The Start of the Addiction
Perhaps it was because of Samuel’s understanding of maritime trade or maybe it was because Shell now had large excess reserves of Borneo fuel oil following its recent merger with Royal Dutch, an East Indies-based rival, but Samuel led the campaign to make the British Royal Navy abandon coal-fueled ships in favor of oil.
Since the late 1890s, Britain and Germany had been caught up in an increasingly high-stakes naval arms race. Central to both sides’ military ambitions was control of the world’s oceans. The British admiralty was dead set against switching to oil – not least because, while Britain enjoyed great reserves of coal, it had no oil of its own. Nevertheless, after a decade of lobbying, Samuel finally got the ear of a new First Lord of the Admiralty, the young Winston Churchill.
Churchill quickly grasped the advantages of an oil-fueled battle fleet. Between two such well-matched imperial powers as Britain and Germany, naval superiority would tip the balance and Churchill saw how Britain could achieve that. Oil fuel allowed faster cruising speeds and faster acceleration than coal furnaces. It took up less room allowing for greater armaments and manpower. It was also cheaper to operate. In April 1912, Churchill took the “fateful plunge” as he described it and commissioned a series of new battleships all dependent on oil.
In one swoop, Churchill had made the security of Great Britain dependent on foreign oil. Yet the lure of oil - its mobility and the advantage it afforded the British fleet at war - was enough to persuade him. With oil, Churchill wrote, “we should be able to raise the whole power and efficiency of the Navy to a definitely higher level; better ships, better crews, higher economies, more intense forms of war power.” As he put it, “mastery itself was the prize of the venture.”
Churchill found the oil he needed to run his navy in Persia where a new company, Anglo-Iranian Oil had struck a rich seam of oil. Yet despite the company’s potential, it was desperately short of capital. In 1913, Churchill announced that, in the interests of national security, the government would buy 51 percent of the company and Anglo Iranian would sign a long-term contract to supply fuel oil to the British Navy. The agreement stipulated that the company must always remain a British concern and, to protect its investment, the government increased its military presence in Persia. Anglo Iranian would soon change its name to British Petroleum, or BP. And Great Britain had become the first Western power to tie its economic and national security to Middle East oil. Others would soon follow.
The First Oil War
Nowadays we take technology in warfare for granted. Ever since the first Gulf War in 1991, the media has fallen over itself to catalogue new military inventions – be it stealth fighters, smart bombs or real-time video footages of the battleground that can be monitored from thousands of miles away. But, as Germany and the allied powers of Great Britain and France squared off in 1914, neither side understood the differences that the internal combustion engine would bring to modern conflict.
The First World War dragged on in an increasingly bloody stalemate for four years as each side introduced more deadly mobile weapons and the carnage grew exponentially. In 1916, the tank was introduced to combat and by 1918, the allied forces were using over 150,000 cars, trucks and motorbikes to transport troops and supplies. During the course of the war, the combustion engine also took to the skies. In 1915, the Royal Air Force had only 250 planes to call upon; by war’s end, British industry had produced 55,000, France 68,000 and Germany 48,000.
These inventions increased mobility on the battlefield, spreading the conflict over a far greater area than military planners had ever imagined. And it changed the odds of warfare. Even the finest infantry and cavalry was no match against the new fighting machines. Over 13 million people died and millions more were wounded during the four-year conflict.
It took huge quantities of oil to supply both sides’ war effort. Oil production at Anglo-Persian’s operations increased ten-fold from 1912 to 1918 and in 1917, Great Britain, with an eye to Mesopotamia’s oil potential, captured Baghdad from the Turks. Yet Britain and France still found themselves facing huge oil shortages at the height of the war. There was only one place they could turn for help – the United States. By 1917, the US was producing 335 million barrels of oil, 67 percent of total world output, and nearly one quarter of that was sent to Europe. In total, the US supplied 80 percent of the allies’ wartime petroleum needs. One quarter of that came from Standard Oil of New Jersey.
Germany’s oil problems were even more severe. Cut off from overseas oil by the allied naval blockade, it had only one other option – the oil fields of Romania. Yet despite a full-press effort to capture the oil fields, British saboteurs got there first putting Romanian oil out of action for five months. On November 11, 1918, Germany, faced with an acute oil shortage for the coming winter, surrendered. As Lord Curzon, a member of Britain’s War Cabinet, triumphantly announced, “The Allied cause had floated to victory on a wave of oil.”