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The Common Wealth of Oil

Life was good for the oil industry in the 1920s. The demand for gasoline was soaring, thanks to booming automobile sales. In 1910, there were 458,000 vehicles on America’s roads; ten years later there were 8 million and, by 1930, the number 23 million — all thirsty for gasoline.

In boom times like these, oil companies had little time, and scant interest, in planning. As a Post writer observed in 1929,

“Authorities all agree that the United States has developed and produced its oil too rapidly… For ten years now, despite the increasing multiplicity of its uses, oil has been found faster than it could be consumed. All the time there has been more of it above ground than the market demanded. ["Taming Wild Oil Wells," Oct 19, 1929]

“The presence of too much of any commodity leads inevitably to its waste… The record of all time for the waste of a national resource has been broken in the past decade in the oil fields of the United States.

“In the state of California, for example, it is estimated that the loss of natural gas alone has been sufficient to have paid off the national debt.

“Of the oil that is in [the typical oil pool], it is believed that not more than 20 per cent is usually recovered before the flow ceases.

“In the interest of prolonging the life of the field, no gas should be allowed to blow off at random or before its full quota of work has been performed. Gas which cannot otherwise be used obviously should be pumped back into the ground so that the life of the field may be prolonged.

“Finding that they owned land over an oil dome, its possessors…  should have agreed to develop the field as a unit and split the returns in proportion to their holdings.”

They “should have” agreed, but they didn’t. Instead, the industry kept drilling for quick oil, taking the crude that natural gas pushed to the surface, left the more difficult oil, and natural gas, behind.

Oil companies showed no signs of moderating themselves, and critics were beginning to wonder how it would all end.

“In view of the now familiar oil over-production, with its unnecessary drain on the natural reserve, the question of future supply become increasingly acute. People are beginning to wonder if the carriage manufacturer is coming back to his former prestige, and whether the faded letters “L-i-v-e-r-y  S-t-a-b-l-e,” now supplanted by the more aesthetic “G-a-r-a-g-e,” on endless buildings, will have to be restored. Is a nation on wheels, as it were, going back to the hoof so far as daily transport is concerned?” ["After Petroleum — What?" Isaac F. Marcosson, March 3, 1928 (PDF)]

“There is more truth than idle speculation in this surmise. Although it may be postponed longer than we think, the time is inevitable when we shall be obliged to depend for motor fuel on imported crude or a synthetic liquid distilled from coal, lignite or shale.

“How much oil is left in the ground for our future needs? Like every other features of the business, this is uncertain. All predictions so far have been in error.

“As recently as 1921, statisticians maintained that our domestic output would be at its peak when 500,00,000 barrels were obtained. Yet last year… we produced 900,00,000 barrels. Despite the pessimism, the supply of oil proved greater than anyone could have predicted.

“The wells drilled during the last three years have already yielded considerably more than 1,000,000,000 barrels of oil and their productive life is still largely in the future. This makes the total reserve from all proved sources nearly 80,000,000,000 barrels. At the 1927 rate of production, this would last thirty-three years.”

They were off by a decade; as you can see from the graph below, domestic production began falling in 1970, while imported oil rose sharply to cover the difference.

Not knowing when the easy oil would give out, critics repeatedly called for conserving oil — long before there were any environmental considerations.

One of the strongest proponents for conservation was former governor and Director of the Forest Service, Gifford Pinchot. He fiercely opposed the unrestrained drilling for oil on federal lands. Conservation, he argued, was essential to the public interest. The restraint of one generation would be the inheritance of the next.

“The conservation policy grew out of the idea that public resources held in the public hands should not be wasted, but be made to serve the public to the utmost, both in the present and in the future. ["Ships, Oil and the Ten Commandments," May 17, 1924]

This chart shows how sharply oil imports rose as domestic production fell. (Wikipedia Commons)

“It was introduced to the people of the United States through the meeting of governors in the White House in 1908 — the first meeting of its kind in American history, and by far the greatest — and met with instant general approbation.

“This was the more remarkable because it was then commonly believed and openly asserted that, since posterity had done nothing for us, we had no reason to do aught for posterity. Let posterity paddle its own canoe. This theory conveniently forgot that our ancestors gave us the only canoe we have to paddle; that they discovered and conquered for us our continent; that they founded and preserved for us our nation; that we, who are their posterity, are living our safe and reasonably comfortable lives because of what they did for us who came after them; and that the only way we can pay our debt to them is to play fair in our turn with those who will come after us.

“From the beginning, conservation has meant wise use in the public interest, and it means wise use today. This generation has a right to all it needs, but no right whatever to waste what it does not need. Our children have their rights as well as we. If there was ever a policy since this world began that was simple, sound and filled with common sense, it is the policy of conservation.”

Read “After Petroleum — What?” Isaac F. Marcosson, March 3, 1928 [PDF]
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