Oil Crimes

American Oil

After oil was discovered in 1859 in Titusville, Pennsylvania, it became a major element in the Industrial Revolution in the United States. In the early days of oil development, the American oil industry was controlled by only a few companies that created large trusts designed to cut out competition and retain as many profits as possible by controlling the entire process of petroleum or oil production and transportation.

These trusts were controlled by oil barons such as John D. Rockefeller of the Standard Oil Company, who ruthlessly squelched competition. The large oil companies manipulated prices in such as way that they received rebates from railroads while independent refineries were charged twice the going rate. When competitors or independents balked at the ruthless tactics of the oil barons, they were taken over or forced out of business. In the 1870s, the situation became so crucial that it led to the Oil War of 1872, which resulted in parades and mass meetings during which Rockefeller's effigy was burned. A Congressional investigating committee uncovered what it saw as “one of the most gigantic and dangerous conspiracies ever conceived.” The oil barons claimed that the trusts benefited the consumers, but critics charged that rigged prices and wages threatened the American economy. The U.S. government agreed that monopolies restricted trade; and in 1911, the U.S. Supreme Court ordered Standard Oil to divest itself of its various subsidiaries.

During the 1930s and 1940s, the U.S. government began to work with privately owned oil corporations in the Middle East to produce sufficient oil to help swing the balance of power toward the Allies in World War II. By the end of the war, the economies of these oil-producing countries had changed forever. The three major players in the Middle East during this period were ARAMCO, an international oil cartel; the U.S. government, which promoted the Middle Eastern colonialism that sprang from the war years; and the government of Saudi Arabia, the largest oil producer in the Middle East and the motivating force in establishing oil prices and policies. In the more developed regions of the world, oil soon replaced coal as the major source of energy. Between 1945 and 1960, consumption of oil and gas doubled because oil was used to provide power for several essential industries such as steel, cement, metalworking, and glass. At the same time, an increase in the numbers of cars, trucks, and other motorized vehicles added to demands for more gasoline at cheaper prices.

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