History of Oil Industry and Cartels

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Questions and Answers

Which regions had developed large commercial oil production by the end of the nineteenth century?

North America and South America

Western Europe and Central Asia

Baku, Burma, Sumatra, Austrian Galicia, and Romania (correct)

The Middle East and Africa

What technology contributed to the vulnerability of local monopolies in oil production?

Oil drilling rigs

Manual labor systems

Pipelines and bulk tankers (correct)

Coal transportation methods

What was the primary goal of the arrangements created by Standard Oil and European firms in the early 1900s?

To reduce oil prices in North America

To eliminate competition in the Middle East

To control worldwide oil production and marketing (correct)

To innovate new oil extraction techniques

Which company formed an alliance with Shell and Rothschild in 1902?

Royal Dutch Signup and view all the answers

What percentage of the European oil market did Standard Oil agree to limit itself to in the cartel arrangement?

80% Signup and view all the answers

What was the greatest concern for oil companies regarding new sources of petroleum?

Potential new rival enterprises in the Middle East Signup and view all the answers

Which company was involved in a division of Asian sales with the Shell group in 1905?

Burmah Oil Signup and view all the answers

Which cartel was formed to manage the western European kerosene and fuel-oil markets in 1906?

The European Petroleum Union Signup and view all the answers

What year did the British geological survey confirm the oil potential in the area?

1899 Signup and view all the answers

What geographical feature was noted to exude crude oil in the survey?

The Tigris River Signup and view all the answers

Which company negotiated for the concession to build a railway connecting Mesopotamia to Europe?

Deutsche Bank Signup and view all the answers

What major action did Deutsche Bank take in 1904 regarding the oil from Mosul?

Stalled on building the railway and developing oil Signup and view all the answers

Who was the largest investor in Egyptian oil exploration rights after the 1904 resolution between France and Britain?

Ernest Cassel Signup and view all the answers

What was the primary aim of the Eastern and African Concessions Syndicate set up by Cassel's firm?

To monopolise oil rights for the Ottoman Empire Signup and view all the answers

What was indicated about the oil deposits in Egypt in relation to their accessibility?

They were located near the coast of the Red Sea Signup and view all the answers

What reason was given for why Deutsche Bank took steps to prevent Mosul oil from reaching European markets?

To protect investments in Romanian oil Signup and view all the answers

What was the initial site chosen for drilling by D'Arcy's team in 1901?

Chiah Surkh Signup and view all the answers

What was one significant advantage of drilling at Chiah Surkh rather than southern Persia?

It allowed access to a bypass route for pipeline. Signup and view all the answers

How much oil was produced daily from the well struck by D'Arcy's drilling team?

Twenty-five barrels Signup and view all the answers

What factor contributed to D'Arcy finding an investment partner?

Support from British imperialists in India Signup and view all the answers

To which location did Burmah Oil move its drilling operations after suspending work near Baghdad?

Khuzestan Signup and view all the answers

What was the motivation behind the expansion of Britain's Indian empire as led by Lord Curzon?

To establish monopolies in local trades Signup and view all the answers

What significant geopolitical context surrounded D'Arcy's drilling ventures in Persia and the Gulf?

An imperial struggle with Russia Signup and view all the answers

What was the ultimate output of D'Arcy's drilling expedition in terms of market interest?

No interest due to insufficient oil production Signup and view all the answers

What was one of the primary goals of the Ottoman government for the railway beyond troop movement?

To settle refugees and increase grain production Signup and view all the answers

What role did Deutsche Bank play in the Baghdad Railway project?

It guaranteed a return on investment through government subsidies Signup and view all the answers

What caused the delay in the Baghdad Railway project according to the content?

Tactical reasons pertaining to oil production Signup and view all the answers

What was the situation of the Ottoman government's agricultural revenue since the 1870s?

It was disrupted by the influx of cheap American grain Signup and view all the answers

Why was the construction of the railway to Baghdad initially stalled according to Deutsche Bank?

They had no interest in oil development at first Signup and view all the answers

What led to the project moving forward after initial obstacles?

A successful oil discovery was made in neighboring Persia Signup and view all the answers

What was a consequence of the exclusive railway and petroleum concessions?

It prevented other firms from developing oil resources Signup and view all the answers

What was the impact of the Young Turk Revolution on the Baghdad Railway project?

It resulted in a shift toward cooperation with Britain Signup and view all the answers

What factor enhanced the power of the oil companies in controlling the workforce?

Wide-ranging political and military support Signup and view all the answers

What was a primary strategy employed by the fledgling British company regarding oil distribution?

Constructing pipelines and securing local protections Signup and view all the answers

How did the properties of oil compare to earlier energy sources like coal?

Oil had more fluid and transportable properties Signup and view all the answers

Which aspect of oil's control was often overlooked in conventional narratives?

The role of the oil-producing workers Signup and view all the answers

What is described as 'the prize' in the struggle for oil mastery?

Mastery over the world’s petroleum Signup and view all the answers

In what way were oil workers’ experiences different from those of coal workers?

They faced more isolation and disconnection Signup and view all the answers

What was claimed by the British company regarding oil investment in Persia?

That it should benefit from Royal Navy protection Signup and view all the answers

What misconception does the conventional narrative about Middle Eastern oil often propagate?

That major oil companies were the only influential players Signup and view all the answers

What was the primary aim of the American diplomat's visit to Istanbul?

To assess support for the concession to enhance American trade. Signup and view all the answers

Who led the group that established the Turkish Petroleum Company?

Ernest Cassel Signup and view all the answers

What was a significant consequence of the German influence on the American concession?

Denial of final approval for the American concession. Signup and view all the answers

How did Anglo-Persian Oil Company respond to the threat from Shell's group?

By seeking support from the British government. Signup and view all the answers

What was the strategic importance of Mesopotamian oil for Anglo-Persian Oil Company?

It could potentially impact the large Indian market. Signup and view all the answers

What role did the Ottoman Public Debt Administration play in Anglo-Persian's plans?

It vetoed customs duties to support railway loans. Signup and view all the answers

What was the outcome that Anglo-Persian Oil Company feared if Shell gained control of Mesopotamian oil?

A possible drop in oil prices and market manipulation. Signup and view all the answers

What was the reaction of the Turkish government to the consortium of British financiers?

They allowed British financiers seats on the board of the company. Signup and view all the answers

Study Notes

Chapter 2: The Prize from Fairyland

Oil discovery in the Middle East is often misrepresented, starting wrongly with Masjid-i-Suleiman in 1908.
A small team of British explorers, searching for oil in Persia, discovered extensive reserves.
Discovery led to the establishment of BP and the modern petroleum industry in the region.
Existing oil reserves in other parts of the Middle East were overlooked.
The aim of the search in Persia was not to develop the region's oil industry but to delay its development.

Main Feature of Middle Eastern Oil

Throughout the 20th century, there was always too much oil, concentrated in a few locations.
Abundant resources like water, timber, solar energy, and grassland often support thriving communities.
Concentrated oil resources create problems, as firms can frequently collaborate to restrict its availability.
Control over the extraction and distribution is crucial.
Significant political power is embedded in the control of oil supply

Oil Company Control and Challenges

Companies controlling oil production and distribution faced significant challenges compared to coal companies.
Oil companies needed outside support (military and financial) to control and manage resources.
Oil companies had difficulties in controlling the labor and logistical structures.
Power of oil companies has expanded over time, especially concerning their supply networks.
Oil companies developed strategies and strong political power to control and delay the development of new oil resources.

Third Misunderstanding of Oil

Oil companies were never strong enough to monopolise oil production entirely on their own.
They needed the support of well-armed states and government resources to exert control over supply and distribution.
They portrayed oil control as beneficial for the 'public good' and 'national interest,' thus gaining support from political leaders.
This portrayal often obscured the real motives concerning oil profits and the implications that control of resources like oil can have on democracy.

A Veritable Lake of Petroleum

Many oil enterprises were involved in pre-twentieth century oil production.
Crude petroleum was discovered in various parts of the world.
Developments in technologies for oil transportation greatly improved after the 1880’s.
Methods are devised to control supply and distribution over large distances.
Various businesses have emerged in oil industries including; drilling, transporting, refining, and marketing, and in various forms of business organization.

Ways of controlling the supply (Methods for control)

Companies developed control over various parts of the production and distribution process.
They gained control over refineries and pipelines, storage, transport, and marketing.
They established their own networks which replaced independent business actors.
Company networks included the infrastructure for logistics.

Oil in the Middle East and Global Power Dynamics

Oil regions were challenging to control, especially the Middle Eastern ones.
Companies were often competing to control access and production.
The companies' aim was largely about delaying development rather than immediate production of oil.
Power dynamics and relations between companies and governments played a significant role in oil exploration and development.
The development of oil-production was influenced by various political and military interactions between major powers or states and companies.

Further Challenges (difficulties in controlling)

Difficulties in maintaining control over oil supply, production, and distribution.
Oil transportation hurdles posed a significant challenge.
The nature of the location of oil and associated infrastructure posed difficulties in controlling it.

Key players in the Oil Landscape

Large corporations (e.g. British companies and their allied entities) played dominant roles.
Key governments (e.g., British, American, etc) were actively involved in supporting (implicitly or explicitly) these companies to exert control over the oil resource.
Control of oil resources has become a significant aspect of national and global power dynamics.

Conclusion

The story of oil in the Middle East is complex, tied to global dynamics, economic forces and a struggle of power
Companies used various tactics to secure control of oil. including delays in development
The desire of companies to restrict access to oil and to control the distribution of it was very effective in some cases.

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Description

Test your knowledge on the development of the oil industry, its major players, and the cartels formed in the late 19th and early 20th centuries. Explore the technological advancements and strategic alliances that shaped the oil markets in Europe and beyond. This quiz will challenge your understanding of key historical events and figures in the oil business.