Thursday, June 30, 2011

Review of Petrolia: The Landscape of America's First Oil Boom by Brian Black

Yesterday's quote of the day describing the Oil Creek area of Pennsylvania was from a book called Petrolia: The Landscape of America's First Oil Boom by Brian Black.

Black relates a tale that will be familiar to contemporary natural gas investors. "[Lease] conditions impelled a producer to drill wells when the market price [of the commodity] did not warrant the expense. Lessees often overdrilled to keep from forfeiting" their leases. This is going to be an inherent problem with the drill-to-hold acreage provisions in leases. Maybe there is a better way of negotiating this problem, which would benefit landowners and producers?

When I read books about turn of the 20th century commerce, I like to imagine myself landing in that time and building up wealth in the rich entrepreneurial environment. You could have established your bankroll in Oil City, PA by bringing in provisions from Titusville, which was only 15 miles away but apparently good for a 20% spread. If this is true, assuming a trip every other day, you could have probably increased your capital several-fold every month!

Mundane tasks have always paid really well in booms. Other example businesses were selling drinking water in the streets or bringing in large quantities on wagons. Investing in a building in a boom town would have been a huge mistake, because the utility was more ephemeral than people realized, and susceptible to fire and flood. A fleet of wagons could have moved from boom town to boom town, shipping goods in and barrels full of oil out. (No deadheading, even!) The teamsters charged more than the wellhead price just to ship the barrels to Titusville! However, at the first sign of pipelines, you would have wanted to sell the wagons.

Black complains that no effort was made to come up with new industries to employ the teamsters when pipelines came along, or to employ other laborers when oil ran out and speculation moved to another town. He says that "industrial rationalization would never allow such humanitarianism to penetrate the utilitarian logic" of an oil town. He fails to realize that no one wanted to live in these towns long-term - men did not even bring their families to the dirty, dangerous, temporary towns. It is presumptuous of him to suggest ways to spend oil entrepreneurs' money when the fact is that these laborers obviously went back to their families and took other jobs.

I would never have picked this up had I known that Brian Black was a Professor of History and Environmental Studies. Not that I don't care about the environment, but all the hand-wringing about messy wells and oil shipment in the early days was tiresome. Remember that Pennsylvanians discovered oil in the first place because it oozed to the surface naturally, being a product of nature.

Another reviewer suggests that Black sought to "understand how Americans turned the utter destruction of a peaceful rural valley and its communities into a cause for national celebration". He doesn't come up with an answer, but I can give him one. Fossil fuels liberated humanity from darkness and manual labor. Of course people were excited. There would be a lot fewer history professors without cheap energy.

2/5 instead of 1 because it was thought provoking.

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