Lesson 6 - Oil Strategy and World War II



We will start the lesson with the battles in the Pacific with Japan and discuss the victory fever that initially gripped Japan and how it turned into desperation on oil shortage and eventually to surrender/defeat. Continue on to cover the war in the Atlantic and in Europe and the role oil played in the war as well as how oil impacted American society because of the war. Then, see how the importance of oil dominated the objectives and strategies to seek oil in the Middle East following the war and find out how America, and not Britain, became the major power in Middle East oil and politics. We will learn when and how America became a net importer of oil and discuss how the Red Line Agreement was finally abandoned, paving the way for major American involvement in Middle East Oil.

Major Lesson Themes

  • Japan’s Attack on East Indies after Pearl Harbor
  • The Battles in the Pacific
  • Supply lines can be long and difficult to defend
  • Japan runs out of oil for which it went to war, leading to defeat
  • International cooperation in oil allocation
  • First full scale gasoline rationing
  • Growing concern about supply
  • Mobility was critical in Allies' advance
  • Importance of supply lines to war generals

Learning Outcomes for Lesson 6:

Students should be able to do the following after completing Lesson 6:

  • discuss what caused Japan to be short of oil and the consequences of the shortage;
  • explain why synthetic oil, especially from pine root, was no substitute for crude oil;
  • explain why Britain rejected the oil from coal synthetic fuel strategy;
  • chronicle the life of Deterding’s last years and why it concerned Britain;
  • explain the impact of the German U-boats and how they were overcome;
  • account for the production, system of coordination, and usage of oil in WWII;
  • explain the argument used for and provide details of the oil rationing in the US;
  • compare WWI and WWII with respect to oil use, innovations, mobility, and impact;
  • state and justify your decision if you were Eisenhower acting on Patton’s request;
  • explain the mission of DeGolyer to the Middle East and its outcome or conclusion;
  • provide the reason why Roosevelt initially refused Lend Lease for Saudi;
  • account for the mistrust between Britain and the US on Middle East;
  • explain the policy of solidification and its outcome;
  • indicate the Anglo-American Petroleum Agreement, its objective and eventual fate;
  • compare the meetings of Roosevelt and Saud and Churchill and Saud;
  • explain the similarities between the “As-Is” and “Anglo-American” Agreements;
  • account for how Harold Ickes eventually lost his power;
  • explain how and when the US became a net importer;
  • explain the difficulties and what it meant to have more US oil companies in Aramco.

What is due for Lesson 6?

This lesson will take us one week to complete. Please refer to the Course Syllabus for specific time frames and due dates. Specific directions for the assignment below can be found within this lesson.

Lesson 6 Checklist
Activity Location Submitting Your Work
Read The Prize: Chapters 18, 19, & 20 - (select sections) No Submission
Read The Quest: Chapter 14 - (select sections) No Submission
Read Online Lesson 6: Oil Strategy and World War II No Submission
Complete Lesson 6 Participation Activity Canvas
Take Lesson 6 Quiz Canvas


Each week an announcement is sent out in which you will have the opportunity to contribute questions about the topics you are learning about in this course. You are encouraged to engage in these discussions. The more we talk about these ideas and share our thoughts, the more we can learn from each other.

Lesson 6 Readings

Reading Assignments for Lesson 6

Students are to read three chapters of the text - The Prize and The Quest. Sections not listed are optional readings.

Chapter 18 - Japan's Achilles' Heel

Sections to Read

  • The Battle of the Marus: The War of Attrition
  • "No Sense in Saving the Fleet"
  • The End of the Imperial Navy
  • A Fight to the Finish?

Major Themes to Ponder as You Read

  • Japan’s Attack on East Indies after Pearl Harbor
  • The Battles in the Pacific
  • Supply lines can be long and difficult to defend
  • Japan runs out of oil for which it went to war, leading to defeat

Chapter 19 - The Allies’ War

Sections to Read

  • Introduction
  • The Oil Czar: The Mobilization of American Supply
  • Trial by Sea: The Battle of the Atlantic
  • Domestic Push
  • Innovation
  • The "Unforgiving Minute"

Major Themes to Ponder as You Read

  • International cooperation in oil allocation
  • First full scale gasoline rationing
  • Growing concern about supply
  • Mobility was critical in Allies' advance
  • Importance of supply lines to war Generals

Chapter 20 - The New Center of Gravity

Sections to Read

  • Introduction
  • "We're Running out of Oil"
  • "The Policy of "Solidification"
  • "A Wrangle About Oil"
  • Quotas and Cartels

Major Themes to Ponder as You Read

  • America fueled most of World War II
  • Growing sense − dominance not last
  • Oil Gulf of Mexico / Caribbean
  • Middle East new center
  • Evident during the war − positioning for post-war order
  • American roots in Saudi Arabia took hold during WWII

From text - The Quest

Chapter 14 - Shifting Sands in the Persian Gulf

Section to Read

  • The Center of Gravity of the World Oil

Major Themes to Ponder as You Read

  • Modern review of the shift of oil power

The Lecture for The Prize Chapter 18: Japan’s Achilles’ Heel

The Prize Chapter 18: Japan’s Achilles’ Heel

Consider the following questions:

  • Are there present-day equivalents to Japan’s wartime fuel production?
  • What are the ecological impacts?
  • How did Japan value life versus fuel?
  • Was dropping the atomic bomb necessary?
  • How did America exact revenge on Admiral Yamamoto in April 1943 for Pearl Harbor?
  • What are your views on the way the Razor, General Hideki Tojo, died?

Balikpapan Oil Fields Destroyed but Victory Fever grips Japan

Right after Pearl Harbor, the families of oilmen in Balikpapan, in Borneo, in the British East Indies were evacuated in anticipation of Japanese advances into Southeast Asia. Balikpapan, with all its oil wells and refineries, was one of the great prizes for which Japan would go to war. In mid-January 1942, crews began to destroy the wells as the Japanese were closing in. They pulled out the tubing, cut them up, jammed them down the wells, and placed cans of the explosive trinitrotoluene (TNT) in each well to destroy them. The crews started with the least productive wells until at last all were destroyed. The refinery complex was also completely destroyed, and with that action, four decades of oil industry that had been created was destroyed in less than a day. The next plan was for the crew to escape. Some crew was evacuated, but 75 people were left stranded at the Bay of Balikpapan still awaiting rescue as the Japanese had already landed on the south side of the bay. Out of the 75, only 35 survived the jungle and the Japanese firing squads and prisons.

It should be pointed out, however, that the initial attempt to deny Japan the oil in the East Indies was only an initial setback. Within a short period, Japan was able to restore the Balikpapan oilfields with astonishing results that far exceeded their goals. Oil production in the Southern zone in 1940 was 65.1 million barrels. In 1942, the Japanese managed to restore 25.9 million barrels, and in 1943, 49.6 million barrels (75% of the 1940 level). With the East Indies oil, Japan was able to import enough oil to make up for the oil embargo in July 1941 by the Americans, British, and Dutch. There was no lack of oil, and the Japanese fleet could even refuel locally at will. They even struck a giant field in central Sumatra in the Minas structure. All these events helped make Japan feel that the oil problem, which was the driving force for its aggression, had been solved.

By mid-March 1942, Japan’s control of the East Indies was complete, and in just three months, Japan had won all of the rich resources of Southeast Asia. With the stunning and rapid military successes in Hong Kong, Manila, Singapore, and Southeast Asia and the Pacific, a “Victory fever” gripped Japan.

Map of the Pacific War theatre showing battles,cities, and command boundaries for the Pacific islands
Map of the Pacific War theatre showing battles for Pacific islands including Midway, Guam, Marus, and the Philippines.

Victory fever gives way to desperation in the Pacific

Americans were in shock and despair on Christmas Day 1941 when Admiral Chester Nimitz arrived in Pearl Harbor to begin the job of picking up the pieces. War was now in both hemispheres, and Pearl Harbor was the worst humiliation in American history. The country was gripped with fear and panic as it attempted to rally for war with Germany and Japan. There was also a lot of conflict between the US Army (led by General Douglas MacArthur) and Navy (led by Admiral Chester Nimitz) in the Pacific which led to bitter and wasteful battles over scarce resources and poor coordination in the key military operations in the widely stretched battles. Nimitz’s strategy for success was to safeguard American supply lines/resources while blocking Japanese oil lines.

Black and white headshot of General MacArthur and a colored photo of Admiral Nimitz
General MacArthur (left) and Admiral Nimitz (right).
Credit: Public Domain

While America mobilized for the war, Japan, celebrating its successes, had to decide its next move: either move westward through India and link up with German forces in the Middle East or Russia to cut off Allies' supply of oil from Baku and Iran. Japan decided instead to mount an attack on Midway Island, 1,100 miles west of Hawaii, to extend its defense perimeter. The Battle of Midway, in June 1942, contrary to the expectations of the Japanese, turned out to be a decisive turning point in favor of Americans. Japan underestimated American submarines and resolve. American manpower, resources, technology, organizational ability and sheer determination after Pearl Harbor resulted in a decisive shift in the balance of power as the Japanese were pushed back in the Pacific in one bloody battle after the other. Suddenly, the feeling of invincibility that surrounded the Japanese Army had been pierced.

Japan assumed the resources of the Southern Zone would secure Japan the staying power to maintain a “Pacific wall.” The strategy was a gamble as Japan’s major weakness became the vulnerability of its shipping/supply lines to American submarines. They clearly underestimated American submarines and the men who sailed on them. Japan thought Americans were too soft and luxury-loving to endure undersea living and warfare. However, American submarines were the best in the war as they were deadly especially with improved torpedoes. The Battle of the Marus (a term used to describe merchantmen) turned out to be a long, drawn-out confrontation between American submarines and Japanese ships between the Southern Zone and the Home Lands. Having cracked Japanese codes, American submarines could easily detect convoy positions, and by 1944, the sinking rate outran new tanker construction rate. Of Japan’s total wartime steel merchant shipping, about 86% was sunk, while another 9% was seriously damaged – oil tankers were also a favorite target. The submariners, less than 2% of US naval personnel, were responsible for 55% of Japan’s total loss.

With the ever-tightening blockade on Japan by the submarines, “The shortage of liquid fuel was Japan’s Achilles' Heel.” Oil imports that had risen to their peak in the first quarter of 1943 were about half that at the same time one year later in 1944 and had completely disappeared/dried up by the same time in 1945. Desperate, Japan tried many forms of improvisations as the oil situation worsened. Industrial oil was made from soybeans, peanuts, coconuts, and castor beans. Potatoes, sugar, rice, and sake were even converted to alcohol to be used as fuel. By 1944, civilian gasoline consumption was down to 257,000 gallons, just 4% of the 1940 figure. Japan revived its 1937 synthetic fuel attempts, and in 1943, Japan’s synthetic fuel production amounted to 1 million barrels – only 8% of the target amount. Over half of this value was in Manchuria, which was useless in late 1944 and 1945 due to the blockade. Besides, synthetic fuel was a drain on resources, manpower, and management and was more of a liability than an asset.

The overall consequence of the oil shortage caused the naval strength of the Japanese fleet to be divided when it truly needed to be combined. Part of the fleet was based in Japan waiting for new aircraft and pilots, and the heavy battleships were stationed near Singapore closer to the East Indies supply. The shortage worsened in 1945, and navigation training for flight pilots was eliminated. Pilots were simply to follow their leaders to targets with the expectation that most would not return. This lack of training, of course, caused the Japanese to lose up to 40% of their aircraft on ferrying operations alone.

The Americans put forth a devastating package of amphibious warfare, carrier airpower, and industrial might - an enormous expenditure of resources Japan could not match. The Allies had successes from one island to the other in the Pacific with the Japanese. America even revenged for Pearl Harbor when, in April 1943, Americans waiting in ambush shot down the plane of Admiral Yamamoto, the architect of Pearl Harbor, sending him to his death in a jungle near New Guinea.

Oil shortage and desperation lead to Kamikazes and eventual fall of the Imperial Way

Eventually, the urgency of fuel led the Imperial Navy to throw all of its weight into the Battle of Leyte Gulf off the Philippines in Oct 1944 as the noose was then growing pretty tight. The shortage of fuel handicapped the Japanese again and again, and the 3-day battle led to a devastating defeat for the Japanese. The losses included three battleships, the four remaining aircraft, ten cruisers, and thirteen destroyers. The desperation led to a new weapon introduced by Japan: kamikazes or suicide pilots. These pilots, given only half of the oil required, were expected to crash their planes and bombs into American ships causing damage/destruction while saving fuel for the return trip!

While Japan’s condition continued to worsen, the Americans had an abundant fuel supply in the Pacific with huge floating bases made up of fuel barges, repair ships, tenders, tugs, floating docks, salvage ships, lighters, and store ships that gave the U.S. Navy long legs across the Pacific. In 1944, Guam became a major American base for bombing Japan, providing 120,000 barrels per day of aviation gasoline. Just from this one location alone, Americans used 6 times as much oil as the Japanese. By early 1945, Manila had been recaptured at an appalling cost, 6,800 Americans and 21,000 Japanese died, and 20,000 Americans were wounded for a 4.5 x 2.5 miles island. At home, in Japan, oil had virtually disappeared from the domestic economy, and gas, electricity, and charcoal were all in a severely short supply. Food intake was also down to less than 1,800 calories per day compared to the daily minimum required amount of 2,160 calories. To most observers, the sinking of the Yamato, the world’s largest battleship and the pride of Japan, by American warplanes before it could even undertake its suicide mission marked “the end of the Imperial Navy.” Still, however, Japan will not give up.

The Imperial Navy, in growing desperation for fuel, launched the pine root campaign where pine roots were dug up and heated for 12 hours to produce a crude oil substitute. Each gallon of pine root produced required 2.5 man-days of work. Thus, the official 12,000 bbl/d target would have required 1.25 million persons per day! By June 1945, pine roots were producing 75,000 barrels per month fuel. However, the refining technology for pine roots oil was still lacking. In Spring 1945, a new government came into power in Japan headed by the 80-year-old retired admiral, Kantaro Suzuki. Suzuki ordered a survey of Japan’s fighting ability to determine if they were sufficient to carry on the war, and the report issued in mid-June 1945 indicated that while fuel oil in April 1937 was 29.6 million barrels, by July 1, 1945, it would be just 0.8 million barrels, and for all practical purposes, Japan was out of oil!

The possibility of surrendering was far from being accepted for many at the top of the Japanese government. Japan put up a fierce resistance to the American invasion of Okinawa in April of 1945, and that did not end till June 21, 1945, with a 35% American casualty rate on that island alone. The bloodiness and stubbornness of the Okinawa battle led to the decision of America to use the new deadly weapon – the atomic bomb, if necessary. Tokyo rejected the Allies’ Potsdam Declaration, which would have allowed Japan to quit the war on reasonable grounds, including retaining the Emperor. On August 6, 1945, the first atomic bomb (code name, Little Boy) made from uranium dropped on Hiroshima, and on August 8, 1945, the Soviet Union declared war on Japan and sent troops pouring into Manchuria. On August 9, 1945, the second atomic bomb (code name, Fat Man) made from plutonium was dropped on Nagasaki.

Finally, on the night of August 14, 1945, the Emperor made a phonograph recording of Japan’s surrender message. Some still didn’t want the war to end as soldiers tried to break in the Imperial Palace to steal the recording before it aired and to also assassinate Premier Suzuki. However, the attempt was unsuccessful and finally, on August 10, the Japanese people heard the call to surrender and the war with Japan was over. Many of the Japanese war leaders including the War Minister, Korechika Arami, and Admiral Onishi, committed hara-kiri or ritual suicide after the surrender. The Allies Supreme Commander, General Douglas MacArthur, arrived in Japan on August 30 to sign the surrender documents. Twelve days later, on September 11, when American officials arrived in the house of General Hideki Tojo, former War Minister and wartime prime minister, to arrest him, he shot himself and his life hung in the balance due to difficulty in finding a doctor as well as an ambulance with gasoline in its tank! Meanwhile, it should be remembered that he is the one who forced Japan into war under the pretext that the fate of Japan depended on access to oil. The cost of the Pacific War of Tojo and collaborators was enormous - up to 20 million lives were claimed, including about 2.5 million Japanese. Tojo survived the self-inflicted shot, and the next year he was put on trial for war crimes, found guilty, and executed.

Yergin, Daniel. (2008). The Prize: The Epic Quest for Oil, Money, & Power. New York: Free Press.

Lesson 6 Chapter 18 Video

Lesson 6 Chapter 18 Video

By this time, you have now read chapter 18 in Yergin's The Prize for this lesson and you have read through online notes that accompany the chapter on this website.

Now, it's time to watch the episodes of the video documentary related to this chapter. Use the documentary to help you review the major themes and the driving questions that were posed for each chapter. Use the play head to advance to the chapter segments listed below.

The Prize - Episode 4

To access the video clips for this chapter, please use the following link, which will open in a new window.

The Prize: Episode 4, Chapter 18 (46:49 - 51:45)

The video clips for The Prize are made available to Penn State students with an active account through a Multimedia Service known as Kanopy. Kanopy provides both Closed Captions and transcripts upon request. Closed captions and transcripts have been obtained for all videos relevant to the course content.

Closed captions may be turned on by clicking on the CC icon on the lower right corner of the video player. Transcripts may be accessed by clicking on the dot icon icon and selecting transcripts. The transcripts will load when you click on the play button.

The Lecture for The Prize Chapter 19: The Allies’ War

The Prize Chapter 19: The Allies’ War

Consider the following questions:

  • How central was oil in the war?
  • Why do we consider oil a strategic commodity?
  • What did you think of Tokyo Rose?
  • How is gasoline different during the war?
  • What did you think of Patton? And, could he have shortened the war?
  • Did Eisenhower make the right decision?

Britain’s Oil Position and the End of Deterding

In 1937, before the outbreak of war and in anticipation of war, a special committee was formed to examine the possibility of Britain adopting an “oil from coal” synthetic fuels strategy similar to what Germany had done in WWI. The strategy was rejected, as importing through many ports was deemed less vulnerable than easily bombed hydrogenation plants. Besides, it would have been more costly compared to the cheaper and readily available oil. Also, 85% of Britain’s domestic refining marketing was in the hands of three western/friendly companies, Shell, Anglo-Iranian, and Standard Oil of New Jersey’s (SONJ) British subsidiary, and two of these had their home in Britain. The British government also decided in 1938 that in case of war the entire British oil industry would be run under one organization and not through three separate competing companies.

At the age of 66, in September 1939, Churchill was brought back as the First Lord of the Admiralty after Germany's invasion of Poland on September 1, 1939, and he subsequently became Prime Minister in 1940. The British began to worry about the future of the Royal Dutch/Shell Group as it feared the power of Deterding under Nazi influence. There was the risk that the company could pass under the Nazi influence as Deterding had developed two infatuations in the mid-1930s - first for a young German woman (his secretary) and then for Adolf Hitler. In fact, in 1935, Deterding initiated discussions with the German government about Shell providing oil to Germany. This caused a lot of concern. However, Deterding soon lost a lot of control in the Shell group as his grip on the company slipped. He retired at the end of 1936 and acted on both infatuations: divorcing his second wife to marry his German secretary and moving to live on an estate in Germany and encouraging European countries to cooperate with the Nazis. Deterding, unfortunately, acted in his last years to undermine what would have otherwise been a fine and impressive reputation as an “international oil man.” He died in 1939, 6 months before the war, and most of his stocks were quickly distributed and passed to the other British holders, thus reducing the potential risk of Nazi control.

As soon as the war began, British oil companies merged activities into the Petroleum Board – basically creating a national monopoly as had been planned. Issues facing Britain at that time were global in nature and included fear of British supplies from Southeast Asia being curtailed by a Japanese invasion, Romanian oil having gone to the Germans, and the Germans having captured France’s oil stockpile. Fears of oil shortage led to rationing being imposed on recreational vehicles in Britain, which led to a big boom in bicycling. Under the threat of German invasion, 17,000 gasoline stations in England were shut down, leaving 2,000 stations that could at least be defended.

Americans Fuel Britain’s War Needs

The two critical questions of importance to Britain for war with the Germans were whether oil would be available and if they could pay for it. The United States was responsible for two-thirds of total world production and, therefore, the answer to whether oil would be available was yes. To help Britain overcome the question of payment, on March 1941, the Lend-Lease was instituted. This removed the problem of finance as a constraint on American supply to Britain, since, with the Lend-Lease, American oil could now be lent and repaid later. The neutrality legislation which had placed restrictions on the shipment of supplies was also gradually lifted to help loosen restrictions on shipment of supplies to Britain. Thus, by spring 1941, all the important steps had been taken to ensure an adequate flow of oil from America to Britain.

Black and White headshot of Harold L. Ickes
Harold L. Ickes served as the Secretary of the Interior for 13 years during the administrations of US Presidents Franklin Roosevelt and Harry Truman.
Credit: Wikimedia Commons

In May 1941, even while the US was not yet in the war, Roosevelt appointed Interior Secretary Harold Ickes to the additional position of Petroleum Coordinator for National Defense, becoming once again the nation’s top oil man, or Oil Czar. Ickes had to turn around an industry that was coping with a surplus to one that would maximize output and avert shortage. He had a huge liability, as the oil industry detested him from the previous encounters. While he had come to their aid in 1933, he subsequently had become very critical of the industry. Mobilizing the oil industry into one giant organization under government direction had been done quickly and efficiently in Britain but turned out to be different and difficult in the US. Ickes, however, managed to work closely and pragmatically with the industry and succeeded in disarming the hostility and ensuring effective cooperation in mobilizing the industry.

The Battle of the Atlantic and the German U-Boats

The wide expanse of the Atlantic made supply lines very vulnerable as targets. German U-boats disorganized shipping, and among their favorite targets of attack were the readily recognizable oil tankers. The success of these attacks terrified the British and caused a serious oil supply situation as in the month of July 1941, there were only five weeks of motor gasoline stocks and two months of fuel for the Royal Navy. To ensure sufficient fuel for the British, even though the real reason was not made public, Ickes launched a voluntary conservation campaign and even sought to reinstate the “gasoline-less Sundays” of WWI. It was feared that explaining the reason would yield valuable intelligence information to the Germans on the oil situation in Britain, and, without the justification and buy-in, it ended up being a flop. The US increased its patrols into the Atlantic and established bases in Newfoundland, Greenland, Iceland and Bermuda to counter the U-boats. Germany declared war on the US on December 11, 1941, four days after Pearl Harbor, and sent devastating U-boats to patrol in American coastal waters.

The number of tankers sunk by U-boats in the first 3 months of 1942 alone was almost 4 times the number built. Tankers and other ships were urged to hug the coast, and those that could fit took the Cape Cod and Delaware Chesapeake canals. The U.S. clearly had neglected anti-submarine warfare and was unprepared for the onslaught. American cities’ night bright lights also helped to make the sinking of ships easier by providing perfect silhouettes of the tankers for the stalking U-boats. Efforts made to improve the situation included: outdoor lighting was reduced in the eastern seaboard, curtains were drawn to reduce indoor lights, convoys were instituted on the East Coast, and an alternative to tanker shipment, pipeline construction (dubbed Big Inch) from Texas to the East Coast, was initiated in August 1942. Within a year and a half of construction, Big Inch was carrying one-half of all crude moving East through its 1,254 miles by the end of 1943. Little inch, which was 1,475 miles, was built between April 1943 and March 1944 to carry gasoline and other refined products also from the Southwest to the East Coast. By the end of 1944, about 42% of all oil was transported to the east coast through pipelines compared to just 4% at the beginning of 1942.

Map shows Big & Little Inch pipelines, both meet at Little Rock. They go from TX to along top edge of KY and the bottom of PA to the east coast
The 'Big Inch' and 'Little Inch' pipeline construction.
Credit: Eaglespeak

The Germans had two significant advantages in the successful U-boat campaign. They changed their code procedures so that the British couldn’t read their U-boat signals while breaking the ciphers that governed the movement of Anglo-American convoys. The battle became even worse for the Americans with new, improved, and larger U-boats. In addition, the Germans introduced large underwater supply ships that could deliver fuel and food to the U-boats. These caused the Allied losses to mount significantly. For example, the U.S. lost 25% of its total tanker tonnage in 1942, and by mid-December, only about two months supply of fuel oil for ships was left. In 1943, the defeat of German U-boats was, therefore, made a top priority if there was going to be a shift in the conduct of the war. To illustrate the seriousness of the situation: in March, the U-boats sank 108 ships!

Black and white photo of a U-boat
German U-boat U-25.
Credit: Wikimedia Commons

The U-boats were overcome in the last days of March 1943. This caused a decisive shift in the battle. The Allies thoroughly broke the U-boat codes and successfully closed off their own convoy ciphers to the Germans. In addition, Americans added new counter-offensive capability to the convoy system and improved radar and development of long-range aircraft. With these developments, in May 1943, 30% of the U-boats at sea were lost, and by the end of May, the U-boats had withdrawn to safer areas, enabling Allied convoys to carry vital oil, etc., across the Atlantic in reasonable safety to Britain. Thus, after 45 months of deadly warfare and mounting danger, the Battle of the Atlantic was virtually over.

Oil Coordination in the Conduct of WWII

Harold Ickes’ hand was strengthened when he was promoted to Petroleum Administrator for War (PAW) from Petroleum Coordinator while still Secretary of the Interior. Even as PAW, Ickes realized that, unlike the case in Britain, coordinating unity among the many competing US forces (Congress, the Administration, the companies, the press, etc.) in the US was very difficult. He managed to gradually establish an effective government-industry partnership and sought antitrust exemption from the Justice Department. Although there were temporary shortages, there was never a serious oil supply crisis in the US. The overall production record in the US was quite good - from 1940-1945, America’s overall production increased by 30% from 3.7 million barrels per day to 4.7 million barrels per day. Meanwhile, between December 1941 and August 1945, the Allies consumed 7 billion barrels of oil, 6 billion of which came from the United States. It is also interesting to note that the wartime oil output was more than ¼ of all oil produced in the US from the time of Colonel Drake to 1941!

To accommodate the war oil output, consumption/rationing was considered. Efforts were made to get industrial users to switch from oil to coal, and President Roosevelt took strong interest in the potential of America’s largely underutilized natural gas resources. However, gasoline was still the focus of contention. The Administration wanted to ration gasoline, but there was a public outcry. The back door argument used for rationing gasoline was that it would decrease and conserve demand for rubber, and thus make more rubber supplies available for troops, since the Japanese capture of East Indies and Malaya had cut off 90% of the natural rubber exported to the US. Bernard Baruch was placed in charge of lobbying to Congress to implement the nationwide rationing to conserve rubber.

Gasoline rationing involved keeping houses at 65 degrees F during the day and 55 degrees F at night. Five grades of alphabetical stickers were placed in windshields giving the status symbol for motorists: X was for doctors, clergymen, some repairmen, and government officials. A – “basic” ration, was what most people got. There was also a ban on gasoline for auto racing and “nonessential driving.” Rationing was also supplemented with a 35 mph limit. America, which had rejected voluntary conservation, now accepted enforced rationing because there was a war. With these changes, the average consumption per passenger vehicle was 30% less in 1943 than in 1941.

During the war, the production and consumption of oil were organized not only at the national level but at the international or global level. For example, crude oil produced from American Southwest was refined and moved to the Northeast by ship, tank, or pipeline and transported across the Atlantic and delivered to wherever it was needed. In the UK and the Middle East, the British filled Americans’ gas tanks, and in the Pacific and North Africa, the U.S. had responsibility for fueling all sources. As difficult and contentious as these matters were, it evolved into a system that served the Allies fairly well.

The Attack on Normandy

By spring 1944, the pendulum was swinging in the Allies' favor. Italy quit the war when the Allied troops landed in the country. Meanwhile, the Russians were driving in from the east. On June 6, 1944 (D-Day), the Allied troops hit the beaches of Normandy, opening up the invasion of Western Europe. On July 25, 1944, the Allied armies finally burst through the German ring, causing the Germans, who were disorganized and under-supplied, to fall back. No force moved faster than the U. S. Third Army under General Patton, Jr., nicknamed “Old Blood-and-Guts,” and who engendered fierce loyalty in the troops under his command. Eisenhower, however, believed that while he had good military qualities, he failed to see the big picture. He was a master of mobile warfare as Rommel. His forces moved so fast they outran their gasoline supplies. When he requested more fuel, the overall commander of the Allied forces, Eisenhower, decided to send the critically needed fuel to the First Army and the British 21st Army Group under General Montgomery, and not to Patton’s Third Army. Patton was furious over the decision.

Black and white photos of 3 major generals on the left, and Field Marshall Mongomery on the right
US Army Generals Omar Bradley, Dwight Eisenhower, and George S. Patton, (left) and Field Marshall Montgomery, (right).
Credit: Wikimedia Commons

Patton believed that if he had been given more gasoline, he would have broken into Germany in 10 days. Could Patton have done it? This is still open to debate, as he could have been open to a counter-attack. Was it worth a try? Possibly, as it could have saved many lives since the concentration camps were executing millions at that time. Out of the total of a million casualties, the Allies suffered in liberating Western Europe, nearly ¾ of the casualties happened after the September check on Patton’s advance. Could this have been avoided? Others also believe if the Allies had broken through the West earlier, Soviet influence would not have projected so far into Europe, as the postwar map of Europe would have been drawn differently. Unfortunately, in December 1945, 8 months after the fighting in Europe, George Patton was killed in a car accident when his limousine collided with a US Army truck on a German road.


Oil clearly was demonstrated to be essential in WWII as it played a significant role for the Army. Before WWII, the Army did not even keep records of its oil use. While WWI had been a static war (used 4,000 horsepower - hp), WWII was a war of motion (used 187,000 horsepower), and, at the peaks, the American forces in Europe used one hundred times more gasoline in WWII than in WWI. A number of innovations were also created to facilitate the use and flow of petroleum. The biggest technical disappointment, however, was PLUTO (Pipeline Under The Ocean) to link the British and French sides of the English Channel. A simple innovation that had a profound effect on the conduct of the war was the 5-gallon gasoline can. This was based on an improved design on captured German cans that led to the common nicknames “jerrycan” and “blitz can.” The improvement over the German was an internal spout to replace the use of funnels and keep out dirt. These red 5-gallon cans, packed and transported in trucks for military operations, formed what was known as the Red Ball Express. Other innovations included the all-purpose motor fuel and all-purpose diesel fuel and the development of the 100 octane fuel, through catalytic cracking, for better aircraft performance. The 100 octane fuel provided greater bursts of speed, more power, quicker takeoff, longer range, and greater maneuverability. The US was producing 514,000 barrels per day of 100 octane fuel by 1945, compared to 40,000 barrels per day in 1940.

Yergin, Daniel. (2008). The Prize: The Epic Quest for Oil, Money, & Power. New York: Free Press.

Picture of hundreds 5-gallon cans sitting in front of military trucks
Red Ball Express - Jerricans depot - 1944.
Credit: Wikimedia Commons

Lesson 6 Chapter 19 Video

Lesson 6 Chapter 19 Video

By this time, you have now read chapter 19 in Yergin's The Prize for this lesson, and you have read through the online notes that accompany the chapter on this website.

Now, it's time to watch the episodes of the video documentary related to this chapter. Use the documentary to help you review the major themes and the driving questions that were posed for each chapter. You can use the play head to advance to the chapter segments listed below.

The Prize - Episode 4

To access the video clips for this chapter, please use the following link, which will open in a new window.

The Prize: Episode 4, Chapter 19 (32:30 - 43:32)

The video clips for The Prize are made available to Penn State students with an active account through a Multimedia Service known as Kanopy. Kanopy provides both Closed Captions and transcripts upon request. Closed captions and transcripts have been obtained for all videos relevant to the course content.

Closed captions may be turned on by clicking on the CC icon on the lower right corner of the video player. Transcripts may be accessed by clicking on the dot icon icon and selecting transcripts. The transcripts will load when you click on the play button.

The Lecture for The Prize Chapter 20: The New Center of Gravity

Prize Chapter 20: The New Center of Gravity

Consider the following questions:

  • How did American and British government oil policies differ?
  • Why is oil often referred to as a prize?
  • Where did the Saudi King sleep and why?
  • What errors did the British make, and did they really matter?

Everette Lee DeGolyer’s Mission to Saudi Arabia

Black and White Headshot of Everette Lee Degolyer
Everette Lee DeGolyer (1886-1956), an American geologist recognized as the founder of applied geophysics in the petroleum industry.

During WWII, the number of oil men working in Saudi Arabia was reduced to 100. They devoted themselves not to development but to the protection of the wells in case they were bombed. They also prepared themselves to destroy the wells in order to deny the Germans, if needed. In 1942-43, the British & American workers actually plugged the wells in Kuwait and Iran in anticipation of the advancing Germans. Interestingly, in late 1943, the 100 oilmen were joined by a respectable man in the oil industry - Everette Lee DeGolyer - who was on a mission.

DeGoyler was born in a sod hut in Kansas and raised in Oklahoma. He attended the University of Oklahoma where he took geology by accident to avoid Latin. He is more responsible than another single person for introducing geophysics into oil exploration & seismography. He pioneered the development of seismographs as a tool in oil exploration and discovered, even while still an undergraduate, the Portrero del Llano 4 well in Mexico which flowed at 110K bpd. In the 1930s, he established the petroleum consulting firm DeGolyer and McNaughton. By his mid-forties, he was a millionaire earning about $2 million a year, who commanded huge respect in the oil community. He later became a founder of Texas Instruments. Interestingly, his hobbies included book collection and being a historian of chili.

In 1943, DeGoyler was called to Washington by Harold Ickes to help organize and rationalize production in the U.S. He was given a special foreign mission to appraise the oil potential of Saudi Arabia and other countries of the Persian Gulf. Because of the war, his trip took him to Miami, over the Caribbean to Brazil and then Africa before finally arriving in the Persian Gulf. During the trip, DeGoyler and his team visited oil fields in Iraq, Iran, Kuwait, Bahrain, and Saudi Arabia. They returned to Washington in early 1944 and reported that the conservative probable reserves of the region were about 25 billion barrels and that the center of gravity of world oil production would shift from the Gulf-Caribbean area to the Middle East. In 1940, for example, the Arabian Peninsula produced less than 5% world oil, and the U.S. produced 63%. The report coming from a man with great respect in oil exploration clearly predicted the end of oil domination by the US that had produced nearly 90% of the oil of the Allies in WWII.

America’s Entry into Saudi Arabia

The British sphere of influence in the Arabian Peninsula was huge relative to the US. However, the US knew there were enormous potential oil reserves in the area, and the American orientation to Saudi Arabia and the Middle East was changing. Ibn Saud, because of the collapse in the pilgrimages to Mecca and new financial crisis in Saudi Arabia, once again was strapped for cash and asked for loans from the British and Casoc and its two parent companies, Standard Oil of California and Texaco. In the words of Ibn Saud, “The Arabs have the religion, but the Allies have the money.” And he needed money badly from the British and Americans. The oil companies, who were not willing to make any more loans, thought perhaps the US government might want to help. Roosevelt refused to apply the Lend-Lease on the grounds that Saudi Arabia was not democratic. The British, however, came through with the help. The American oil men, however, made sure that Saud knew the US was helping the British, which meant the aid was really and indirectly coming from the Americans.

America’s entry into the war in 1942 and 1943 caused a whole new outlook to be placed upon Middle Eastern oil. Oil was recognized as a critical strategic commodity that was essential for national power and international predominance. The single resource that shaped military strategy and could cause defeat was oil. The U.S. single-handedly fueled the Allies during WWII, which significantly drained its oil reserves. Fear of shortage began to grow, and the explosive growth with discoveries in the 1920s and 1930s had fallen off sharply resulting in additions becoming more difficult, expensive, and limited (i.e., the law of diminishing returns was in effect). This led Harold Ickes, in December 1943, to state, “We’re Running Out of Oil!” and that “if there should be WWIII it would have to be fought with someone else’s petroleum….” These assessments led to the conclusion that the U.S. was destined to become a net importer of oil, with potentially grave security implications. This gave rise to the “conservation theory,” which suggested that the U.S. government had to control and develop foreign oil reserves to reduce the drain on domestic supplies and conserve them for the future and guarantee America’s security. And the foreign reserves had to be the Middle East. In essence, American policymakers had arrived at the same standpoint that Britain had held since WWI, the centrality of the Middle East.

Unfortunately, there was mistrust between Britain and the US. The Americans held unnecessary and exaggerated concerns about British intentions, while, in reality, the British actually wanted American involvement for security and financial reasons. On the other hand, the British were fearful that the Americans wanted to cut them off and deny them access to the Middle East oil, including those even under its control. With all the anxieties and mistrust, Americans had three options: direct government ownership (like the Anglo-Persian model); a negotiated deal with the British; and leaving the whole matter in private hands, which was risky in wartime.

The Attempt at the Policy of Solidification

Socal & Texaco were the only private companies involved in Saudi Arabia, and they knew the size of the Saudi Arabian oil. They were afraid the British, through the financing of Ibn Saud, would help get them kicked out of Saudi. Besides, Saudi Arabia was only 20 years old, and they were unsure if the Kingdom and oil concession would survive the King himself. They also realized that it was one thing to throw out private companies and another to take on the most powerful power in the world. Thus, the policy of solidification, or direct involvement by the American government in Saudi Arabia, was an easy argument since it would help reduce the risk of expropriation as happened in Mexico. Socal, Texaco, & Casoc went with hats in hands to ask the federal government for foreign aid to Saudi Arabia to help keep the British at bay. Harold Ickes managed to convince FDR to extend Lend-Lease assistance to Saudi Arabia, and on Feb. 18, 1943, the president authorized Lend Lease assistance to Saudi Arabia. The Army projection of oil shortage in 1944 helped to push the US towards Saudi Arabia.

In a surprising move, Harold Ickes wanted to go beyond assistance through the Lend-Lease to the acquisition of direct ownership of foreign oil reserves and formed the Petroleum Reserves Corporation. He was supported by the Army and Navy but not the State Department. The target of the new Corporation was Saudi Arabia through Casoc. In the negotiations, Casoc only wanted the US to acquire a fraction of it, but FDR & Ickes wanted 100%. Presidents Rodgers of Texaco & Collier from Socal, the parent companies of Casoc were shocked, as they had only wanted “assistance” and not “assimilation,” leading one of the negotiators to note, “They had gone fishing for a cod & caught a whale.” Finally, in August 1943, they struck a bargain and arrived at 1/3 Casoc for $40 million, with the right to go to 51% in peacetime and 100% in wartime. As expected, there was a huge firestorm from the rest of the oil industry, as they saw the government being an unfair and formidable competitor who might promote foreign oil over domestic oil. They also saw it as a possible step to control and even nationalization of the oil industry. The opposition was so strong from both the independents and the other major oil companies such as Standard Oil of NJ and Socony-Vacuum (Mobil) that Ickes abruptly withdrew his offer in late 1943, blaming Casoc for being too greedy and recalcitrant. Ickes later also dabbled in another plan involving the financing of a foreign pipeline that would carry oil from the Middle East (Saudi and Kuwait) across other desert countries to the Mediterranean for transshipment to Europe. Again, a potent coalition of opponents and critics killed it.

The Anglo-American Petroleum Agreement

If the US was not going into the oil business, there was still another avenue to consider: British Partnership in managing the world oil market. Both the British and Americans saw a coming postwar glut from the Middle East & potential for all-out competition. Also, many in the US feared the exhaustion of US reserves and wanted fundamental transformation in supply arrangements whereby Europe could be supplied primarily from the Middle East and not from the US reserves. The British campaigned hard on negotiations on the Middle East oil. Both sides recognized that after the war the Middle East countries that depended on the oil royalties were going to put incredible pressure on the companies to increase production to increase their royalty revenue. This, in turn, was going to lead to a glut and intense competition, as failure to meet the demands of the countries would result in vulnerability of the oil concessions. Thus, the U.S. government explored partnerships with Britain to manage the world oil market ahead of the problem. The objective was “not rationing of scarcity, but orderly development and distribution of abundance.” Roosevelt proposed to the British diplomat that they share Iraq and Kuwait, with Persian oil going to the British and the Saudi oil going to the U.S. However, both sides continually disagreed, and negotiations continued on.

Finally, the Anglo-American Petroleum agreement was signed on August 8, 1944, with the objective of ensuring equity to all parties, including the producing countries. It had an 8-member International Petroleum Commission that would prepare estimates for global oil demand, suggest quotas and price, and report to the two governments on how to promote development throughout the world. Thus, the Anglo-American Petroleum Agreement was, in essence, trying to manage oil as had been tried in the 1920s and 1930s by the “As-Is” of Achnacarry and also the Texas Railroad Commission. Both independents and majors were opposed for different reasons and the agreement submitted to the Senate as a treaty was defeated, and, in January 1945, Roosevelt’s Administration withdrew it, essentially killing it by early 1945. Shortly after, Roosevelt left to Yalta in the Soviet Crimea for talks with Stalin and Churchill to lay the basis for the postwar international order.

The Twins: The Meeting between Roosevelt and Ibn Saud

See image caption
FDR meets with King Ibn Saud, of Saudi Arabia, onboard the USS Quincy (CA-71) in the Great Bitter Lake, Egypt, on 14 February 1945. The King is speaking to the interpreter, Colonel William A. Eddy, USMC. Fleet Admiral William D. Leahy, USN, the President's Aide and Chief of Staff, is at left.
Credit: Wikimedia Commons

In mid-Feb 1945, on his way back from Yalta; Roosevelt met with King Saud near the Suez Canal onboard one of the US ships, USS Quincy, and had five hours of discussions on Jewish homeland in Palestine, oil, and postwar configuration of the Middle East. Ibn Saud primarily wanted to assure continuing American interest to counterbalance British influence that he saw as a threat to his reign. King Saud had been brought in on another US ship, USS Murphy, from Saudi and he refused during the trip to sleep in the commodore’s cabin and instead slept in a tent on the deck. This was, perhaps, only the second trip of Saud outside his Kingdom. The two men got along very well. Roosevelt refrained from smoking in the King’s presence out of respect for his religious beliefs and also gave the King his extra wheelchair as a gift, as well as a DC 3 plane. Roosevelt also met with King Farouk of Egypt and Haile Selassie of Ethiopia during the trip.

Winston Churchill, fearful of the American growing influence in an area of traditional British influence, drove within three days of Roosevelt’s meeting to meet Ibn Saud in a hotel at an oasis. Churchill was not very accommodating and continued to smoke in front of the King. Also, he gave the king a small case of perfumes worth about 100 pounds, while Saud gave him expensive diamonds and pearls and other diamond jeweled swords and other items worth over 3,000 pounds. Embarrassed by the gifts of the King as well as those from Roosevelt, he promised the King to give him a Rolls-Royce later. Again, the British were not very accommodating and had assumed the King sits at the back of the car or Rolls-Royce as done in Britain. Instead, the Rolls-Royce that was delivered had the steering wheel and the driver at the right front where the King sits in Saudi Arabia. Thus, when the king went to sit in his new Roll-Royce and found the driver sitting there, he closed the door and gave it as a gift to his brother! All in all, things did not go well at all for the impromptu visit meeting between Churchill and Saud compared to the meeting with Roosevelt.

Black and White Headshot of Truman
Harry S. Truman (1884 – 1972), 1945 – 1953, the thirty-third President of the United States.
Credit: Wikimedia Commons

On April 12, 1945, Roosevelt died in Warm Springs, WVA, and Harry Truman became president. Several attempts were made to revive the Anglo-American Petroleum agreement by excluding domestic American production to make it domestically acceptable, but all still failed. People like J. Edgar Pew proclaimed the fear of an American oil shortage were psychological and not based on scientific geological data. Also, with the victory over the Axis Powers, there was no pressing demand on American oil reserves, making the agreement increasingly irrelevant. Worse still, the main driving force of the agreement, Harold Ickes, following a dispute with Truman, tendered his resignation as he had done many times with Roosevelt to get his way. Unfortunately for him, Truman quickly accepted it with delight and gave him two days to clean out his desk, instead of the six weeks Ickes had requested to wind things down. The U.S. was soon finding that it could not sustain itself on its production alone, as it was on its way from being a net exporter to being a net importer. Everything that wartime negotiators sought to prevent was soon found to be coming true: competition, chaos, and instability. In the absence of an International Petroleum Agreement, oil companies moved quickly to work out their own salvation in the Middle East for the postwar world.

Yergin, Daniel. (2008). The Prize: The Epic Quest for Oil, Money, & Power. New York: Free Press.

Lesson 6 Chapter 20 Video

Lesson 6 Chapter 20 Video

By this time, you have now read chapter 20 in Yergin's The Prize for this lesson, and you have read through the online notes that accompany the chapter on this website.

Now, it's time to watch the episodes of the video documentary related to this chapter. Use the documentary to help you review the major themes and the driving questions that were posed for each chapter. You can use the play head to advance to the chapter segments listed below.

The Prize - Episode 5

To access the video clips for this chapter, please use the following link, which will open in a new window.

The Prize: Episode 5, Chapter 20 (20:00 - 25:00)

The video clips for The Prize are made available to Penn State students with an active account through a Multimedia Service known as Kanopy. Kanopy provides both Closed Captions and transcripts upon request. Closed captions and transcripts have been obtained for all videos relevant to the course content.

Closed captions may be turned on by clicking on the CC icon on the lower right corner of the video player. Transcripts may be accessed by clicking on the dot icon icon and selecting transcripts. The transcripts will load when you click on the play button.

The Lecture for Quest Chapter 14: Shifting Sands in the Persian Gulf

Quest Chapter 14: Shifting Sands in the Persian Gulf

Consider the following questions

  • How does the Pennsylvania compare to the Middle East as the Center of Oil Industry?
  • How did World War II set the stage for more oil development?

The Center of Gravity of the World Oil

This is a review of the development of the oil industry in the Middle East. Throughout the lessons, this can get confusing and lacking big picture coherence. So, this one page of review brings the Middle East pre-World War II development back. Now, we just had our lesson about when the realization of the oil opportunities in the Middle East are truly coming to light. Just to see the foundation for the Middle East Oil Industry as the greatest Prize.

DeGolyer’s team - "The oil in the region is the greatest single prize in all history."

Yergin, Daniel. (2012). The Quest: Energy, Security, and the Remaking of the Modern World. New York: Penguin Books.