Oil is as old as the world…
Oil is as old as the world…
Populations like the Sumerians, the Egyptians and the Persians used oil and bitumen for a variety of purposes. Shallow oil pits, used to extract oil as a fuel for illumination purposes, have existed in Asia and Europe at least since the Middle Ages. Only in the late modern era, however, oil would assume the capital importance it has nowadays, spurred by the progress brought by the Industrial Revolution. The very first oil rush, which originated in Pennsylvania in the 1860s, was a business venture like no other. At this time, oil wells made men rich overnight and, just as quickly, dried up, leaving them with nothing. In this risky line of business, successful entrepreneurs gained a legendary aura. Among those, stand out the incredible stories of Edwin L. Drake, John D. Rockefeller, and John W. Steele (also known as Coal Oil Johnny).
“Colonel” Edwin L. Drake
Edwin Laurentine Drake drilled the first well of modern times in Titusville, Pa. in 1859. It was the age of the gold rush, and miners were leaving their houses and moving across the U.S. in search of fortune. Until a few years earlier, “rock oil” (the translation of the Latin word “petroleum”) had been something to get rid of, a by-product of Pennsylvania salt wells, first sold as medicine in 1849, then as lamp fuel and lubricant, but still on a small scale.
In 1854, the Pennsylvania Rock Oil Company (later renamed Seneca Oil Company) took control of the Titusville well, effectively constituting America’s first oil company. Production was low due to the difficulties in drilling wells, a problem which Edwin Drake, a former train conductor from New York, was hired to solve in 1858. A few letters of introduction from his superiors referred him to the locals as “Colonel,” a title by which he would come to be known.
Drilling was problematic, especially since the Titusville site was close to a river, and water continuously seeped in, making the borehole unstable. Drake’s innovative solution was to drive sections of pipe into the ground, effectively creating a tunnel, which slowed down progress even further, since drilling had to take place through the pipe.
Investors started to lose faith in the venture, and ultimately Seneca Oil executives ordered him to close down the facility. By then, Drake had already borrowed money out of his initiative, which allowed him to continue operations. Luckily, he would find oil soon after that, at a depth of just 69 feet (21 meters) on Aug. 27, 1859. The Titusville well would go on providing an average of 1000 gallons of oil per day for the next three years, making the city grow at an exponential rate.
Drake’s pioneering enterprise effectively started the Pennsylvania oil rush, and from that moment on, oil companies started to compete heavily with each other in the area.
John D. Rockefeller
John Davison Rockefeller was a successful entrepreneur in the transportation and commerce of goods, when in 1863 he decided to build an oil refinery, inspired by the growing success of the Pennsylvania oil business.
The process “was simple and easy […] and at first the profits were very large,” he wrote in his autobiography. As the refinery market quickly got saturated, Rockefeller and partners worked on improving efficiency and exporting their products abroad. Thanks to their efforts, their business grew so much as to need miles and miles of pipelines across the U.S., an enterprise requiring millions in funding, which they managed to accomplish.
At the time, as Rockefeller expanded operations, the oil industry was still considered a risky business. Oil wells were going from producing hundreds of barrels to zero from one day to the next, and “securing capital was very difficult,” as Rockefeller himself recounted. Still, he managed to build on his initial success an immense empire, thanks to his intuition, shrewd management and business practices.
In 1897, Rockefeller retired from business and devoted himself to philanthropy. It was estimated that throughout his life, he donated a total of $500 million.
John W. Steele, aka “Coal Oil Johnny”
Much sadder than Rockefeller’s, but just as legendary, is the story of John Washington Steele, born in Sheakleyville, Pa. in 1844. Steele was adopted by the McClintock family, and grew up on a farm in Venango County, Pa., not far from Titusville. After Drake’s successful extraction in 1859, entrepreneurs from all over the country flocked to the area, installing their extraction wells and paying hundreds of dollars in royalties to local residents.
Steele’s family was no exception — they had an oil spring on their property, and began earning considerably. Unfortunately, Steele became an orphan in 1864, by the age of 20, the only heir of his parents’ farm, the oil wells, and a considerable sum of money for the time: $24,500. Without guidance, and inebriated by his newfound means, he began a lifestyle which would foster legend upon legend. According to a 1921 issue of the New York Times, Coal Oil Johnny, as he quickly became to be known, had so much money in his pockets as to find his coat “uncomfortable.” A great number of stories about his enterprises multiplied, it was said that he let his horse drink champagne and that he used to light up his cigars with hundred-dollar bills.
Attracted by his fabulous lifestyle, con men of all kinds involved Steele in a variety of businesses, most of which failed. Unable to manage his businesses, discouraged, and victim of several lawsuits, Steele recounts that he was advised by his agent to leave the management of the farm and the oil wells to his wife. The agent then proceeded to convince his wife to sell him the property for $20,000, forcing him to declare bankruptcy in 1868, only four years after inheriting.
After his financial collapse, Steele would go on redeeming himself, working very hard to erase his reputation as Coal Oil Johnny, and ultimately regaining the trust of his family. Not without irony, he would end up a respected man working for the railways, the same industry in which Drake started off.
Drake, Rockefeller and Steele’s incredible stories are testimonies of the oil boom, a time of great uncertainty and great fortunes when the world was only on the verge of becoming what it is today.
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