Contemporary international political situation is influenced by some special necessities which are sources that states need them. This reality comes from ancient times as states have vital arguments to be powerful than others in everywhere. State mechanism needs any special material to live for a long time or be strong always like blood function for human body. There is a main argument as a vital interest; oil which effects political situations of states with its useful benefits for all areas of the state mechanism. It had been transformed to a new style like blood as an alternative to other energy and trade materials since 19. century.
As historically oil was discovered in different special regions of the world and understood for some special features such as advantage to prevent some diseases, to attack material which burns under sea in wars by Byzantine Empire, to illuminate and to use for machineries. So it had been transformed from energy event to main subject of trade activities. In 19. century oil was formed to be functional style as kerosene with chemical tests by George Bissell and Benjamin Silliman. They developed industrial function of this material and some search methods were created such as different drilling system. George Bissell who was called as father of oil industry, used oil as kerosene and he developed a system to find oil with drilling system instead of mining. Oil drilling and marketing had a new face after chemical contributions and industrial processes. It will be main theme for producting and economic interaction. Oil was realized internationally as an alternative for candeel and coal with searching activations in Pennsylvania-Titusville by E. L. Drake. Drake entered to this market with other men, but his self initiatives kept him specially.
“Drake tried the usual method, digging trenches — and failed. He studied the land and speculated about oil deposits. His intuition told him he should drill into the ground, just as salt mining was done. From July 1858 to May 1859, he struggled to find a borer to do the work, spending the New Haven money to buy a steam engine and build an engine house in the meantime. Through a long, cold winter, the merchants of Titusville extended credit to their poor, misguided new friend and his family. Folks started to call him Crazy Drake.”[1]
This step opened a new period of oil for the world’s destiny. New source overspread to far geographies of the world in a short time. Also intercontinental transportation activities started, first oil was transferred to London in 1861 and to St. Petersburg in 1862.
After that time the largest company Standard Oil which will effect the oil market as a monopol was founded by J. D. Rockefeller in the USA, 1870. Manhattan was headquarter which called as Old House. Investors were creating some combine companies to establish common power about this market, but some of them left here to keep their sovereignty at this period. Main function of Standard Oil was that integrated company characteristic that has some steps like producing, rafinery, transportation, distribution and wholeseller-retailer system. Other successfull new companies took an example from this useful system. Oil companies were founded by initiators who finds oil in California and Texas. Also new technical method rotary drilling system was invented and useful oil production started. On the other hand new technical searching systems are developed from time to time at starting point of 20. century and they effected oil industry competition from local to international.[2] Standard Oil had been stronger than others and the company created its basic system in all areas of industry. In that rivalry circumstances other companies tried to establish alternative systems for transportation for preventing Standard’s main activity in trade. Standard Oil established a pipeline system to transport and other companies created barrel system for quickly transportation. At this situation Standard Oil discounted oil prices against them for balance interactions to all of them, namely everybody uses effective tools to protect their self interests via whatever ways as knowingly internal economic or oil crisis. In 1890, regional integrated company Unocal was founded, in 1893 oil production started in Texas. Guffey and Geley created their company in Kansas.[3] Also Gulf, Sun, Texoco oil companies was founded as against to Standard Oil. Strong competition started in the USA and it will jump other continents in a short time. Additionally we should say that %25 of world oil transportation was provided in the USA at this time. Of course Standard Oil was the first bigger than other untill a just law decision.
On the other face of the world there were some exploration activities in Caspian region in that time and it influenced oil market with its rich oil sources. Robert and Ludwig Nobel brothers founded oil rafineries in Baku and they discovered new ways to export oil from Caspian region. There was a period to complete its integrated company situation. First Caspian oil was transferred to St. Petersburg via ship which called as Zoroaster in 1876. Nobels were pioneer about tanker ship system. They ordered new tankers with new designs; Buddha, Tatarin, Mohammed, Socrates, Darwin, Koran, Talmud and Calmuck.[4] New transportation ways were necessities for Caspian oil to send other states via land and sea ways. So they planned to establish a rail road system from Baku to Batumi. It was started by Palashkovski but an economic disability prevented this project. But Rothschilds helped them and project completed successfully. Rothschilds entered this market system and founded Black Sea Petroleum Company at this region. Old House didn’t want to miss new conditions at this continent and founded Anglo-American Oil Company as an European foot of Standard Oil. Marcus Samuel who was owner of Shell Transportation Company and seller of seashells, visited Baku and started to work for oil market with his conditions and he created a new way from Baku to East Asia via Bosphorus and Suez channel to Bangkok and Singapore. First Baku oil was transferred to East Asia by M. Samuel via his ship which is called as Mirex. We can say that there were two global oil companies at this time; Standard Oil and Nobel-Rothschild Oil Company.
Third big oil production was in East Indian Islands. There is a company here, Royal Dutch Oil Company which origins from Netherlands. Henry Deterding headed this company after old patron Kessler’s death. Marcus Samuel explored here and demanded to amalgamation of Shell and Royal Dutch to create a common power and use advantages of this strategic and oil-rich region.[5] Systematically Shell has effectual technical supports for Royal Dutch. After the amalgamation Deterding shared new points as restriction of production and quota system, so oil had a new value in the world oil market because of new artificial scarcity against to other competitors. Before the amalgamation Standard Oil was bigger than others, but new situation is militate in favor of Royal Dutch-Shell. Also law effect created a new period for oil market. In 1906 Federal Court in the USA decided to divide Standard Oil because of unfair rivalry in the state. Company was divided to 7 sectors, new companies; Exxon, Mobil, Chevron, Amoco, Sun, Conoco and Standart Oil of Ohio. After this condition new period started for oil market and oil industry, they had new modifications and innovations which are changeable to international political situations also they changed all balances of powers of the world.
Mehmet Fatih ÖZTARSU – Turkish Forum
[1] Oil Drilling, E. Drake, http://www.pbs.org/wgbh/theymadeamerica/whomade/drake_lo.html.
[2] Rovshan Ibrahimov, Oil and Policy Lecture in Baku Qafqaz University, November 2009.
[3] Daniel Yergin, The Prize, Epic Quest for Oil, Money and Power.
[4] Robert W. Tolf, The World’s First Oil Tankers, 1976.
[5] Shell International History, official web site of Shell, .