The 19th century was a period of great change and rapid industrialization. The iron and steel industry spawned new construction materials, the railroads connected the country and the discovery of oil provided a new source of fuel. The discovery of the Spindletop geyser in 1901 drove huge growth in the oil industry. Within a year, more than 1,500 oil companies had been chartered, and oil became the dominant fuel of the 20th century and an integral part of the American economy.
Many of the early explorers of America encountered petroleum deposits in some form. They noted oil slicks off the coast of California in the sixteenth century. Louis Evans located deposits along the eastern seaboard on a 1775 map of the English Middle Colonies.
Did you know? In 1933, Standard Oil secured the first contract to drill for oil in Saudia Arabia.
Settlers used oil as an illuminant for medicine, and as grease for wagons and tools. Rock oil distilled from shale became available askerosene even before the Industrial Revolution began. While traveling in Austria, John Austin, a New York merchant, observed an effective, cheap oil lamp and made a model that upgraded kerosene lamps. Soon the U.S. rock oil industry boomed as whale oil increased in price owing to the growing scarcity of that mammal. Samuel Downer, Jr., an early entrepreneur, patented “Kerosene” as a trade name in 1859 and licensed its usage. As oil production and refining increased, prices collapsed, which became characteristic of the industry.
The first oil corporation, which was created to develop oil found floating on water near Titusville, Pennsylvania, was the Pennsylvania Rock Oil Company of Connecticut (later the Seneca Oil Company). George H. Bissell, a New York lawyer, and James Townsend, a New Haven businessman, became interested when Dr. Benjamin Silliman of Yale University analyzed a bottle of the oil and said it would make an excellent light. Bissell and several friends purchased land near Titusville and engaged Edwin L. Drake to locate the oil there. Drake employed William Smith, an expert salt driller, to supervise drilling operations and on August 27, 1859, they struck oil at a depth of sixty-nine feet. So far as is known, this was the first time that oil was tapped at its source, using a drill.
Titusville and other towns in the area boomed. One of those who heard about the discovery was John D. Rockefeller. Because of his entrepreneurial instincts and his genius for organizing companies, Rockefeller became a leading figure in the U.S. oil industry. In 1859, he and a partner operated a commission firm in Cleveland. They soon sold it and built a small oil refinery. Rockefeller bought out his partner and in 1866 opened an export office in New York City. The next year he, his brother William, S. V. Harkness, and Henry M. Flagler created what was to become the Standard Oil Company. Flagler is considered by many to have been nearly as important a figure in the oil business as John D. himself.
Additional discoveries near the Drake well had led to the creation of numerous firms and the Rockefeller company quickly began to buy out or combine with its competitors. As John D. phrased it, their purpose was “to unite our skill and capital.” By 1870 Standard had become the dominant oil refining firm in Pennsylvania.
Pipelines early became a major consideration in Standard’s drive to gain business and profits. Samuel Van Syckel had built a four-mile pipeline from Pithole, Pennsylvania, to the nearest railroad. When Rockefeller observed this, he began to acquire pipelines for Standard. Soon the company owned a majority of the lines, which provided cheap, efficient transportation for oil. Cleveland became a center of the refining industry principally because of its transportation systems.
When product prices declined, the ensuing panic led to the beginning of a Standard Oil alliance in 1871. Within eleven years the company became partially integrated horizontally and vertically and ranked as one of the world’s great corporations. The alliance employed an industrial chemist, Hermann Frasch II, to remove sulfur from oil found at Lima, Ohio. Sulfur made distilling kerosene very difficult, and even then it possessed a vile odor—another problem Frasch solved. Thereafter, Standard employed scientists both to improve its product and for pure research. Soon kerosene replaced other illuminants; it was more reliable, efficient, and economical than other fuels.
Eastern cities linked to the oil fields by rail and boat boomed also. The export trade from Philadelphia, New York, and Baltimore became so important that Standard and other companies located refineries in those cities. As early as 1866 the value of petroleum products exported to Europe provided a trade balance sufficient to pay the interest on U.S. bonds held abroad.
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