Historical Review

Hello and welcome back. Today Ill tell you about history of oil: how our
ancestors found it, produced it and used it. Lets go.
4000 years before common era, people already used oil for construction
works, at war, for heat and light, and for medical purposes. The most ancient oil
fields were along the Euphrates, in Kerch, and Szechuan province of China. Oil is
mentioned in many ancient sources for instance, the Bible mentions tar pits
around the Dead Sea; there are supporting authorities stating that bitumen were used
to water-proof the basket where baby Moses was found, and tar Noas Arc both on
the inside and outside. Burning oil and gas springs are sacred in Zoroastrism, which
is one of worlds most ancient religions. The tradition to burn the Eternal Flame to
honor those fallen in wars is still alive today.
First coal, and then natural hydrocarbons (that is, oil and natural gas) played
an important part in turning our civilization from an agricultural into an industrial
one. Industry started using petroleum in late XVIIIth early XIXth centuries; that
is, about two hundred years ago, when James Watt built the steam engine, and then
Robert Fulton built the steamboat and George Stephenson built the steam
locomotive. Funny enough, these first steam vessels used petroleum not for fuel, but
as a lubricant for their numerous moving parts.
Oil was gathered from pits and water surfaces. That was not much, but that
was enough, as oil initially was used in the industry as a means to overcome forces
of friction, that is, as a lubricant.
Back then, whale oil was used to light the streets of cities. However, whale
hunters were not able to produce enough whale oil, so a new source of energy was
required. The breakthrough came when Ignacy ukasiewicz and Jan Zeh, two
drugstore owners from Lviv, invented the first kerosene lamp in 1853. Very soon
this lamp was used for an emergency night operation in one of Lviv hospitals, which
saved patients life. Soon kerosene lamps became common in both streets and
homes. Kerosene-powered light extended the daylight hours, giving people the
opportunity to work more and better. So, oil gave people light.

Kerosene manufactured from oil burned brightly and was safe, so global
demand for kerosene was growing rapidly, and people started looking for oil
deposits. Edwin Drake was the first one to drill an oil well in 1859. Drake was lucky
enough to drill right when the petroleum bearing formation was close to the surface,
so his well produced the amount of oil that was considered enormous at the time.
Numerous oil companies were founded, ruined, merged and taken over. Competitive
fighting was ferocious, a soil was an opportunity to make serious money.
First refineries appeared and started evolving; besides kerosene, the industry
produced machine oil and fuel oil which was used to power engines.
When Gottlieb Daimler build a light, compact gasoline engine that Carl Benz
used on an automobile, and the Wright brothers on an airplane, demand for the
gasoline spurted. But the real game changer was Henry Ford who introduced
conveyor belt assembly to automobile industry, starting the mass production of cars.
A car was no longer a thing of luxury, but an affordable transport, a part of everyday
life. We cannot pass by Rudolf Diesel who built an internal combustion engine
named after him. Diesel engines are still in use today.
Internal combustion engines used on cars, planes, ships gave man ability to
cover great distances fast, conquering land, air and sea.
In the middle of the XIXth century, global oil production leaders were the
United States of America and Russia, with top production in Pennsylvania and Baku
respectively. In 1850, 300 thousand tons of oil were produced in the world, with
Russia bringing 101 thousand tons. That was the age of rapid industrial development.
In the United States, John Rockefeller founded Standard Oil, worlds first vertically
integrated company. In Russia, the Nobel brothers built their own oil empire and
fought Rockefeller for the European markets. This tough competition required
engineering knowledge, so new technologies started emerging. Great demand for
metal pushed steelmaking. Development of other industries accelerated as well.
Thus oil industry became the engine of progress.
By 1900, global annual oil production grew to about 20 million tons, with 9.9
million tons produced in Russia, 8.3 million tons in the USA, 0.43 million tons

in Indonesia (back then it was called Dutch East Indies). Romania and AustroHungary produced third of a million tons each, Japan produced 110 hundred
thousand tons, and Germany 50 hundred thousand. Oil became a strategic resource
as it gave armies speed and mobility. Military automobiles, planes, tanks and APCs
were built by thousands, diesel powered battleships were more efficient that coalfired ones. After World War I it became clear that control of oil was vital for national
security, so politics came into play as well. Oil became the guarantor of security.
Just before World War I, oil production in the USA grew rapidly, and World
War II also taught us that powers that control oil win wars.
In 1940s, new petroleum products came to be. These were synthetic materials
such as nylon and polyethylene. This industry was booming, so the oil became a
source of plastics for us. Today we cannot imagine our life without petrochemical
products such as synthetic fabrics, utensils, household goods, etc.
Today the global distribution of oil production looks like this:
Russia is the third, with 10 million 853 thousand barrels per day. From the
chart you can see that Russian oil production grew over the years, bringing oil dollars
to national economy. Yet, 2014 with oil price collapse followed by ruble weakening
showed that Russian economy depends on global oil prices too much.
Saudi Arabia is the second, with daily 11 million 624 thousand barrels. And
the first place, quite expectedly, is occupied by the United States, which produce 13
million 973 thousand barrels per day.
It needs to be mentioned that the United States played a major role in the 2014
oil price collapse, as they boosted domestic oil production and created a large
national pool of petroleum products, becoming less dependent on oil import.
Financial analyst, like Bloomberg, remark that now the USA does not need to buy
that much oil from Russia, Nigeria and Venezuela.
This is what I wanted to tell you about oil production history; in our next video
we will discuss a more current topic, which is oil pricing. See you!