Black gold: The story of oil

Oil. It’s known as 'black gold' and its use dates back to as early as 3000 BC, when Babylonians would use it as mortar in construction and to waterproof their boats. Oil is one of the foundations of the modern world. Here, we look at its fascinating history.

What is oil?

Oil is a naturally occurring fossil fuel that’s trapped underground. The dark liquid is made up of a mixture of organic materials, including hydrocarbons, and is created by those materials heating and compressing over many thousands of years.

Oil as it’s found in nature is known as crude oil, or unrefined petroleum. Most of the crude oil we use today is extracted from the ground by drilling oil wells. The oil is then refined and turned into a whole range of petroleum products, including gasoline, diesel fuel, jet fuel, heating oil, bitumen, asphalt and feedstocks that are used to make chemicals, plastics and synthetic materials.

The early days of oil

Long before European settlement, Native American Indians discovered oil in the north-east of America. The Iroquois tribes, including the Seneca Indians in Pennsylvania, extracted oil from the ground and mixed it with other substances to make war paint, mosquito repellent and healing salves.

In the 16th century, early settlers were known to trade oil and other materials with the Native Americans. They used the oil as grease for tools and wagons, as fuel for kerosene lamps and for medicinal purposes.

It wasn't until 1859 that Edwin L Drake, backed by the Seneca Oil Company, drilled America’s first commercial oil well in Titusville, Pennsylvania. He pioneered a technique of using cast iron pipes to line bore holes, which enabled deeper drilling. The well’s success would trigger an oil rush and spawned a new, lucrative industry. By the end of the 19th century, the US became the world’s dominant oil producer.

20th century discoveries

At the turn of the 20th century, the Standard Oil Company (owned by John D Rockefeller) dominated America’s petroleum industry. But a major discovery would soon change all that.

In 1901, the world's (then) most powerful oil well was discovered at Spindletop, near Beaumont, Texas. The gush blew oil more than 50 metres in the air at a rate of 100,000 barrels a day for nine days, making it the largest “gusher” in the world and catapulting the US into an oil boom. Hundreds of new oil companies were launched, and market competition was created in earnest for the first time.

Across the globe, British subject William Knox D'Arcy was negotiating the exclusive rights for oil exploration in Persia (now Iran) during that same year. D’Arcy’s crew went on to discover the Middle East’s first commercial quantities of oil in 1908. Following their lead, several European companies gained exploration rights for other Middle Eastern countries.

The automobile and two World Wars

Back in the US, improvements in internal combustion engines and the proliferation of cars and aeroplanes created a dramatic increase in demand for oil. Concerned over potential oil shortages, government leaders encouraged oil companies to explore abroad, and many major companies responded. The Middle East would come to provide more than 60 per cent of the world’s oil supply.

The outbreak of World War I saw a second oil rush as oil became a strategic priority. Warships were converted from coal-burners to oil as it allowed them to move faster and stay out at sea for longer.

World War II led to weaponry and transportation developments that increased the number of products containing petroleum and natural gas – TNT and artificial rubber, for instance. By that time, oil was also being used in heating, electricity generation and agricultural machinery.

Oil in the 1990s and beyond

Due to the constantly changing nature of the oil industry, oil companies continue to pioneer new technologies to allow the most efficient extraction and distribution of oil. For example, the 1990s saw the development of hydraulic fracturing, or ‘fracking’ – the pumping of high-pressure fluids into ground fractures of oil-bearing rocks so the oil can be extracted. This technique helped to increase US oil production, which led to a fall in imports from the Middle East.

So why is there continued interest in ‘black gold’? Ultimately, because we still use it – oil makes up more than 30 per cent of global energy consumption. While many people associate oil with cars, petroleum products are now used to produce everything from fertiliser to personal products.