No nation uses more oil than the United States. The U.S. uses a full quarter of all the oil produced in the world. And even though it produces nearly eight million barrels of oil a day, it must import a further 12 million barrels just to meet its daily needs. Yet despite this amazing discrepancy, we still take oil for granted.
How could it be that a people whose way of live is so dependent on oil could be so naive in how we use it? The more I thought about it, the more I began to realize that America’s oil addiction runs deeper than a love for big cars and the open road.
Oil, I believe, has etched an indelible yet invisible mark on the modern American psyche. After all, America the birthplace of the oil industry. Cheap, plentiful supplies of U.S. oil propelled the United States to victory in two World Wars. Oil fed the post-World War II consumer boom that established a consumption-crazy Middle Class. And the oil industry helped spawn another industrial giant, the automobile industry. At every step of the way, oil has provided a blueprint for modern American life that the rest of the world eagerly copied. Americans, for their part, have embraced the spirit of self-confidence and invincibility that grew from knowing they controlled their own oil destiny. And that spirit continues today, even though America has long depended on others for oil.
One weekend last summer, I took a drive from New York to the rolling hills of Western Pennsylvania. I wanted to visit the birthplace of the oil industry. I wanted to see where the roots of modern life began. And I wanted to capture a bit of the old oil spirit.
Six hours west of New York, I pulled off Interstate 80 and headed north following the Allegheny River as it winds its way through some of Pennsylvania’s most rugged and beautiful countryside. Climbing up through the hills, I came to the small town of Oil City, its impressive late 19th century stone buildings a proud reminder of the time when this rural patch of Pennsylvania was the very heart of the world oil industry.
Oil City was once the most important boom town of what became known as Pennsylvania’s Oil Regions, a heart of oil exploration that sent crude oil north by rail to refineries in Cleveland, Ohio. In the early 1860s, 2,000 oil wells dotted the land around the town and the entire area resembled an oil derrick pin cushion. For a short time, Oil City was as famous as Houston.
In 1857, a small group of New Haven, Connecticut investors founded the Pennsylvania Rock Oil Company to tap into a flammable substance that seeped from the earth around the hills in this part of Pennsylvania. “Rock oil” was being used by the locals to clear headaches, toothaches and even upset stomachs.
The investors were interested for another reason. Global supplies of the whale oil that had long been burned in lamps were dwindling as sperm whales had been hunted to the point of extinction. Meanwhile, in Europe, a new process was being employed to dig this rock oil out of the ground by hand so that the stuff could be refined to make a new illuminant, kerosene.
The Pennsylvania Rock Oil Company had a better idea for extracting oil - it would drill for it using the same techniques already used at salt wells around the country. The man the investors chose to lead this venture was Edwin Drake. The 38-year-old jack of all trades was “between jobs” at the time, but he happened to be living in the same hotel as one of the main investors. The company decided on him partly because he portrayed himself as a can-do type of guy and partly because, as a railroad conductor, he could travel to Pennsylvania for free.
To bolster Drake’s credibility in Pennsylvania, the company sent letters ahead of his arrival addressed to “Colonel” E.L. Drake. The title stuck and, in 1858, the Colonel began drilling a few miles south of the little hamlet of Titusville, some fifteen miles north of Oil City. on a farm that contained a seeping oil spring. For over six months he had dug deep but dug dry. He was still searching for oil and had exhausted all the funds of the investors when, out of desperation, they mailed him instructions to abandon the operation. But the letter didn’t reach Drake until after he had tried one final well. This time, the drill bit sank 69 feet into the ground – then slid six inches more. Drake had hit oil and the industry that would change the world was born.
Soon thousands of prospectors – many of them returning from the Civil War - were flocking to the area around Titusville in search of their fortune. No place better epitomized the Oil Region’s frenzy of speculation than the town of Pithole, a few miles south of Drake’s first discovery in Titusville. At its peak in 1865, Pithole had 10,000 inhabitants, 50 hotels, two telegraph offices, and a post office that was said to be the third busiest in the United States. It was also a haven of prostitution packed with 50 “free and easy” brothels.
But Pennsylvania’s dominance was short-lived. Within a year Pithole was gone. The oil fields had been pumped too quickly by the prospectors, and once abandoned, Pithole’s wooden buildings burned to the ground in a fire. Soon, bigger and better oil fields were discovered in Texas, California and Oklahoma, then farther afield in Russia, Mexico and Venezuela and eventually, in the desert lands of the Persian Gulf. In the process, big oil companies – most of them American – would ride the booms and the busts and grow so rich that they often became more powerful than the countries where they drilled for oil.
Pennsylvania’s oil boom crashed almost as quickly as it began. But, in the 1920s, Oil City received a second lease on life when a company named Pennzoil relaunched the town’s oil business. Oil City became a company town – its livelihood totally dependent on Pennzoil’s business. Then, in 1995, the company pulled the plug on Oil City and moved to Texas where production costs were cheaper. Today, as you walk down the once vibrant Petroleum Street, you can’t help but notice that most of the stores have been replaced by boarded-up buildings. Even the town’s central landmark – the Oil City Savings Bank - now opens only for a weekend flea market. “This town used to be full of nice shops and boutiques,” said the owner of the Yellow Dog Lantern restaurant when I stopped by for dinner. “Now there is nothing left.”
Oil City discovered the perils of building a society that is totally dependent on oil. It is a lesson that America as a whole has yet to learn. Yet Pennsylvania’s problem wasn’t that it ran out of oil. There are still some 4,000 active small oil wells across the state. No, Pennsylvania’s problem, one that Oil City was able to delay, was that it could no longer compete against newer, cheaper sources of oil from other parts of America and the world. Oil fields rarely run dry, but as they get older - or grow more mature, as the oil industry calls it - the oil becomes more expensive to produce.
It wasn’t until the 1970s that the U.S. first realized it had an Achilles heel. The 1973 Arab oil embargo, coupled with a series of price hikes by the Organization of Petroleum Exporting Countries (OPEC), shocked the U.S. into realizing that its oil dependency had become a seriousness weakness.
Yet since that time, oil production in America has fallen rapidly. US oil fields in the lower 48 states are 25 percent less productive today than they were in 1985. And since 1990, proven oil reserves have dropped 20 percent. Unable to meet its own needs, and wary of being burned once more by OPEC, the US has made a concerted effort to spread its oil imports across a large number of producing countries. Winston Churchill once said that oil “security exists in variety and variety alone” and this has been the mantra of US governments since the end of the 1970s.
The US presently gets just 25 percent of its imported oil from the Middle East, and it has cultivated important relationships with Canada, Mexico and Russia as well as other producing nations in Latin America and Africa. Europe and Japan, with little oil of their own to draw upon, have also sought to diversify their oil imports, though they still rely more on Middle East oil than the US does.
But despite this emphasis on diversity, everyone associated with the oil business knows that the future of oil will be decided by one region, the Middle East. For all the new technology and all the financial resources that oil companies can call upon to find and drill oil around the world, the Middle East has not just the most abundant and deepest reserves of oil in the world but also the oil that is cheapest to produce. As the lessons of Pennsylvania’s oil regions show, it is only a matter of time before the rest of the world’s oil becomes uncompetitive compared to that of the Middle East. When that happens, Saudi Arabia, Iran and Iraq will be able to set their price.
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For as long as we are dependent on oil, we will face a triple threat.
The first part of the threat is economic – As the balance of power once more shifts to the Middle East, America’s oil dependency is likely to leave the nation once again at the mercy of OPEC. At that point, oil prices are likely to start rising and that could threaten the jobs of millions of Americans and ultimately undermine the economic well-being of the country.
The second is geopolitical – the United States must protect its oil interests all over the world. That forces the US to get directly involved in those regions where oil is abundant, regions where the very power and allure of oil wealth breeds instability. The end result is that the US supports a host of corrupt autocratic regimes solely because they have oil. At the very least, this fosters anti-American sentiment. At its worst, America’s oil addiction has caused US governments to plot the overthrow of other countries’ governments. Increasingly, the US is shaping a military policy based on protecting strategic oil resources around the world.
Finally, oil dependence is sowing the seeds of a global environmental tragedy. Even if the US could produce enough oil to meet its own needs, or could solve all the problems of the Middle East, the rapidly growing demand for oil throughout the world will result in the large-scale release of greenhouse gases like carbon dioxide into the atmosphere. Global warming – an assault on the earth’s atmosphere the scale of which no one in the world’s scientific community can yet fully comprehend - could ultimately destroy the very planet that sustains us.
So is all lost? Should we just give up now, buy Hummers and drive off into the brightly glowing and rapidly warming sunset? Hardly. Our dependence on oil grew over just 150 years. That’s a mere speck in time in the history of our world and it is also the best indicator that our addiction may also be fleeting. Oil replaced our reliance on more polluting fossil fuels like wood and later coal. Now, having appreciated both the achievements of oil and also its risks, we can move to a new energy strategy that would both sustain us and protect us in decades to come. With global demand for oil likely to double by 2030, the time has come to develop a new fuel strategy that reduces the threat of global warming and eases the power struggles that threaten our security.
This strategy should be realized in three stages. First, we in America should reduce the amount of oil we consume by implementing new fuel economy standards for our automobiles. Next we should adopt a new generation of gasoline-and-electric-hybrid vehicles that can provide a bridge between the internal combustion engine and new, non-polluting forms of transportation. Finally, we should put our resources behind an aggressive plan to make hydrogen the fuel that powers our automobiles. Most important of all, this hydrogen needs be produced using non-polluting, renewable energy forms like solar, wind or hydro-electric power.
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I’d been writing stories about oil for nearly a decade before I fully began to appreciate its power. At first, I viewed oil as just another big industry, albeit one ruled by some of the largest multinational companies on earth. But over time I started to realize that oil was a lot more important than just a business.
The main reason that it took me so long to appreciate the power of oil was because it flowed so deeply through my life. This was the industry that had built those super-cool supertankers that mesmerized me as a child growing up on the coast of Wales, and the same industry whose gas stations gave away coin collections commemorating all my favorite English soccer teams. For a while, my family even made special trips to one Esso gas station to collect free drinking glasses (I think my mother is still using them.) As a teenager, I was taught how North Sea oil was the lifeblood for a British economy that was sinking otherwise into a pit of moribund industry. And on my first visit at age 15 to the U.S. I fell in love with American cars and car culture. Life in America seemed so fast so supercharged compared to back home and it left an indelible mark on my teenage mind – so much so that I would later settle in New York.
At the same time, this was the industry that was responsible for an oil spill that wrecked the coast near my home. It was the industry that flooded Alaska’s Prince Edward Sound with millions of barrels of oil from the Exxon Valdez within months of my arrival in the US. Later, I would see the full extent of oil pollution and destruction when I traveled the fringes of the Amazon rainforest and met whole communities whose lives had been ruined by oil.
These contradictions had filtered through my brain for years as I followed the oil industry from afar, but it wasn’t until the months immediately following the September 11, 2001, terrorist attacks on New York and Washington D.C. that I started to consider the larger role of oil in our global society.
I started to notice how so many of the stories I read each morning in the newspaper were connected to oil. There were the obvious ties between Osama Bin Laden’s anti-US jihad and America’s military presence in Saudi Arabia – a hangover of the Gulf War and US commitment to protect Middle East oil supplies. And there was the increasing military deployment of US forces in the countries that surround the oil-rich Caspian Sea. Then there were the environmental and energy policies of the Bush administration, which sought to pump new life into America’s domestic oil industry while rejecting the environmental controls that the rest of the world seemed to agree could combat global warming.
And then there was Iraq and the US government’s bellicose drive to overthrow Saddam Hussein. Opponents of the Bush administration inside the US and all over the world were convinced this was a war over oil. At the same time, both the US and the UK government of Tony Blair were adamant that oil played no role in the push to putsch Saddam.
The Bush administration’s pre-emptive war seemed both preposterous and crass even without the benefit of hindsight that we now enjoy. But I couldn’t buy the No Blood for Oil argument. The U.S. had spent the last 20 years cultivating relationships with other producing nations and it didn’t have to invade Iraq just to satisfy its own oil needs. However, I was convinced that oil played some crucial role in the geopolitical maelstrom surrounding Iraq that neither the pro- nor anti-war crowd was addressing.
That was when I decided to undertake this journey through the world of oil. The purpose of the journey was simple – to understand and explain in straightforward terms the ways that oil has come to control our lives.