A Historical View of Crude Oil


Did you know that the invention of the internal combustion engine in the early part of the 20th century was the major influence in the rise in the importance of petroleum? It was the need to keep the trains moving on their newly laid tracks that fueled the demand for oil and its derivatives.

A Historical View of Crude Oil

But the history of oil began long before the railroad was even invented. The earliest known oil wells were drilled in China in 347 AD or earlier with depths of up to about 240 meters; theywere drilled using bits attached to bamboo poles. By the 10th century, extensive bamboo pipelines connected oil wells with salt springs and natural gas was used for lighting and heating.

Persian Gulf

At around the same time, in the Arabian Peninsula, chemicals such as kerosene were distilled from petroleum and were used in kerosene lamps while crude oil was distilled in Persia in order to produce flammable products for military purposes. Beginning with Islamic Spain in the 12th century, petroleum distillation moved westward throughout Europe and Russia and was recorded in Romaniaat the start of the 13th century.

During the 18th and 19th centuries, oil springs were discovered in several European locations as well as in Pennsylvania, U.S. and Ontario, Canada. By the 20th century, these were joined by oil wells in Ohio, Texas, Oklahoma, and California.

19th Century Oil Boom

The major production of petroleum began in the 19th century in Scotland with the refining of paraffin from crude oil. The very first commercial oil-works and oil refinery in the world was completed in 1851 in Bathgate near Glasgow using oil extracted from locallymined shale, and bituminous coal to manufacture naphtha and lubricating oils.Paraffin for fuel use and solid paraffin were not sold to the public until 1856.

This was followed by a series of refinement experiments in various laboratories in, Europe, Russia and North and South America resulting finally in the development of many oil fields all over the world. Up to the mid-1950s, coal was still the world’s foremost fuel; after that oil was the fuel of choice.

Oil supply levels became a major topic of the media following the 1973 and 1979 energy crises and fear of limited resources and dismal predictions of electricity blackouts and shutdowns resulted in an increase in oil production and a reduced demand. This caused the oil glut of the 1980’s.

Access to oil is still a major economic and political factor in world events.The price of crude oil continues to be a topic of concern to people everywhere and discussions about peak prices and embargos continue to dominate the news.

The price of U.S. petroleum during much of the twentieth century was heavily regulated through implementation of price controls.  In the post-World War II era, U.S. oil prices averaged $28.52 per barrel adjusted for inflation to 2010 dollars.  Over the same post-war period, the median for the domestic and the adjusted world price of crude oil was $20.53 (2010 prices. ) Adjusted for inflation, from 1947 to 2010 oil prices exceeded $20.53 per barrel only 50% of the time. Remarkably, today’s price of crude oil stands at $108.68.

* A Historical View of Crude Oil

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