Standard Oil announces that it will discontinue the sale of Mica Axle Grease and Eureka Harness Oil. Those were among the first and principal products of what was then the one and only Standard Oil, back around the turn of the century when gasoline was poured on the creeks to get rid of it. (Remember those days Sid?) More precise electric log correlation becomes possible thanks to a new geologic development utilizing business-machine “punch cards” and the new high-speed electronic calculators. What is believed to be the longest and toughest radioactive tracer project ever attempted is completed by Tracerlab, Inc. They successfully tracked a radioactive pig through a 30”/652 mile crude-oil pipeline from Superior, Wisconsin to Sarnia, Ontario using a portable Geiger counter. What next you ask? How about bottling up natural gas in a deep freeze and peddling it in containers like ice cream? Some say it could happen one day. This of course would make the gas pipeline industry obsolete, put the Federal Power Commission out of business, and give sweaty palms to a lot of L.P.G. suppliers.
East Texas crude oil - $2.90 per bbl; U.S. – 2,598 rigs running
Despite arguably possessing the richest store of minerals in the Western Hemisphere, Alaska will reportedly have 144 windmills and 23,000 solar installations by the turn of the century, according to the U.S. Commerce Department. From the Dirty Capitalist Department: A Tehran revolutionary radio broadcast backing the Ayatollah Khomeini accuses the Russians of swindling Iran by buying low and selling high! Official 1976 figures show Russia paid Iran an average of $0.60/Mcf and turned around and sold it to Czechoslovakia for $1.33 /Mcf. (Not bad.) Soviet scientists are quoted in the Russian press as saying that coal gasification offers interesting new possibilities “if the coal’s combustion takes place with the help of highly concentrated energy sources such as lasers or electronic guns.” (There is bound to be a plot for a James Bond movie in here somewhere.)
U.S. – 2,008 rigs running
Russia slashes natural gas deliveries to countries with unpaid debts. Moldova dodges the bullet by promising to pay in agricultural produce. (Would you dare consume produce from a country called Moldova?) Amoco alerts employees of corporate restructuring plans intended to reduce costs and improve organizational flexibility. One option reportedly being considered involves reducing corporate staff and replacing each of Amoco’s three operating units with a “minimally staffed sector executive.” (As a reminder, last year Amoco posted net income of more than $1.8 billion and had the second best return on capital among U.S. majors.) Unocal pleads no contest to three criminal charges involving what may be the biggest petroleum spill in California history, namely that it leaked thousands of barrels of a kerosene/diesel diluent beneath the Guadalupe oil field and failed to report it during a 40-year period of time. Russia and Marathon-led 4M-S group are expected to finally sign a development agreement covering oil and gas fields off Sakhalin Island, with the first well likely to spud in April.
WTI - $14.82 per bbl; Natural Gas - $2.11 per MMBTU; U.S. – 743 rigs running
U.S. independents such as Mitchell Energy, which just completed a 21% staff reduction, announce plans to cut capital budgets and ride out the low crude-oil prices. Elf also reports plans to cut 21% of its E&P workforce, with its technical and research base at Pau, France being especially targeted. The mayor of Pau threatens to go on a hunger strike if job cuts are implemented. For the first time since 1951, there are no drilling rigs operating in North Dakota. This compares with an average of 18 drilling rigs operating daily just two years previous. In a survey of 1,000 oil and gas sector companies, 94% of them report “Y2K readiness.” (What ever became of those overnight Y2K consultants?) The U.S. steps up air strikes against Iraqi military targets in response to Iraq’s continued violation of the no-fly-zone rules. One such strike reportedly damages a pipeline taking oil to Turkey and, in the process, halves Iraq’s oil exports.
WTI - $12.87 per bbl; Natural Gas - $1.75 per MMBTU; U.S. – 541 rigs running
The Rest of the Yarn
“I believe it is man’s religious duty to get all he can honestly and to give all he can.”
This quote was not just his philosophy but truly the life lived by this most controversial businessman and oil tycoon. Born to humble beginnings on a farm in Richford, New York, he observed his father master the arts of unscrupulous selling, staying one step ahead of the law, and working very hard to avoid work. His mother, on the other hand, was quite a devout Baptist and was able to inject some strong moral values into his life. It is evident that he gleaned some traits from both sides of the family, questionable business tactics from his father and a sense of piousness from his mother. Known to many for his predatory pricing, collusion with the railroads, bribery of politicians and industrial espionage, he knew no shortage of enemies during his long lifetime. Despite his unpopularity among competitors, he also became greatly admired for his staggering generosity.
With no more training than incomplete high school and a three-month business course and no more experience than as a cashier and bookkeeper with a commission merchant and produce shipper, he set out with $2000 to start his own commission business with a young entrepreneur named Maurice Clark. In that same year, the first oil well was drilled in western Pennsylvania, and he began to see the opportunities. Four years later he took on a second partner, Samuel Adams, and they became oil refiners. In 1865 he bought all the interests in the oil refining business and sold his share of the commission business.
Demand for oil grew sharply in the 1860’s, due primarily to the increased use of kerosene lighting. He used his refining profits to organize the oil company that would forever be synonymous with his name. By the 1890’s it is estimated that his company controlled over three-fourths of the petroleum business in the U.S. In the most famous anti-trust case in business history, his oil company was dissolved into numerous individual entities, many of which have survived into the 21st century.
Two paradoxical legacies of his life remain, namely, his ruthless business practices and his unmatched philanthropy. By the time he died at age 98, the world’s first billionaire had given away most of his worldly wealth. However, he still managed to leave behind an estate worth over twenty-six million dollars – no small sum in those days. As one final act of benevolence, he paid off the mortgage of the church where he was converted. That same day, May 23, 1937, he suffered a heart attack and passed away the following morning. In his day he was the world’s richest man, it’s greatest philanthropist, and the founder of Standard Oil. He was John D. Rockefeller, Sr. And now you know…The Rest of the Yarn.
In 1954, what state became the U.S.’s 29th oil-producing state? Hint: There is a silver lining to this story.
If you would like to participate in this month’s quiz, e-mail your answer to email@example.com by noon, March 15. The winner, who will be chosen semi-randomly from all correct answers, will receive a $50 gift certificate to a nice restaurant.
Answer to February’s Quiz
When Stanolind Oil and Gas filed the first application to drill an offshore Texas OCS well in 1954, they filed that application with the U.S. Army Corps of Engineers.
Answer to January’s Quiz
The two countries whose oil ministers are generally considered to be the founding fathers of OPEC in 1960 were Venezuela and Saudi Arabia.
Congratulations to January’s winner – Bernie Schwartz with Kerr-McGee.