Oil

Evolutionary History

The first oil well was struck in 1859 in Titusville, Pennsylvania. This was the beginning of an enterprise that has surpassed any other industry, in multiplicity of impact and in transforming power in history of capitalism, and that has criss-crossed the entire globe for some 150 years now. This was followed by bountiful gushers halfway around the world, first in 1872 in Baku, Azerbaijan, and then in 1908 in Masjid Sulaiman, Persia. From that point forward, searching for oil has become synonymous with searching for conflict, control, and power across the global divide. Before others joining for a piece of this bulging pie in cut-throat competition, tycoons like John D. Rockefeller in the United States, the Nobel Brothers in Russia, and D'Arcy and Anglo-Persian Oil company (and the British Government) in Persia (which, in 1934, was renamed Iran) were the major contenders in these ventures and adventures.

The evolution of oil across the globe—from its early discovery through to its today's global maturity—has advanced through three distinct stages of development: (1) the age of syndicates, colonial concessions, and cartelization (1870–1950); (2) the period of internal transformation and transition (1950–1972); and (3) the stage of transnational globalization, since the mid-1970s. In the span of a protracted century (1870–1970), the oil sectors were characterized by the unmediated administrative pricing and deliberate accounting calculations through integrated and cartelized networks across the colonial, semicolonial, and industrial regions of the world. These pricing practices, beginning soon after the loss of Baku to the Russian Revolution, took as their point of departure the cost of oil production in the Gulf of Mexico (using the U.S. basing-point system) and applied this to oil produced anywhere in the world as a universal yardstick. The United States was the center of oil production, and the country mimicked the so-called law of one price and, in addition to monopoly pricing and phantom freight—the imposition of transportation costs from the Gulf of Mexico on all oil regardless of their point of origin—pocketed the super profits that resulted from differences in the cost of deposits across the geography of production.

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