Crude Oil: 150 years since Titusville

August 27 marks 150 years since the first commercially-successful oil well was drilled in Titusville, Pennsylvania. With that well, the state racked up production in 1859 of a whopping.... 2,000 barrels.

The people backing the venture were not after the oil to fuel a long-term vision of a world full of automobiles, jet flight, plastics, or most of the ways we know petroleum to be used today. They were capitalists trying to make money by alleviating a pain of the present time: the runup to the US Civil War had started disrupted whaling, and whale oil used in lamps and stoves, was in short supply. Its substitute, alcohol, was heavily taxed.

Some nine years before, a Pennsylvania farmer had devised a way to distill the crude oil that pooled on the surface of his streams. Natural oil seeps always had been found worldwide and were used throughout history by ship builders to coat the bottoms of ships (pitch). The newly refined product was called "carbon oil" to distinguish it from the coal-based kerosene which had been developed earlier in the century and, because of the soot it created, not ideal for indoor use.

The Titusville "carbon oil" inaugurated a new era of oil-based kerosene lamps and stoves but hardly stopped with domestic uses. Along with the internal combustion engine and electrical power generation, it literally fueled the next phase of the industrial revolution and, with no exaggeration, world development.

Titusville wasn't the first attempt at drilling an oil well; others in the area had tried but only ended up only with salt water. Nor was it the most successful. But it did mark a Gladwell-worthy tipping point.

Today oil is a global multi-trillion dollar business by any calculation and the world produces about 85 million b/d.

Crude oil is a nation-building, strategic geopolitical asset, and is not only the world's most actively traded physical commodity but the linchpin of many numerous derivative industries including transportation, plastics and pharmaceuticals.

Pennsylvania still produces oil but is no longer the epicenter of production, the honor of which goes to Saudi Arabia, whose capacity in excess of 10 million b/d makes it the world's largest producer and exporter of total petroleum liquids. By most accounts, it holds at least one-fifth of the world's reserves.

Oil is not yet in short supply, and the industry as a whole has consistently found more resources than it has tapped, and governments around the world have long set as a goal attempting to reduce their use of petroleum-based products, for a variety of reasons: security, costs, politics. More recently, one of the most commonly held long-term goals is to reduce the emissions resulting from the use of oil, both by improving the processing and use of oil and gas, and by finding substitutes.

Some of the substitutes are subject to various tax incentives in many countries. And oil and its derivatives are in the cross-hairs of the kind of new excise schemes that would make the taxes on Civil War-era alcohol look inconsequential, ranging from international bunker fuel emissions to cap-and-trade regulations in the US.

With many searching for tomorrow's whale oil, likely contenders could be found in laboratories, air or coincidentally, even the salt water that early drillers for oil were so disappointed to strike. Given history, it may be something not even conceived at present.

Pennsylvania is now a bit player in the oil game, producing approximately 7/100ths of one percent of Saudi's annual crude production. However, it's a reminder that tomorrow's Titusville has yet to be identified.