Oil - Setting The Scene For Wars - 1
Inception of A Corporatised World
Oil is responsible for giving birth to companies which would, in times to come, grow bigger than many economies of the world. This beginning was heralded by surfacing of a personality called John D. Rockefeller of Ohio. Rockefeller saw great fortunes in distribution of petrol rather than in just production.
Year 1870 marked the birth of Standard Oil Company with Mr Rockefeller at the top and it was not long before the company was dictating the fate of US oil industry. By building a strong cash position, the company manipulated the markets without much scruples and evolved into what we call a multinational today. Its manipulative practices drove many competitors to bankruptcy.
Three decades of Standard Company’s reign finally woke the press up and it launched a scathing attack resulting in the US government’s massive lawsuit against the company. A great legal battle ensued which resulted in declaration of the company as monopoly and its splitting in 34 companies. But in course of time, these split subsidiaries too grew in monstrous proportions. Global oil giants of today like Exxon, Chevron and Mobil are none other than these Standard’s offsprings known formerly as Standard Oil of New Jersey, Standard Oil of New York and Standard Oil of California etc.
By the end of the century, companies such as General Motors, Wal-Mart, Exxon Mobil, Ford, and Daimler Chrysler were richer than entire nations. By the year 2000, of the world’s one hundred leading economies, fifty-one were corporations.
Europe Catches On
It did not take too long for Europe to join the oil club. In the last quarter of 19th century, Europe was utilizing US kerosene and it was a hefty source of revenue for US, more so for Standard Oil. But with the dawn of 20th century, usage of oil greatly increased in Europe and this attracted several players. Next was the find of oil in Baku, Russia. Rothschild of France headed for Asia after his attempts to takeover European markets were frustrated by Standard Oil. In the mean time, one Mr Marcus Samuel founded ‘Shell’ in London. Then there was ‘Royal Dutch”. Thus began the tussle for corporatization of the world.
Of course oil did not confine itself to domestic users. It was not too long before the oil trickled down in the military brains. Britain, Germany and several others quickly realized the superiority of oil over coal in powering battle fleets. None of these powers had oil of their own and still the advantages petroleum were too numerous to ignore. Of course, in times to come, this inevitably would give rise to a branch of diplomacy known as oilomacy. These great powers would do anything conceivable to retain their hold on world’s oil fields.
Soon oil became the military life line. Petroleum made a hell and heaven difference to military paraphernalia. Speed, acceleration, light weight, cheapness, all these qualities of this wonder liquid went on to introduce a new concept of war to humanity, a war which was far more lethal, a war which could quickly engulf the globe as a whole.
Availability of petroleum ushered in an unprecedented race amongst two great powers of the time, Germany and Britain.
Wilhelm II of Germany desired to construct a formidable German navy which could tie in with German ambitions in the colonial and commercial spheres, threatening British domination in these areas. The Kaiser entrusted the establishment of this German navy to his Naval Minister and close advisor, Grand Admiral Alfred von Tirpitz.
Motivated by Wilhelm's backing and his own enthusiasm for an expanded navy, Tirpitz championed four Fleet Acts from 1898 to 1912. The German program was enough to alarm the British and drive them into the alliances with France and Russia.
Under the direction of Admiral Jackie Fisher, the First Sea Lord from 1903 to 1910, the Royal Navy embarked on its own massive expansion to keep ahead of the Germans. The cornerstone of British naval rearmament was to be the revolutionary battleship Dreadnought, which was launched in 1906. From then on until 1914, the British and Germans vied with each other to construct superior numbers of battleships, submarines, and other naval vessels and weaponry. This arms race, based on imperialistic ambitions just needed a spark to explode into a great ruinous war.
First World War
First Oil Propelled War
Modern warfare, which inflicts far more casualties than a conventional one, is one of the many gifts of oil. It is only due to this dense energy product that the wars drag on for years and each time more deadly weapons are introduced with carnage growing exponentially.
In fact, the very concept of World War is actualized by discovery and subsequent usage of oil. Without this fossil fuel, the war zones could not have spread globally.
The origins of World War I were complex and included many factors, including the conflicts and antagonisms of the four decades leading up to the war.
After the onset of the Great Depression of 1873 in Britain, the sun began to set on the British Empire. By the end of the 19th Century, British industrial excellence was headed for a decline. The decline paralleled an equally dramatic rise of a new industrial Great Power on the European stage, the Germany. Germany soon passed England in output of steel, in quality of machine tools, chemicals and electrical goods. Beginning the 1880’s a group of leading German industrialists and bankers recognized the urgent need for some form of colonial sources of raw materials as well as industrial export outlet. German goods were of a superior quality and still lacked markets. Much later, this ire amply reflects in Hilter’s calling Great Britain a ‘shopkeeper’s nation’. With Africa and Asia long since claimed by the other Great Powers, above all Great Britain, German policy set out to develop a special economic sphere in the imperial provinces of the debt-ridden Ottoman Empire. The policy was termed “penetration pacifique” an economic dependency which would be sealed with German military advisors and equipment. Initially, the policy was not greeted with joy in Paris, St. Petersburg or London, but it was tolerated. At the heart of this expansion policy laid the Berlin-to-Baghdad railway project, a project of enormous scale and complexity that would link the interior of Anatolia and Mesopotamia (today Iraq) to Germany. What Berlin and Deutsche Bank did not say was that they had secured subsurface mineral rights, including for oil along the path of the railway, and that their geologists had discovered petroleum in Mosul, Kirkuk and Basra.
The immediate origins of the war lay in the decisions taken by statesmen and generals during the July crisis of 1914, the spark for which was the assassination of Archduke Franz Ferdinand of Austria-Hungary by a Serbian irredentist. The crisis did not however exist in a void; it came at the end of a long series of diplomatic clashes between the Great Powers in the decade prior to 1914 which had left tensions high almost to a breaking point. In turn these diplomatic clashes can be traced to changes in the balance of power in Europe since 1870. But if we were to blame one single object for the scale of catastrophe, it was petroleum without which war’s scope would have been limited in terms of time and space.
The belief that a war in Europe would be swift, decisive and "over by Christmas" is often considered a tragic underestimation; if it had been widely thought beforehand that the war would open such an abyss under European civilization, no one would have prosecuted it. Ivan Bloch, an early candidate for the Nobel Peace Prize, had predicted that an industrial warfare would lead to bloody stalemate, attrition, and even revolution on scales never witnessed before.
The one single factor that changed the course of war was British access to Iranian oil through a company known as Anglo-Iranian Oil.
In the first World War, in 1916, the combustion engine changed all the rules of the game. Fueled by petroleum, combustion engine increased mobility on the battlefield, spreading the conflict over a far greater area than any one could had ever imagined. War dynamics, dating back to thousands of years, overnight changed. The new fighting paraphernalia overwhelmed the best of infantry and cavalry. All because in the veins of these war machines flowed the potent liquid, petrol.
Over 13 million people perished and millions more were wounded during the four-year conflict.
Air warfare was also a new addition. Towards end of the war, Britain, Germany and France had ended up producing more than 1,50,000 planes. This war also saw the introduction of tank for the first time, and also cars, trucks and motorcycles.
It took huge quantities of oil to supply both sides’ war effort. Oil production at Iranian wells was increased ten fold. Britain, captured Baghdad to further boost the supplies. Still France and Britain faced an acute shortage.
Germany’s oil problems were worse. Allied naval blockade had cut off its supplies, leaving it with only one other option- the oil fields of Romania. Germans tried their best to capture Romanian fields but British army ahead of it, sabotaged the oil machinery. November 11, 1918 marked the day when a desperate Germany, faced with a serious oil shortage for the winter ahead, surrendered.
The decisive relationship of war and oil first emerged in the First World War. Britain, with its colonial control over Iranian oil, had a decisive advantage over the German-led Axis powers, allowing the Allies to "[float] to victory on a wave of oil," in the words of Britain's Foreign Secretary Lord Curzon.
In countless ways, World War I created the fundamental elements of 20th century history. Genocide emerged as an act of war. So did the use of poison gas on the battlefield. The international system was totally transformed. On the political right fascism came out of the war; on the left a communist movement emerged backed by the Soviet Union. Foundation was laid for America to become a world power. Of course until 1892, the United States was a second grade state at best and not even considered enough a contender at the table to warrant posting a full Ambassador level diplomatic mission. It was hardly played any serious role in European or Eurasian affairs. The Great Powers included Great Britain, France, the Austro-Hungarian Empire and Russia. After its defeat of France in 1871, Germany too joined the ranks of the Great Powers, albeit as a latecomer. After the world war 1, The British Empire reached its high point and started to unravel. Britain never recovered from the shock of war, and started her decline to the ranks of the second-class powers. At the peace conference of 1919, the German, Turkish, and Austro-Hungarian empires were broken up.
One thing was all too obvious after the World war 1- have oil or perish. There started frantic search for oil in different parts of the world. New fields were discovered in US, Mexico etc, but cynosure of all eyes was Middle East. Before the great war, US was a bystander as far as Middle East was concerned but now it too developed a keen interest in the region. Likewise there was much pushing and pulling, diplomatic maneuvers and once again the time arrived for another war.
Second Great Oil War
Just as the war was ending, German Nationalists like Hitler gathered millions who rejected the peace and blamed Jews and Communists for their defeat. The road to the Second World War started there.
The Standard Oil group of companies, in which the Rockefeller family owned a one-quarter (and controlling) interest, was of critical assistance in helping Nazi Germany prepare for World War II. This assistance in military preparation came about because Germany's relatively insignificant supplies of crude petroleum were quite insufficient for modern mechanized warfare; in 1934 for instance about 85 percent of German finished petroleum products were imported. The solution adopted by Nazi Germany was to manufacture synthetic gasoline from its plentiful domestic coal supplies. It was the hydrogenation process of producing synthetic gasoline and iso-octane properties in gasoline that enabled Germany to go to war in 1940 — and this hydrogenation process was developed and financed by the Standard Oil laboratories in the United States in partnership with I.G. Farben.
Evidence presented to the Truman, Bone, and Kilgore Committees after World War II confirmed that Standard Oil had at the same time "seriously imperiled the war preparations of the United States."(Elimination of German Resources,p. 1085).
During World War II Standard Oil of New Jersey was accused of treason for this pre-war alliance with Farben, even while its continuing wartime activities within Himmler's Circle of Friends were unknown. The accusations of treason were vehemently denied by Standard Oil.
By the Second World War, the scramble for oil was a strategic priority on all sides. "The Japanese attacked Pearl Harbor to protect their flank as they grabbed for the petroleum resources of the East Indies," author Daniel Yergin wrote in his history of oil titled The Prize. "Among Hitler's most important strategic objectives in the invasion of the Soviet Union was the capture of the oil fields in the Caucasus. But America's predominance in oil proved decisive, and by the end of the war, German and Japanese fuel tanks were empty."
In this way, twenty years after the end of World War I, once again all the world powers knew that oil would make the difference between victory and defeat. The US once again used its plentiful oil fields to supply its own war needs and those of Great Britain. But Germany, just as in the First World War, was forced to undertake a risky strategy to capture foreign oil supplies.
Germany had two goals in mind - first capture Baku oil fields and then head for Middle East. A cut off fuel supply lines was synonymous with defeat.
Fuel shortages continued to haunt both sides as the war went on. General Rommel of the Afrika Korps, the best tank division Germany possessed, had to retreat in North Africa when the allies destroyed his refueling lines of supply. ‘My men can eat their belts’ he said, ‘but my tanks gotta have gas.’ was the comment made by General George Patton when faced with reversals.
Japan was very poor in most of natural resources, and it had to rely on import of these resources to function as a modern state. Among many natural resources, oil was one of the most crucial strategic materials that Japan desperately needed. Japan could not produce oil, within its borders, even for 10% of its domestic consumption. At the time, Japan had relied very much on the US, which supplied Japan about 80% of oil that was consumed in the island-nation. In other words, the power of life or death was in the hand of the American president. And President Roosevelt decided to choke Japan by keeping all oil, not even one drop, from going to Japan to make it comply with the demand of the US. Japan had also tied an economic treaty with Netherlands, which promised Japan the supply of oil (approximately 13% of the oil need) from the Dutch East India (Indonesia). However, the Dutch broke the treaty and followed the America’s oil embargo in August of 1941 as well. That meant that there was no oil supply for Japan from the outside world, and the Japanese leaders had to find an alternative way to gain oil. Only option that the Japanese leaders could come up with was to take the Dutch East India and control oil fields. However, it was clear that if Japan just moved to south the war would become inevitable. The oil stock Japan had was only for a year and half, and time was running out. The Japanese leaders had to make up their minds as quickly as possible. If the war was unavoidable and they chose to fight, the longer they would wait the lesser the chance for victory would be because of the limited oil stock, which would be spent even during the peace time.
The final decision the leaders of Japan made was war, though most of them knew that their chance to beat the US was very slim, and on December 7th in 1941, the Japanese airplanes launched from the aircraft-carriers carried out a surprise attack on the US military bases in Pearl Harbor, Hawaii.
US was already on alert about Japan’s imperial ambitions and had moved the American fleet from California to Pearl Harbor.
President Roosevelt had hoped that oil embargo would make them come to the bargaining table instead they came to pearl harbor, and Singapore etc.
Hoping to catch US by surprise they thought they may be able to buy time to expand deeper into western Asia to secure much needed oil, raw materials, and farmland. They believed that if they were going to spread westward they were going to have to disable the US fleet to give themselves a running start.
The December 7, 1941 attack destroyed a significant part of the fleet. But there was another blunder on their part. They failed to target the four and a half million barrels of oil stored at Pearl Harbor. This fuel saved American forces from getting completely immobilized in Pacific.
The turning point in the Pacific War was the battle of Midway in June 1942. From then on, the Allied forces slowly won back the territories occupied by Japan. In 1944, intensive air raids started over Japan. In spring 1945, US forces invaded Okinawa in one of the war's bloodiest battles. A key aspect of the US Navy's Pacific strategy was an intense campaign against Japanese commercial shipping. This blockade, primarily targeting oil, was spearheaded by US Navy submarines. A blockade proved the most effective means of attacking Japan's oil
With each defeat, Japan saw its access to oil dwindle. The US navy was sinking every Japanese oil tanker before it could return home from the Dutch East Indies and the Japanese Navy didn’t have enough fuel to leave its home base. Oil, like that of many others, was instrumental in deciding Japan’s fate too. Atom bombs made Japan surrender but it was oil paucity that defeated Japan by crippling its army and rendering its navy and air force completely useless.
Oil was the indispensable product, in all its forms, to the Allied campaigns around the world. Without it World War II could never have been won. For oil, once processed or refined in various ways, became the source or indispensable material for laying runways, making toluene (the chief component of TNT) for bombs, the manufacturing of synthetic rubber for tires and the distilling into gasoline for use in trucks, tanks, jeeps, and airplanes. And, that is not to mention the need for oil as a lubricant for guns and machinery.
To provide all the oil, or at least most of it, for the Allied war effort, the United States enlisted the aid of American oil companies, all of which responded without hesitation to the challenge. Meeting what everyone in government knew would amount to a demand for oil in unprecedented quantities required much organization. In May 1941, even then before the Japanese attack on Pearl Harbor, President Roosevelt established an official body known as Petroleum Administration for War (PAW).
American oil amounted in all to 6 billion barrels out of a total of 7 billion barrels consumed by the Allies for the period of World War II. Without this prodigious delivery, this global war might never have been won.
Field-Marshall Karl Rundstedt of Germany, when interviewed by newsmen, readily admitted how important oil had been in World War II. In fact, he attributed German defeat to three factors, :(1) the Allied bombing sorties (strategic and tactical); (2) the bombardments by Allied naval guns; and (3) Germany's own deficiency in oil, especially in the form of gasoline.
The oil has not looked back ever since.