BL Oil & Gas History, Economics and Geopolitics OENA8433

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CRICOS Provider No. 00126G copyright © The University of Western Australia
BL Oil & Gas History, Economics and Geopolitics OENA8433

Topic 1, Lecture 1: Introduction: Oil Beginnings
Dr Karin Oerlemans
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Unit Overview
Topic 1: Introduction – The Founders
Lecture 1: Introduction to course: Oil beginnings
Lecture 2: The establishment of oil capitalism in the USA
Lecture 3: The irresistible rise of John D Rockefeller
Lecture 4: The rise of the multinationals
Topic 2: The Global Struggle
Topic 3: War and Strategy
Topic 4: Oil and Gas Economics
Topic 5: Oil and Gas Technology in context
Topic 6: The Energy Industry Today
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Recommended Reading
Yergin, D. (1991). The prize: The epic quest for oil, money and
power. New York: Free Press.
Prologue
Chapter 1
Economides, M. & Oligney, R. (2000). The colour of oil. Katy:

Round Oak.
Other References:
J R Soc Med. 1993 January; 86(1): 43–44
http://www.sjgs.com/history.html
http://www.loc.gov/rr/business/BERA/issue5/history.html#ancient
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Lecture Outcomes
Upon successful completion of this lecture you should:
Have an overview of the Course

Content
Themes
Assessment
Delivery
Comprehend the historical development of oil

The three themes underlying the story of oil
Oil beginnings from antiquity to the 1850s
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Lecture Overview
Course Introduction
Course Objectives
Content Themes
Course Content
Assessment
Course Delivery
Current Affairs
Oil – The Beginnings
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3
Course Introduction
The oil and gas industry
Short modern history

Long use history
Amazing technological development
Globally dispersed
Incredible wealth
Wields immense power
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Course Introduction
1911 Churchill: Britain’s naval supremacy based on oil –
“Mastery itself was the price”
Oil is about the quest for Mastery
Oil continues as the global focus

War
Money
Power
Why Oil?
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Course Objectives
By the end of this unit students should be able to:
Comprehend the importance of oil and gas to a nation’s economy and
trace the historical development of the industry, identifying how the
quest for oil and gas resources has influenced and determined the
world distribution of political and economic power;
Relate the economic importance of oil and gas in today's society and
understand the changes in the balance between coal, oil and gas
utilisation from the Industrial Revolution until now, and into the future;
Appreciate the technical innovations that have enabled oil and gas to
be found, purchased and transported to customers;
Demonstrate an understanding of the economic concepts and tools
required to understand pricing mechanisms, financing, fiscal policy
and the measures of profitability appropriate to the oil and gas
industry; and
Distinguish between the economic and political environments of a
number of different oil and gas regions, analyse how these impact the
industry of nations globally, nationally and locally, and perceive future
trends.
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Course Themes
The rise and development of capitalism and modern business
Oil as a commodity intimately intertwined with national
strategies and global politics and power
Hydrocarbon Society – Hydrocarbon Man
Rolls Royce 1920 Pattern, http://en.wikipedia.org/wiki/Rolls-Royce_Armoured_Car 10

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Content Themes
This unit encompasses 10 main sub themes.
Our Dependence on Oil and a Personal Energy Audit:
How much energy do you use/require in your every day life?
The rise and development of capitalism & modern business enterprises: oil as
the fore-runner
Oil and National Security
National strategies
Global politics
Power
Security of supply
The Middle East – a Geopolitical case study
OPEC
The Shaping of Society: ‘Hydrocarbon Man’
Oil & Gas Economics
The Age of Gas
Hydrocarbon Wealth: A Mixed Blessing? Australia and Saudi Arabia
Future Trends
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Course Content
Historically
An extensive examination of the growth and development of the oil and
gas industry
A historical account of the first production of oil in the USA, and the oil
rushes that followed
A description of the rise of major American oil companies
A discussion of the development of the industry outside the USA,
leading to oil and gas as a global industry, and the rise of multi-national
oil companies.
An outline of the formation and history of OPEC
A historical look at the development of the engineering and technology
to meet the demand of producing and transporting the world’s
requirements for oil and gas
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Course Content
Geopolitically
The documentation of the role of the global struggle for oil in the wars of
the 20th Century, and also including the Iraq conflict
An examination of the economic impact of the oil & gas industry through
a number of studies:
The North Sea and its impact on the UK and Norwegian economies
SE Asian fields and the impact of their development on countries in the
region
The North West Shelf and its impact on the Australian economy
These studies will also consider the accompanying political settings and
policy decisions in each case.
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Course Content
Economically
Fundamentals in oil and gas economics
Effect of oil and gas industry on an economy
Government revenue
Oil and gas pricing
Market forces
Taxation
Future trends
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Assessment
These will use a variety of modes and will include
Assignments integrated with the lecture delivery
Assignments for developing selected case studies
Presentations of case studies
A final exam to assess the overall understanding of the subject
A number of formative assessments (short answer and multiple
choice questions) at the completion of each topic, for student’s own
feedback and information – these may be discussed in tutorials
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Assessment
Assignment 1 - Personal Energy Use 15%
Assignment 2 - World Energy Use 15%
Case study Assignment & Presentation 50%
Exam 20%
Total 100%
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Current Affairs
Newspapers & Current Affairs:
Students will need to raise their awareness of current affairs and
become regular newspaper readers & listeners to serious news
radio
Please read the requirements for the first assessment, which

incorporates looking at daily oil prices, to help you get into the
swing of things.
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Oil – The Beginnings

In this next section of the lecture
The beginnings of oil industry
Historical development
Yergin Prologue and Ch1
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Oil – Antiquity
First records of oil:
Indians - used it for decoration, skin coloring, medicinal purposes and
various religious practices.
Mesopotamia 3000BC, most famous source was at Hit, on the Euphrates,

not far from Babylon
Form of oil was ‘semi solid oozy substance’ – bitumen or asphalt
It came to the surface through cracks & fissures – seepage
“Whereas many incredible miracles occur in the Babylonian country,

there is none such as the great quantity of asphalt found there” (p24)
Chinese – lighting and cooking as early as 4th Century BC
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Oil – First Uses
Collected from seepages and traded through Middle East:

building mortar
bound the walls of Jericho, Babylon
water proofing & caulking
road making
Used (in a limited & unsatisfactory way) for lighting
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Oil – For Medicine
Medicine:
Bitumen or asphalt seepages
Pliny (1st Century AD), “healed wounds, treated cataracts, a

liniment for gout, cured aching teeth, soothed a chronic cough,
relieved shortness of breath, stopped diarrhea, drew together
severed muscles, relieved rheumatism & fever, straightened
out eyelashes.”
Like ‘snake-oil’ merchants of American 1850’s

These claims have echoes in today’s world, with great claims being
advanced for various herbs & concoctions!
Egyptians used it for embalming their dead!
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Oil – Hydrocarbon gas uses

Bitumen or asphalt seepages: hydrocarbon gases – Some
seepages burned continuously
Led to fire worship in Middle East

Zoroastrianism
Involved the conflict between Mazda (god of light & good) & spirits
of darkness & evil
Religion of the magi, and of ancient Persia – still followed by

Parsees
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Oil – War
Used in warfare
Romans – flaming containers
Iliad (Homer), “ the Trojans cast upon the ship unwearied fire, and
over her forthwith streamed a flame that might not be quenched”
King Cyrus of Persia (attacking Babylon), “We also have plenty of

pitch and tow, which will quickly spread the flames everywhere, so
that those upon the housetops must either quickly leave their posts or
quickly be consumed”
Byzantine empire
Later than 7th Century: for attacking ships, shot on arrow tips, primitive
grenades
Recipe – a state secret
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Oil – In Europe
Similar bitumen or asphalt seepages in Europe: especially
Rumania, where Peasants dug shafts by hand to obtain crude
oil, from which kerosene was refined
“A pharmacist from Lvov, with the help of a plumber, invented

a cheap lamp suitable for burning kerosene”
By 1859, Galicia (Poland) was a thriving kerosene oil business:

more than 150 villages mining crude oil
Kerosene became “a staple of commerce in Vienna”
Source: museum.gov.ns.ca/fossils/finders/gesner.htm
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Oil – The Beginnings in the USA
First records & uses of
oil in USA
Oil seepages:
Oil Creek in Western
Pennsylvania
Known as Rock Oil
Collected by
primitive means -
skimming, wringing
out rags left to soak
up oily water
Medicines and
kerosene industry
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Oil – The Beginnings of Kerosene

Fledgling kerosene industry:
1846-1850 Canadian Dr Abraham
Gesner developed process for
extracting oil from asphalt and coal
for illumination
Called Kerosene – after Keros
and elaion, the Greek words for
“wax” and “oil”.
1854 applied for US patent
1959 New York kerosene refinery
works
5000 gallons a day
34 companies - $5 million
Vienna lamp was being imported &

improved
Couldn’t get enough kerosene to
satisfy market demand
Source: J R Soc Med. 1993 January; 86(1): 43–44
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In Summary
Course
Content
Lectures
Assessment
Tutorials
Historical Development
Three themes
Oil beginnings
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Lecture Conclusion
This is the end of Topic 1, Lecture 1
You may now progress to Topic 1, Lecture 2
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CRICOS Provider No. 00126G copyright © The University of Western Australia

BL Oil & Gas History, Economics and Geopolitics OENA8433

CRICOS Provider No. 00126G copyright © The University of Western Australia

 Economides, M. & Oligney, R. (2000). The colour of oil. Katy:

 Have an overview of the Course

 Comprehend the historical development of oil

 Short modern history

 Oil is about the quest for Mastery

 Oil continues as the global focus

Rolls Royce 1920 Pattern, http://en.wikipedia.org/wiki/Rolls-Royce_Armoured_Car 10

 Please read the requirements for the first assessment, which

Oil – The Beginnings

 Mesopotamia 3000BC, most famous source was at Hit, on the Euphrates,

 Form of oil was ‘semi solid oozy substance’ – bitumen or asphalt

 It came to the surface through cracks & fissures – seepage

 “Whereas many incredible miracles occur in the Babylonian country,

 Chinese – lighting and cooking as early as 4th Century BC

Oil – First Uses

 Collected from seepages and traded through Middle East:

 bound the walls of Jericho, Babylon

 water proofing & caulking

 Used (in a limited & unsatisfactory way) for lighting

 Pliny (1st Century AD), “healed wounds, treated cataracts, a

 Like ‘snake-oil’ merchants of American 1850’s

 Egyptians used it for embalming their dead!

Oil – Hydrocarbon gas uses

 Led to fire worship in Middle East

 Religion of the magi, and of ancient Persia – still followed by

 King Cyrus of Persia (attacking Babylon), “We also have plenty of

 “A pharmacist from Lvov, with the help of a plumber, invented

 By 1859, Galicia (Poland) was a thriving kerosene oil business:

 Kerosene became “a staple of commerce in Vienna”

 Known as Rock Oil

Oil – The Beginnings of Kerosene

 Vienna lamp was being imported &

Source: J R Soc Med. 1993 January; 86(1): 43–44

Vous aimerez peut-être aussi

Economides, M. & Oligney, R. (2000). The colour of oil. Katy:

Have an overview of the Course

Comprehend the historical development of oil

Short modern history

Oil is about the quest for Mastery

Oil continues as the global focus

Please read the requirements for the first assessment, which

Mesopotamia 3000BC, most famous source was at Hit, on the Euphrates,

Form of oil was ‘semi solid oozy substance’ – bitumen or asphalt

It came to the surface through cracks & fissures – seepage

“Whereas many incredible miracles occur in the Babylonian country,

Chinese – lighting and cooking as early as 4th Century BC

Collected from seepages and traded through Middle East:

bound the walls of Jericho, Babylon

water proofing & caulking

Used (in a limited & unsatisfactory way) for lighting

Pliny (1st Century AD), “healed wounds, treated cataracts, a

Like ‘snake-oil’ merchants of American 1850’s

Egyptians used it for embalming their dead!

Led to fire worship in Middle East

Religion of the magi, and of ancient Persia – still followed by

King Cyrus of Persia (attacking Babylon), “We also have plenty of

“A pharmacist from Lvov, with the help of a plumber, invented

By 1859, Galicia (Poland) was a thriving kerosene oil business:

Kerosene became “a staple of commerce in Vienna”

Known as Rock Oil

Vienna lamp was being imported &