride, Betancourt noted that, as a result of the tax reforms of the mid-1940s, the Venezuelan government received 7 percent more per barrel than what was paid to the Mexican government by its nationalized industry. And Venezuelan production was six times that of Mexico. (Location 9768)

Tags: mexico, venezuala

Note: .venezuala .mexico oil provided 60% of the governments incomes

The Neutral Zone was the two thousand or so square miles of barren desert that had been carved out by the British in 1922 in the course of drawing a border between Kuwait and Saudi Arabia. In order to accommodate the Bedouins, who wandered back and forth between Kuwait and Saudi Arabia and for whom nationality was a hazy concept, it was agreed that the two countries would share sovereignty over the area. (Location 9784)

Tags: kuwait, saudi

Note: .saudi .kuwait neutral zone was ruled by both countries

within eight years of winning the concession, an oil man named Jean Paul Getty, or J. Paul Getty as he called himself, would become the richest man in America. From his earliest days in business, the inward, vain, and insecure Getty had been driven by a powerful need to make money, matched by an extraordinary talent for doing so. (Location 9823)

Tags: saudi, getty

Note: .getty .saudi getty made money from the saudi ownnership of the neutral zone

Getty always wanted the cheapest price, the best bargain, and he was ruthless in the pursuit. During the Depression, he fired all his employees and then hired them back at lower salaries. (Location 9861)

Tags: getty

Note: .getty

He achieved further fame as the Billionaire Miser. He spent his final years as squire of Sutton Place, an exquisite, 72-room Tudor manor house in Surrey, and there, amid the splendors of his priceless collection of art and antiques, he installed a pay phone for guests to use. (Location 9944)

Tags: getty

Note: .getty

The Venezuelans had not taken on these additional expenses sheerly out of altruism. In Caracas, it had become, as Romulo Betancourt observed, “increasingly evident that the competition from low-cost, high-volume production from the Middle East was a grave threat to Venezuela.” Best get those costs up, which would be accomplished if the Middle Easterners were to raise their taxes. And so, in the ironic words of a State Department petroleum expert, the Venezuelans “decided to spread the benefits” of the fifty-fifty principle “to the area which was taking business away from them—the Middle East.” (Location 9987)

Tags: venezuala

Note: venezuala promoted the 50/50 concept in the middle east to try drive up the cost of oil from there and thus make their own oil more competitively priced

“The Saudis knew the Venezuelans were getting 50/50,” he later said. “Why wouldn’t they want it too?” At a State Department meeting on September 18, 1950, McGhee told representatives of American oil companies operating in the Middle East that the time was certainly at hand for “rolling with the punch.” (Location 10023)

Tags: venezuala, saudi

Note: .saudi .venezuala

The Saudi-Aramco fifty-fifty agreement of December 1950 was, with justification, described as a “revolution” by one historian of the decline and fall of the British empire—“an economic and political watershed no less significant for the Middle East than the transfer of power for India and Pakistan.” (Location 10062)

CHAPTER 23 “Old Mossy” and the Struggle for Iran

Mossadegh dispatched the governor of Khuzistan province to Anglo-Iranian’s headquarters at Khorramshahr. On arrival, the governor sacrificed a sheep in front of the building, and then announced to a delirious crowd that the concession was voided. Anglo-Iranian’s facilities in Iran, as well as the oil they produced, now belonged to the nation of Iran. Mossadegh’s son-in-law followed with an emotional speech in which he declared that the days of colonialism were over and those of prosperity at hand. He fainted from the excitement and had to be carried away. (Location 10217)

Tags: dan, iran

Note: .iran .dan

Meanwhile, in the oil fields and at the refinery, operations were grinding to a stop. The British managed to mount an embargo by threatening tanker owners with legal action if they picked up “stolen oil.” In addition, Britain embargoed goods to Iran, and the Bank of England suspended financial and trade facilities that had been available to Iran. In short, the expropriation was being met with economic warfare. (Location 10378)

Tags: embargo, uk, iran

Note: .iran .uk .embargo

The Suez Canal was the way most of the swelling volumes of Persian Gulf oil got to Europe, cutting the 11,000-mile journey around the Cape of Good Hope to Southampton down to 6,500 miles. By 1955, petroleum accounted for two-thirds of all the canal’s traffic, and in turn two-thirds of Europe’s oil passed through it. (Location 10789)

Tags: suezcanal

Note: .suezcanal 2/3 of the shhips were transporting oil

The “Seven Sisters” included the four Aramco partners—Jersey (Exxon), Socony-Vacuum (Mobil), Standard of California (Chevron), and Texaco—plus Gulf, Royal Dutch/Shell, and British Petroleum, which were tied together in Kuwait. (Location 11337)

(In 1954, Anglo-Iranian, taking up the name of the subsidiary it had acquired in World War I, had rechristened itself British Petroleum). (Location 11339)

Tags: bp

Note: .bp

After much back and forth, the Japanese agreed to take only 44 percent, leaving the Saudis with 56 percent. In addition, the Saudis would have the right to acquire an equity stake in the company should it strike oil. When word of the terms spread among the American and British companies, the alarm bells went off. The whole structure of Middle Eastern relations might be threatened. (Location 11420)

Note: Once the 50/50 agreement was breached other companies would want to follow suit

the delegates proposed the building up of domestic refining capacity and the establishment of an Arab tanker fleet and an Arab pipeline to the Mediterranean. They also discussed creating an Arab “international body” or “international consortium” that would manage Middle Eastern oil production, increase revenues, and counterbalance the power of the petroleum companies. The group emphasized the need to build up Arab expertise and technical skills in order to challenge their mystique. (Location 11490)

Note: arab countries want to build up the expertise themselves

If only the market price were reduced, then the oil companies alone would be absorbing the entire loss. Yet could they risk making another cut in the posted price? The first one, in February of 1959, had inflamed the Arab Oil Congress and led to the Gentlemen’s Agreement. (Location 11733)

Tags: opec

Note: .opec cutting the price of oil let to the foormation of opec. The intention was to strengthen the position of the producing countries vs the foreign oi comanies

By 1965, Libya was the world’s sixth-largest exporter of oil, responsible for 10 percent of all petroleum exports. By the end of the 1960s, it was producing over three million barrels per day, and in 1969 its output actually exceeded that of Saudi Arabia. It was an incredible accomplishment in a country in which, a decade earlier, no petroleum reserves had yet been discovered. (Location 11957)

Tags: libya

Note: .libya

The automobile was also absolutely central to dating, going steady, the acquisition of carnal knowledge, and the rituals of courtship. One survey in the late 1960s found that almost 40 percent of all marriages in America were proposed in a car. (Location 12500)

Tags: car

Note: .car

To the Israelis, watching the mobilization of Arab military might all around them, the noose seemed to be growing very tight. (Location 12557)

Tags: israel

Note: .israel israel is surrounded by enemies

“The crisis is more serious than at the time of the Suez blockage in 1956–57,” said a United States Assistant Secretary of the Interior on June 27. “At that time no major producer except northern Iraq was closed and the problem was exclusively one of transportation. Now … three-quarters of [Western Europe’s oil] comes from the Arab regions of the Middle East and North Africa, one-half of which is now out of production. Europe is, therefore, facing an immediate petroleum shortage of critical proportions.” (Location 12579)

Tags: suez

Note: .suez the suez crisis was about transport but this was also about production


The __British did help set up a federation, the United Arab Emirate__s, to bind together a number of the small states, which, it was hoped, would afford them some measure of protection. With that accomplished, the British packed up and left the Gulf in November 1971. Their departure marked the most fundamental change in the Gulf since World War II and meant the end of the security system that had operated in the area for over a century. I__t left behind a dangerous power vacuum in a region__ that supplied 32 percent of the free world’s petroleum and that, at the time, held 58 percent of the proven oil reserves. (Location 12762)

Tags: uk, uae

Note: .uae .uk the uae was setup by the uk in 1970 to bammd smaller states together to reduce the risk of viiolence

the line of the great buccaneer-creators of oil: Rockefeller, Samuel and Deterding, Gulbenkian, Getty and Mattei. (Location 12986)

Qaddafi and his associates had begun their conspiring a full decade earlier, while teenagers in secondary school, inspired by Gamal Abdel Nasser, his book, Philosophy of Revolution, and his radio station, the Voice of the Arabs. They decided to model their lives and their cause on Nasser. They also decided that the road to power was not directly through party politics, but the same route Nasser had taken, through the military academy. (Location 13023)

Tags: qaddafi, egypt, libya

Note: .libya .egypt .qaddafi

Qaddafi’s new Revolutionary Command Council after the successful September coup were the shutting down of the British and American military bases in Libya and the expelling of the large Italian population. Qaddafi also closed all the Catholic churches in the country and ordered their crosses removed and their contents auctioned (Location 13031)

Tags: qaddafi

Note: .qaddafi

Each day Hammer worked through the arduous, draining negotiations. Each night, he flew back to Paris, so that, from his suite at the Ritz Hotel, he could telephone with some security back to his board of directors in Los Angeles. There was another reason for this daily commute. Despite Jalloud’s offer of the hospitality of a palace that had belonged to the deposed King Idris, Hammer worried that he might be “detained” for an extended stay. ... He would arrive back in Paris at 2:00 A.M., and would be off again by 6:00 A.M. Throughout his life, he had had a remarkable capacity to nap under all kinds of conditions, and he put that ability to very good use on the flights. (Location 13072)

Arab oil, while it seemed endlessly abundant, was not the supply of last resort. Texas, Louisiana, Oklahoma—those states could always and quickly put additional oil into the world market. But once the United States hit 100 percent in terms of production rates, that old warrior, American production, could not rise up again to defend against the oil weapon. (Location 13407)

Americans realized that Israel could lose the war without resupply. In Kissinger’s and even more so in Nixon’s formulation, the United States could not allow an American ally to be defeated by Soviet arms. (Location 13664)

Available Arab oil in the first part of October had totaled 20.8 million barrels per day. In December, at the most severe point in the embargo, it was 15.8 million barrels per day, a gross loss of 5 million barrels per day of supply from the market. This time, however, there was no spare capacity in the United States. Its disappearance represented a major change in the underlying dynamics of politics and oil as they had existed as recently as six years earlier, during the 1967 Six-Day War. America’s spare capacity had proved to be the single most important element in the energy security margin of the Western world, not only in every postwar energy crisis but also in World War II. And now that margin was gone. Without it the United States had lost its critical ability to influence the world oil market. (Location 13882)

Tags: surplus

Note: .surplus having surplus can bring great flezibility and power

The fears aroused by the embargo ignited a series of commodity panics that recalled the violent “rice riots” that had shaken Japanese governments in the late nineteenth and early twentieth centuries. Taxicab drivers staged angry demonstrations, and housewives rushed out to buy and hoard laundry detergent and toilet paper—in some cases, upwards of a two-year supply. The price of toilet paper would have quadrupled, like that of oil, had it not been for government controls. As a result, in Japan, the oil shortage was accompanied by a toilet paper shortage. (Location 13943)

Tags: japan

Note: .japan an oil shortage led to a toilet paper shortage. In times of uncertainty people buy toilet paper

There were elements of both resentment and poetic justice in the European position. The French had long felt that the “Anglo-Americans” had unfairly excluded them from most Middle Eastern oil, especially in Saudi Arabia with the postwar renunciation of the Red Line agreement, and that the Americans had undermined them in the struggle over Algeria. Then there was the 1956 Suez crisis. Seventeen years had passed since the Americans had blatantly undercut France and Britain in the confrontation over the canal with Nasser, hastening the retreat of the two nations from their global roles and giving a great boost to Arab nationalism. (Location 14216)

Tags: us

Note: The US & UK excluded France from Middle Eastern oil. The US didn't support UK & France during the suez crisis in 1956.

At the beginning of the 1970s, Nixon and Kissinger had established a “blank check” policy, giving the Shah a free hand to buy as many American weapons systems as he wanted, even the most technologically advanced, so long as they were not nuclear. The policy was part of the “twin pillars strategy,” established for regional security in the wake of the British withdrawal from the Gulf. Iran and Saudi Arabia were together to be the pillars, but of the two, Iran was clearly, as one American official put it, the “Big Pillar,” and by the mid-1970s, Iran was responsible for fully half of total American arms sales abroad. (Location 14618)

Tags: iran, us

Note: .us .iran the us sold arms to iran in the 70s to help bolsterbbtheiir security after the UK left the region at thye start of the decade

Iran had now joined Saudi Arabia on the side of moderation. With those two countries representing 48 percent of OPEC production, they could dictate to the other members, and oil prices would be held in check. (Location 14664)

Tags: saudi, iran

Note: .iran .saudi iran and saudi make up alomst half of opec

After the initial panic and shock of the Arab oil embargo, Japan began to marshal its responses. The Ministry of International Trade and Industry made a personal “statement” of sorts; it curtailed elevator service in its own headquarters building. (Location 14844)

Tags: japan

Note: .japan

In order to reduce the need for electric air conditioning in the summer months in Japan, a major effort was also made to promote an ingenious innovation in men’s fashions: the shoene rukku or “energy conservation look”—business suits with short-sleeve jackets. While the elevator service remained curtailed, the new suits, though advocated by Prime Minister Masayoshi Ohira himself, never caught on. (Location 14846)

Tags: hc44, japan, suits

Note: .suits .japan .hc42 he japanese tried to introduce short sleeve shirts to reduce the need for air con

In 1971, MITI had conducted a study on the need to move from “energy-intensive” to “knowledge-intensive” industry, based upon the premise that Japanese oil demand was growing so fast that it would put undue pressure on the world oil market. (Location 14860)

Tags: japan

Note: .japan japan shifted from energy intensive industry to knowllegde industry becuase of their fears about oil supply

France also developed the most aggressive government policy on energy conservation. Inspectors would swoop down on banks, department stores, and offices and do “le check up”—take the inside temperature with special thermometers. If the temperature exceeded the officially approved twenty-degree-centigrade level, fines would be levied on the building management. (Location 14880)

Tags: france

Note: .france "le check up" to see if offices were above 22 degrees

important assumption underlying this common view was the belief in the “Iron Law”—that is, that there was an inevitably and inescapably close relationship between economic growth rates and the growth rates for energy and oil use. If the economy grew at 3 or 4 percent a year, as was generally presumed, oil demand would also grow by 3 or 4 percent a year. (Location 15271)

Tags: economy, energy

Note: .energy .economy

The hostage crisis had even wider ramifications. It served to demonstrate the apparent weakness, even nakedness, of the consuming countries—in particular, of the United States, whose power was the basis of the postwar political and economic order. And it seemed to establish that world mastery really did lie in the hands of the oil exporters. (Location 15984)

Tags: iran

Note: .iran the iranian hostage crisis showes the us had lost some power

The war had been sparked by a host of rivalries: ethnic and religious, political and economic, ideological and personal; by a struggle for primacy in the Gulf; by the insecurities of national cohesion; and by the arbitrary way in which “nations” had been created and borders in the Middle East overlaid on the map of the defunct Ottoman Empire. Indeed, geography was decidedly at the heart of the conflict. (Location 16084)

Tags: geography, iraq, iran

Note: .iran .iraq .geography

Deregulation of an industry removes protection and increases competitive pressure and, thus, typically results in consolidations, spinoffs, takeovers, and a variety of other corporate changes. (Location 16539)

Tags: deregulation

Note: .deregulation deregulation increases competition

he became fascinated by the gap between stock value and the value of the underlying oil and gas assets. Pickens fastened his eyes on Hugoton Production, a sleepy but considerably larger company that had extensive gas reserves in the Hugoton, in southwestern Kansas, then the nation’s largest gas field. Its stock price was much lower than its gas reserves would have fetched if sold off. (Location 16590)

Tags: stock, assets

Note: .assets .stock consider the underlying value of things

Yet out of the tumult of the 1970s and 1980s, important lessons had emerged. Consumers had learned that they could not regard oil, the fundament of their lives, so easily as a given. Producers had learned that they could not take their markets and customers for granted. The result was a priority of economics over politics, an emphasis on cooperation over confrontation, or at least so it appeared. (Location 17526)

During the 1970s, as security came to the fore and hard economic times led to renewed emphasis on jobs and economic performance, the environmental movement lost some of its momentum. (Location 17793)

All of the oil world is divided into three. The “upstream” comprises exploration and production. The “midstream” are the tankers and pipelines that carry crude oil to refineries. The “downstream” includes refining, marketing, and distribution, right down to the corner gasoline station or convenience store. A company that includes together significant upstream and downstream activities is said to be “integrated.” (Location 18266)

Tags: integrated, oil

Note: .oil .integrated exploration and production transport of crude to refineries refining and selling to the market