Ask Google about the discovery of oil. It will tell you oil was discovered in 1859 in northern Pennsylvania.
This is not exactly true.
1859 marked the beginning of the modern history of oil, but the world had flirted with oil for about 4000 years. Much can be learned from this torrid romance.
Oil before our time
Babylonians, Byzantines and Greeks all knew petroleum oil could ignite! Also, oil was used in lighting as far back as 4,500 BCE.
Yet, when lamps popularised in Egypt by the Ptolemaic (beginning 305 BCE) and Roman (beginning 30 BCE) periods, the fuel of choice was olive oil rather than petroleum oil. Why?
Technology [the lack thereof], of course. Easy answer. But how?
There were five challenges that oil had to overcome to be useful, the “4A+A”: availability, accessibility, acceptability, adaptability, +affordability (cf. APERC).
To begin, petroleum oil was less available than olive oil because back then people had to wait for it to erupt from the ground. There was simply not enough of it as to allow widespread usage.
Petroleum oil was also not as easily adaptable as olive oil. It spurs from the ground as bitumen, a gooey substance. Lamps of the time used wicks. Bitumen is too thick for wicks.
Oil became more available over time, and adaptable about a thousand years later thanks to the process of distillation [probably] developed by the Arab alchemist Muhammad ibn Zakariya Razi –Al-Razi — by the end of the 9th c. CE.
Additionally, Al-Razi also focused on enhancing the acceptability of petroleum oil by paying attention to it being ‘safe to light’. Safety is still a big concern when it comes to fuels like kerosene, diesel, or gasoline. You would certainly not fill your car tank with gasoline if cars exploded regularly.
Thanks to improvements in availability, adaptability, and acceptability, by the 12th century CE, kerosene was such a basic commodity that it could be easily purchased in the streets of Damascus. An entire industry developed – we have evidence of this from none other than Marco Polo himself:
To the north lies Zorzania [Georgia], near the confines of which there is a fountain of oil which discharges so great a quantity… In the neighbouring country no other is used in their lamps, and people come from distant parts to procure it.
Kerosene lamps faded in parallel with the decline of science in the Middle East.
Obviously, the demise of the early Islamic oil industry is the result of a combination of challenges to accessibility. Oil trading became unfeasible. However, accessibility alone does not explain why Europe did not develop its own oil industry. As it turns out, Europe had oil. Oil seepages were mentioned in a book written by a polish Jesuit in 1721 in a way that evidences centuries-old knowledge of oil. Furthermore, technological know-how existed: distillation was achieved in Europe during the middle ages?
Why did the European oil industry not develop?
In Europe oil was simply not an affordable investment. There is no need to take my word for it. Some people tried to make a business of oil during this time. They tried hard!
An example was Joseph Hecker (cf. Frank & Forbes). In 1810, Hecker found a promising source of oil in the Galician region — in the town of Drohobycz (modern Western Ukraine). Hecker knew how to distil and found that he could convert 40% of this oil into kerosene. This enabled him to get a contract to provide the fuel for Prague’s lighting in 1816. However, he was forced to default on his contract due to a combination of complications in the amount of oil his well yielded (availability) and transportation (accessibility). Hecker could have always dug more shafts, of course, but this was financially unfeasible once you considered costs and profits.
Whereas Al-Razi’s story shows that synergy can be found between ‘4A+A’ factors, Hecker’s shows that the opposite can also happen. Imbalances between the ‘4A+A’ factors can decrease the competitiveness of oil.
The situation started to turn around once again with the Galician re-discovery of distillation and the re-invention of the kerosene lamp.
In 1852, Ignacy Lukasiewicz, a pharmacist from Lviv, a town neighbouring Drohobycz, perfected the process of distillation developed by his mentor Jan Zeh. They recruited a local tinsmith, Adam Bratkowski, to help them build a kerosene lamp. The men soon got in touch with Lviv’s hospital, where their kerosene lamp enabled the first night-time emergency surgery in history, in 1853. The scale of these efforts, however, was limited.
Similar stories were unfolding elsewhere.
The Absheron Peninsula, home to Baku and part of Tsarist Russia in the mid-1800s, saw the first attempts to drill for oil using earth augers. Russians dug to a depth of 21 metres in Absheron in 1948, the same depth that Bissell and associates would reach a decade later in Pennsylvania. Nonetheless, the gains in availability were offset by long distances and stringent tax policies.
Finally, the definitive oil-meets-entrepreneurship event took place in Titusville, Pennsylvania, in 1859 when Bissell and associates joined into the Pennsylvania Rock Oil Company. Oil was struck at a depth of 69 feet (21 metres) on August 27, 1859. The well is said to have yielded somewhere between 20–35 barrels a day, which sold for about $20 per barrel (cf. Tarbell& Robinson).
The 4A+A factors aligned once more. Bissell’s use of salt drilling techniques to extract large oil quantities (availability), their proximity to markets (accessibility), the market desire for a substitute for oil and lard oils (acceptability), and the ability to distil oil (adaptability), all came together to improve the +affordability of oil.
Solving the 4A+A in an integrated manner proved key to the historical success of the early oil industry pioneers. Twice. In both cases, those who managed the feat redefined the energy industry.
If history is any indication, thus, modern entrepreneurs who only partially tackle 4A+A challenges may find some success, but their success will be as fragile as Hecker’s. Instead, those who tackle the big challenges and figure out ways to sync solutions to the 4A+A challenges will find a more resilient success and will enjoy the social and political capital that is needed to redefine an industry.
Parts of this article are an abridged view into the author’s recent study about The Future of Oil. Find the full study here.