The future of the oil industry is becoming more precarious as shareholders, investment giants, environmentalists , and lawmakers increasingly pressure firms about climate change and the role fossil fuels play in it.
At issue in this green-future movement is whether oil companies can sustain their business model. Experts say they’ll need to shift away from only fossil fuel production toward providing cleaner ways of powering cars and sending energy to homes and businesses.
One example is ExxonMobile, the largest US oil company. At least two seats on its board of directors have gone to the activist hedge fund Engine No. 1. Experts believe those board members likely will force the oil company to confront Exxon’s role in climate change.
In the Netherlands, a court has ordered Shell Oil to reduce its carbon outflows by 45% by 2030 compared with 2019 levels. The court also said the company had to go beyond curbing its own direct emissions from drilling and other operations. It also needs to reduce those of the oil, gas, and fuels eventually burned by consumers. Shell has said it will appeal.
Meanwhile, at another US oil company, Chevron, shareholders have voted to endorse cutting emissions from the end-use of its fuels. Shareholders also took a non-binding vote on whether to assemble a report on the business impact of achieving net-zero emissions by 2050. The vote fell short.
🍊 Extra Juice: The History of the US Oil Industry
So what are the origins of Big Oil and the American oil industry?
Using oil as a fuel to power engines was first discovered in the 19th century, a century of great change and almost overnight industrialization. The iron and steel industries were built, as were railroads, with oil becoming the key natural resource powering all of this change.
When was oil first discovered in the US?
Many early explorers of America ran across petroleum deposits in some form, and they noted oil slicks off the California coast as early as the 16th century. An explorer named Louis Evans was the first to document the discovery of oil. He noted oil along the Eastern Seaboard on a 1775 map of the English Middle Colonies.
How was oil first used?
Early on, Europeans and Native Americans both believed that oil had medicinal properties. Native Americans used crude oil to waterproof their baskets, make arrowheads and weaponry, and as glue. But they also used oil in medicine. The Seneca tribe even traded “Seneca Oil” to New Yorkers. It was believed, by both new American settlers and Native Americans, that this oil has great medical value. The Seneca tribe used the oil as a tonic, insect repellant, and salve. Europeans used it to treat rheumatism and sprains.
Before the Industrial Revolution, in which oil played a huge role, rock oil distilled from shale became available as kerosene. A merchant from New York, John Austin, traveled to Austria and saw an effective, cheap oil lamp. He returned to the US and made a model that upgraded kerosene lamps.
From the 16th to 19th centuries, whale oil was heavily used for lighting, lubrication, and the manufacture of soap, textiles, jute, varnish, explosives and paint. Before long, the rock oil industry boomed because whale oil costs soared as the water-based mammals became scarcer. An entrepreneur named Samuel Downer Jr. patented “Kerosene” as a trade name in 1859 and licensed its use. As oil production and refining ramped up, however, prices plummeted. This would be characteristic of the industry’s supply-and-demand cycle, which still exists even today.
What was the first major oil discovery in the US?
The discovery of the Spindletop oil geyser in southeastern Texas in 1901 propelled growth in America’s oil industry. In less than a year, more than 1,500 oil companies were chartered, with their owners seeing a promising and lucrative future in oil production.
What was the first official oil company?
The Pennsylvania Rock Oil Company of Connecticut was the first oil business. It was launched to develop oil discovered floating in the water near Titusville, Pennsylvania. It would later become the Seneca Oil Company. The company launched a drilling operation in 1859 and struck oil at a depth of 69 feet, which is believed to be the first time oil was tapped at its source using a drill.
Who was the first so-called oil tycoon?
Entrepreneur John D. Rockefeller heard about the Titusville discovery and jumped feet first into the oil business. His acumen proved on the mark, and Rockefeller would be a leading figure in the oil business for decades to come. Rockefeller, along with his brother William, S. V. Harkness, and Henry M. Flagler, created what was to become the Standard Oil Company. Flagler is considered by many to have been nearly as important a figure in the oil business as Rockefeller. Standard Oil merged with other firms to “unite our skill and capital,” in Rockefeller’s words, and by 1870, the company reigned as the dominant player in the emerging oil sector, making Rockefeller the richest man in modern times.
How was oil transported around the country?
Rockefeller spotted a four-mile pipeline from an oil drilling location to a railroad in Pennsylvania. He immediately realized this was the best way to transfer oil across the country and he began to acquire and build more pipelines.
Soon, his company would own a majority of the lines. Cleveland, due to its transportation systems already in place and its location as a transportation hub in the Midwest, became a center of the refining industry. However, the 1901 discovery of the Spindletop gusher put a damper on Standard Oil’s monopoly in the business. After that geyser, with those 1,500 companies in business, oil strikes quickly followed in Oklahoma, Louisiana, Arkansas, Colorado, and Kansas. By 1909, oil production in the US would equal the production of the rest of the world.
What countries are the largest producers of oil in the modern era?
This is in some dispute among various sources, but there’s no question that the US, Saudi Arabia, and Russia are the top three. Many cite Saudi Arabia as having the most plentiful oil resources, with the Middle Eastern nation enjoying the second-largest reserves of naturally occurring oil in the world after Venezuela, but the Saudi oil is of better quality. Saudi Arabia's oil resources are estimated to amount to 260 billion barrels.