Oil and the Middle East Flashcards
Edwin Drake
First person to strike oil in US (Pennsylvania) extracting oil + storing it in barrels = becomes oil unit of measurement - at time fuel for lamps + lubricant - dawning realization that new forms of transport will need oil - lots of it
The Seven Sisters Oil Companies
Exxon, Gulf, Texaco, Mobil, Socal, British Petroleum, and Royal Dutch Shell
Big industrial powers: mediated huge multinational oil companies
Early 20th c sources of oil supply
W hemisphere of MEX, RUS, Romania, Indonesia (Dutch E Indies), after 1908 Iran (Persia) emerged as producers
□ Then 20th c mid - emergence of middle East states - emerge as major oil producers
W hemisphere of MEX, RUS, Romania, Indonesia (Dutch E Indies), after 1908 Iran (Persia) emerged as producers
□ Then 20th c mid - emergence of middle East states - emerge as major oil producers
what impact did oil in the middle east have
§ Later in 20th c see impact of emergent nation states in production areas - want real access to the wealth - emergent states in the middle east
Western Powers + Oil
main initial: US + UK - two most powerful countries in world - mainly capitalist entrepureurs - nature of oil industry demanded big companies - had to undertake risky operations (like looking for oil, $$$ + no guaranteed success)
Who is the primary example of an Oligacholy/Monopoly
J D Rockafeller
est standard Oil, special dominance in transportation of oil + refinement - controlled 95 of refining capacity in US + almost all transport of oil (pipelines etc) hugely dominant
US progressive movement + consequences on oil co monopolies
independent poli phenomenon - liked efficiency + hated corruption + huge abusive monopolies + trusts - began to prosecute these cases: use US justice - Stnd Oil via Sherman anti-trust act of 1890 - Standard forcibly broken up in 1911* - retained close links with each other - daughter co’s became big US oil co’s - NJ = Esso -> Exon, etc
Sherman Anti-trust act 1890
a US law that prohibits monopolies and other business practices that restrain trade
Marcus Samuel
Samuel’s company combined with Royal Dutch Petroleum to create the Royal Dutch/Shell Group
William D’arcy
} Anglo-Persian Oil co - formed by combine of investors backing William D’arcy looking for Oil in Persia + found oil in 1908 - private enterprise
– UK royal navy - converting into diesel engines + wanted to secure supply of oil for royal navy -> sus of Dutch co, went with for Brit purchase interest in Anglo-Persian Oil co -> becomes crown corps
reason for Oil inc amount of collabouration
saw how inelastic oil market was - didn’t benefit them getting in production wars - made sense to claim own slice of pie + break up market = cartel - secret cartel arrangements
Achnarry Agreement 1928
carved up oil market illegally
Red-Line Agreement 1928
oil co’s looking at middle E - using thick red grease pencil - decide who got access to what investment opportunities in M.E - provided for fact that once starting to produce oil they would control the supply - did not want huge glut of oil
Battle of the Atlantic
a key part of World War II that involved the transportation of oil and other supplies across the Atlantic Ocean to Britain and Europe - trying to interdict US oil coming to Uk
US Bombing of Germany (Oil)
US Airforce realized they should hit oil conversion facilities in Germany - big chemical companies had dev conversion co’s that converted coal + shale into oil - when Nazi’s came to power wanted access into this tech + invested heavily b/c wanted autocracy
– Summer 1944 hitting facilities systematically - germ run out of fuel
Oil Rivalry between UK + US
-> Entrance of Middle East in big way -
◊ After dismantlement of Ottoman Emp after WW1 - BRIT Dominated the middle east - countries became BRIT protectorates + princedoms
} France had Syria
} UK thought ME would be their Texas - US took offense to this, did not want to be locked out of ME - State dept pushed cos to enter ME + backed them
– 1922 oil combine is set up in Iraq - US elbowed their way in - successful - same for Kuwait in 1934: lots of oil, Gulf enters deal to exploit oil w Anglo-Persian oil
Arab League (1945)
} US put pressure on UK to back off politically - give them at least nominal independence
– Egypt + Iraq* independent - by 40’s more autonomy + formed club of independent Arab countries -> Arab League (1945)
org members: Egypt, Iraq, Transjordan, Lebanon, Saudi Arabia, Syria, and North Yemen
Ibn Saud
founder and first king of Saudi Arabia, responsible for the country’s wealth as an oil producer. He started the search for oil in Saudi Arabia and signed agreements with foreign companies to explore for it.US mainly access - not under UK dominion - US oil co’s get in there 1933 - Saudi Arabia had biggest oil reserve in the word - all big US co’s were in there + big conglomerate: RAMCO** - exempt form local laws, taxes - very adv to oil co
Saudi post WWII
US invest heavily in Saudi + built up pumping, refining, pipelines etc - by 1950’s producing almost half the oil in the world - above 1/2 by 1970
hydrogenation
a chemical process that adds hydrogen to oils and fats to improve their stability and shelf life
challenges to Anglo-American Oil dominance
oil co’s boycotted by oil producing countries, wanted to nationalized -> crippled by oil co’s (MEX, Russia, Iran) all failed
Venezuela + oil shocks
instead of nationalizing just asked for more royalties (50%) big oil relieved that not extreme so agreed - Big co’s passed on to consumers = Venezuelan oil more expensive - went to middle east and pushed them to make same deal
OPEC Organization of Petroleum Exporting Countries
suggested that if producer countries got along they could get moreearly 70s OPEC all took control of subsoil Oil - Oil co forced back into marketing + transport - producing countries now control price b/c can collaborate to control supply to keep the price up
1970s oil shocks
□ Heavy inflation in 1970s - price hikes - Oil: prices went up - see pics - production areas ruled by autocratic kings; vast shift of wealth + could shower pop w benefits + have foreign workers - did not have to provide Liberal dems - w/o poli reforms
