The Prize, Chapter 4 Overview
The chapter is characterized by additional themes. We see the rapid, and fortuitous transition of the industry from primarily supplying fuel for lighting to now supplying fuel for transportation- mainly for the newly commercially mass-produced automobile. And not a moment too soon because the invention of the electric light completely decimated the oil for lighting business. To this day, fossil fuels are fundamental to transportation of all types. From cars to airplanes to ships, they move because of fossil fuels. The time period also saw the oil industry keep up with rapid industrialization of the economy, with the growing use of fuel oil to power boilers in factories.
This chapter also highlights that the oil sector was growing, and it was no longer all about Standard Oil. We see the birth of new companies and new producing areas. No longer was Pennsylvania the center of action. During this period Texas and California came online as substantive producing areas. Unlike Pennsylvania, which has faded a bit, places like Texas and California still dominate as major US producing regions. The famous Spindletop in Texas occurred in this period. Spindletop exemplified that despite many lessons learned over time, certain things were done the “old way,” resulting in the same problems. The same issues of over-drilling and uncontrolled production that crashed the industry in Pennsylvania also hurt Spindletop. Unfortunately, those drilling at Spindletop did not learn that production rates must be controlled to maintain reservoir pressure and price stability. An interesting development as the California oil sector evolved in 1900-1911 was the use of science, specifically geology, to be more logical and accurate in searching for oil. The days of finding oil by chance gave way to using science. Geology helped explain how oil forms and where to look for it. Eventually, the “petroleum geologist” became its own profession.
As to competition, we saw the birth of many new companies that have since become iconic household names today. Shell, Gulf, Sun, and Texaco all came of age during the late 1800’s and early 1900’s. We also saw the establishment of the “integrated company” where a single entity controlled everything from getting oil out of the ground all the way through to refining and distribution.
The Prize, Chapter 4 - The New Century
Sections to Read
- Markets Lost and Gained
- Patillo Higgins' Dream
- The Deal of the Century
- Sun: "To Know What to do With It"
- "Buckskin Joe" and Texaco
Questions to Guide Your Reading:
- What was happening with the markets at the time?
- What threatened kerosene’s dominance?
- In addition to Russian & Sumatra Oil, where was new oil was found?
- What was happening to Standard Oil’s dominance?