How did the American Oil Industry start?

One answer, Gold.

Throughout history, gold has been the definitive form of wealth. Even today, gold is worth over $1,100 per ounce and is a major form of investment in today’s markets- it is a metal crafted into jewelry and is more of a product of beauty rather than use.

There is another gold, one that has produced an incredible amount of wealth, not only in the United States but around the world.

Can you guess what it is?

It drives today’s economies into becoming industrial powerhouses and has led to wars between nations. This is not your gold metal. It is black gold. If you are unfamiliar with the name black gold, you are probably more familiar with its other name, oil.

Oil is one of the world’s leading commodities and resources traded around the world and used in the energy sector each and every day to drive further economic production and expansion.

In the United States, what began as a small tool used for greasing wagons became one of the main driving forces into creating the United States as the leading economic force that it is today. As of 2016, the United States is one of the world’s largest producers of oil with over 9 million barrels of oil produced each day.

Among the top ten oil producing companies in the US, the average market cap is over $25 Billion USD per company . That is not including major corporations such as ExxonMobil and Chevron.

But how did oil transform from a small tool to the massive global commodity that drives production and expansion in the world’s strongest economy?

To answer that question, we have to go back in time to the 1800s.

In what was known as the Drake well, named after Edwin Drake, 1859 was the year where a well was successful with the purpose of digging for crude oil.

The well was located in Pennsylvania, and it revolutionized the need for oil to drive further industrial expansion on the eastern coast of the United States. Before the Drake well, other attempts at retrieving oil failed due to the collapse of the well structure underneath the earth’s surface.

The Drake well differed by using steel to reinforce the drilling path of the well. Because of the support of the steel, the well was able to hold up during the drilling process at the depth necessary for oil production. It is because of this well that oil drilling became a large economic industry in the United States.

How did the Oil Industry become profitable? 

Because Drake never patented his drilling process, other individuals and oil companies used his idea to drill their wells, and the oil boom began. This technology led to many companies being created and individuals becoming very wealthy. One man, John Rockefeller, is the greatest example of the wealth oil brought to the United States.

John Rockefeller created Standard Oil in 1870. Standard Oil may not sound like a familiar company to you, and that is because it no longer exists.

What happened to it?

It became so successful and dominant in the industry. The United States government declared it had become a monopoly over the oil industry. This decision happened in 1911, and Standard Oil was split into multiple companies, many of which are still around today,

  • Chevron
  • ExxonMobil
  • Esso

These are just some of the companies that came out of the breakup of Standard Oil.

How about BP?

While BP is not a direct creation of the Standard Oil breakup, BP acquired many of the companies that were created because of it. Such companies acquired by BP include ARCO and the American Oil Company.

At its peak of business, Standard Oil became so dominant in the US market that it accounted for 90% of oil in the United States. Because of its success, John Rockefeller became the first American billionaire and is considered the richest man in the modern era. When adjusted for inflation, it is estimated that his personal wealth equated to over 300 Billion USD. Because of his success, he has become an American legend, and his name is famous to this day.

This is just one example of the success of the American oil industry. Countless investors have achieved great wealth and success through investments in oil.

Stay tuned because in our next article, we will look at how investment in oil can be done today, and how WTC-SF can offer exciting opportunities to become a part of the American oil industry.

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The information in this article is meant for general information purposes only and should not be taken as legal advice. Please consult an immigration attorney for your specific immigration needs.