December 1956

For the first time, an analog computer will be used to automatically compute refinery process data such as pressure, temperature, flow rate, etc. and alert operators of any deviations from normal operating conditions. Will it be located in Texas? California? New Jersey? Would you believe at Esso Standard Oil’s refinery near Havana, Cuba. (If you answered correctly, please let us know, and we will send you a cigar.) The blockade of the Suez Canal is reportedly costing the world’s oil industry $25 million per month. Enter multimillionaire shipping magnate Aristotle Onassis (more widely known as Jackie’s second husband), who is proposing to build an emergency oil pipeline that will parallel the canal and carry 500,000 bbl of oil daily. What’s more, he proposes to build it in 6 months using borrowed pipe.

East Texas crude oil - $2.90/bbl
U.S. active rig count – 2,766

December 1981

A bill is introduced in Congress to permit Indian tribes to participate actively with oil companies in the development of tribal mineral resources, a step beyond their current rights to merely grant competitive bid leases on tribal lands. President Reagan asks all U.S. citizens, including oilfield personnel, to leave Libya as soon as possible because of imminent danger. An estimated 1,500 Americans are reportedly in Libya, employed by 30 U.S. companies. (Don’t look now, but we’re back!) The Energy Action Educational Foundation and the Citizen/Labor Energy Coalition merge to combat decontrol. This announcement was made by “Cool Hand Luke.” (That’s right, actor Paul Newman, one of the founders of Energy Action).

U.S. active rig count – 4,476

December 1996

Russia’s Gazprom, the largest natural gas producer in the world, announces plans to sell a 9% stake to foreign investors. This comes on the heels of the Soviet government freezing some of its accounts for nonpayment of about $2.8 billion in back taxes.
In apparent defiance of U.N. sanctions, Iraq and China National Petroleum Corp. sign a production-sharing deal for Al-Ahdab oil field in central Iraq. A Garland, Texas independent rigs up to drill a rank wildcat in Georgia, a state devoid of oil and gas production. The state is offering a $250,000 prize for the first successful well.

Light sweet crude oil - $25.15/bbl
Natural Gas - $3.48/MMBTU
U.S. active rig count – 856

The Rest of the Yarn

Continuing this month with a look back at the early history of oil trading in this country, we take up where we left off with an examination of the early oil exchanges.

 

As discussed last month, the first formal oil exchange was located in Oil City, Pennsylvania. Other oil exchanges sprung up in New York City and elsewhere as oil production spread through the Allegheny and Ohio Valley regions. Nevertheless, Oil City remained the nerve center of the industry, and its oil exchange did far more business than any other.

 

Because the early trading was in paper, not in oil, the number of barrels bought and sold in Oil City’s exchange each day far exceeded the amount of oil actually in production or in storage. Most of the buyers had no use for a drop of oil, and traded in certificates as a means of speculation. Gambling would be a better term for what they did, as prices changed violently on every rumor from the oil fields. News of a new gusher sent the price tumbling, while word that a new wildcat was dry or that a good well had gone to water, sent it sky-rocketing. Speculators made and lost fortunes in a matter of hours.

 

In 2 days in May 1884, for example, the price of oil on the exchange dropped from $0.91 to $0.78 per barrel, and on both of those days the Oil City exchange sold more than 27,000,000 barrels.

 

Next month, stability comes to oil prices, much to the chagrin of the oil traders.

 

Readers are encouraged to submit brief, ostensibly true stories about notable personalities from our industry’s storied past. Submissions should be e-mailed to contest@houston.spe.org.

 

History Quiz

In 1910 the Exchange National Bank in Tulsa opened. It was originally formed to help fund the oil empire of one of the barons of the oil industry, himself a Tulsa resident. Name that legendary figure.

 

If you would like to participate in this month’s quiz, e-mail your answer to contest@houston.spe.org by noon, December 15. The winner, who will be chosen randomly from all correct answers, will receive a $50 gift certificate to a nice restaurant.

Answer to November’s Quiz

The grand opera Aida was written by the Italian Verdi to celebrate something of great significance to the oil industry, namely, the opening of the Suez Canal.

Answer to October’s Quiz

Phillips Petroleum was the first operator to drill deeper than 25,000 ft on a well in West Texas in 1958.

 

Congratulations to October’s winner – Mario Zamora with M-I SWACO