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Chart N.1, N.2, N.3, N.4

Oil’s Early History, Development of the Oil Industry in the United States, Royal Dutch Shell, The Growth of Oil Fired Engines in the Marine Industry, The Rise of the Automobile, Tanks and Trucks Transform Battlefield Mobility, Aviation Gasoline, Interwar Development of the Aeronautical Industry, Global Oil Output, Oil and the Decision for War, Conclusion

Oil’s Early History: When World War II started the modern oil industry was barely fifty years old. Although oil is referred to in Homer’s Iliad and had been drilled for as early as the 4th Century, and used by the Arabs and Persians in the 9th and 10th Centuries, its secrets did not reach Europe until the Arab enlightenment brought knowledge of the substance to Spain in the 13th Century. About the same time Marco Polo wrote about oil and described it being transported in shiploads. Around the same date Rumanians were using oil, which was known as pacura. The earliest record of oil in the Americas was made by Sir Walter Raleigh in Trinidad in 1595.

In 1795 during the reign of Empress Elizabeth of Russia, the first well and refinery was constructed at Ukta to the east of Archangel by Fiodor Priadunov. Oil was used to light lamps in Russian Orthodox churches and monasteries. In the same year Louis XIV of France authorized the first oil sands mine located in Alsace, the region that spawned Schlumberger, the now world renowned oil services company founded in 1926.

In modern times the Scottish chemist James Young, after observing seepage of a liquid in the shafts at Riddings Colliery in Derbyshire, developed a distillation process, which produced paraffin. However four year later, in 1854, it was Benjamin Silliman, a chemistry professor at Yale University, who was the first person to develop a process for the distillation of oil into various products. It was a discovery that spread rapidly to Baku in Azerbajan, an area where oil oozes from the ground, and where the first modern refinery was built in 1861. Refineries followed in Poland and Romania but it was the United States that led the world at the end of the 19th Century.

Development of the Oil Industry in the United States: In the United States Edwin Drake, a farmer’s son whose career started on America’s burgeoning mid-19th Century railroads, who founded Seneca Oil Company and drilled the first well producing 25 barrels a day at Oil Creek in Pennsylvania in 1859. It sparked the first American oil rush. George Bissel, the original promoter of Seneca Oil wrote, “The whole population are crazy almost… I never saw such excitement.”1 With the rapid global depletion of sperm whale stocks by the middle of the 19th Century, the arrival of a new source of premium illumination oil was well timed. A year after Drake’s discovery the first handbook on oil noted, ‘As an illuminator the oil is without a figure: it is the light of the age.’2 In addition the increasing mechanization of manufacture was creating a demand for a more hard-wearing lubricant than lard. The civil war barely interrupted the scramble for oil and indeed encouraged it in the north, which found itself cut off from supply of camphene, a cheap illuminating oil derived from turpentine (a distillation from pine trees).

In the next great oil rush in Ohio, the twenty one year old J.D. Rockefeller, established the Standard Oil Company in 1861. He went on to develop a multi-state business, which became the dominant name in the industry – by the mid-1980s his three refineries in Cleveland, Philadelphia and Bayonne (New Jersey) produced 25 percent of the world supply of kerosene. Rockefeller’s dominance was such that Congress ordered Standard Oil’s breakup in 1911.

The increase in demand for kerosene for lighting had brought rapid growth. Annual production in 1861 had amounted to 2,000 barrels, and expanded to 4.2m barrels ten years later. By the end of the century US production had grown to 57m barrels and still demand was not satisfied. More oil discoveries led to the rapid development of the industry in Oklahoma, Texas and California. The discovery of a major field at Beaumont in Texas in 1901 sparked an oil boom. Within a few years it spawned the Texas Oil Company (later Texaco) and Gulf Oil - names that were to become synonymous with the industry. In 1911 the Humble Oil Company (later Exxon) was established.

In the early part of the 20th Century, as news of the liquid gold spread, fields were developed with American finance and entrepreneurial knowhow in Persia and Venezuela. Europeans also jumped onto the new bandwagon, and Royal Dutch Shell began to develop oilfields in the Middle East (Saudi Arabia and Iraq), South America, California and the Dutch East Indies. By the late 1920 Shell had become the world’s largest oil company. By the first decade of the 20th Century oil had developed into one of America’s major industrial concerns.

If the growth of the oil industry was spectacular up to World War II, its ascent was even more dramatic thereafter. Three major technological innovations would spur its growth. The development of the internal combustion engine for motorized transportation, the development of aviation and the development of diesel engines would transform the outlook for the oil industry. World War I served as a catalyst for change for all three technologies.

Royal Dutch Shell: The founder Marcus Samuel started selling oriental sea-shells from his shop in the East End of London in the 1830s. Shells gave the company its name. Samuel’s sons developed an import and export trading business with machine tools, textiles and rice. After visiting the Black Sea and seeing the potential for oil, the Samuels took their company into oil trading. Starting in 1892 the Samuels revolutionized transportation of oil by hiring tankers to carry oil through the Suez Canal. Five years later 1897 the Samuels changed the company’s name to the Shell Transport and Trading Company.

Around the same time, in 1890, a new company, Royal Dutch Petroleum Company was formed in the Dutch East Asian colony of Sumatra. The company had its origins in the curiosity of Aeilko Jans Zijlker, a plantation manager for East Sumatra Tobacco Company. While visiting a swampy coastal area of Southern Sumatra, Zijlker came across pools of liquid, which, when tested, yielded 60 percent kerosene. With the help of a royal license from the Dutch government his business took off.

Although Zijlker died in the year the company was founded, his successor Jean Baptiste Kessler, oversaw the building of a 6-mile pipeline to a refinery at Balaban River that started production in 1892. In spite of initial funding difficulties production rose dramatically. In the three years from the beginning of 1895, production increased by 500 percent. Even Standard Oil took notice. One executive noted, ‘Every day makes the situation [Royal Dutch Petroleum] more serious and dangerous to handle. If we don’t get control of the situation soon, the Russians, Rothchilds, or some other party may.”3 In spite of stiff completion from Standard Oil, which offered US$40m to buy out Shell, Samuel’s Shell merged with Royal Dutch Petroleum. Thus Bataafsche Petroleum Maatschappij, a subsidiary of Royal Dutch Shell, was established in 1907; ownership was 60 percent Royal Dutch Petroleum Company and 40 percent by the Shell Transport and Trading. To prevent Standard Oil from buying up shares and closing down the company, the directors of the newly merged company created a special preference voting stock that was tightly controlled.

When the US banned the export of high-octane aviation fuels to Japan in 1940, the Japanese government began to put pressure on the Dutch government to increase exports to Japan of 100-octane gasoline, which Royal Dutch Shell had just started to manufacture at its Plaju Refinery in South Sumatra. Shortages of higher-octane fuels and anti-knock additives were already in short supply by 1938 to the extent that the Japanese government lowered the standard for private car gasoline to 74-octane. When Roosevelt’s freeze on Japan’s financial assets led to an oil embargo in July 1941, Shell’s assets in Sumatra and the Dutch East Indies, the nearest major oil resources to Japan, became the default existential target for Japan’s military government.

The Growth of Oil Fired Engines in the Marine Industry: Rudolph Diesel, understanding that coal fired steam engines dissipated as much as 90 per cent of the energy they generated, produced the first diesel internal combustion engines in the last decade of the 19th Century and patented much of the technology. He died in penury – mysteriously found floating in the Atlantic after his cabin was found empty during a transatlantic crossing in 1913.

A year earlier the Danish merchantman Selandia became the first ship to be powered exclusively by oil rather than coal. In the same year that Selandia was launched the first diesel locomotive was also built. From 1914 German submarines were fitted with diesel engines built by MAN of Augsburg, which solved the problem of on board fumes and dirt that had occurred with coal fired systems. Sneider & Co. in France and Fabrica Italiani Automobili Torino (FIAT) also developed products. In the UK, Harland and Wolf took an exclusive license to build engines developed by Burmeister and Wain of Copenhagen. Within a decade Rudolph Diesel’s technological breakthroughs had triumphed. Submarines apart, war put a break on development. However Vickers of Barrow, working with the British Admiralty designed a small MAN designed diesel powered coastal gunship, HMS Marshall Soult, which was commissioned in 1915. Her diesel engines had been filched from the experimental Royal Fleet Auxiliary tanker Trefoil.

The move to oil as the main energy source for marine transport had an early champion in Marcus Samuel of Shell Transport and Trading. In the low quality Texas crude which was not suitable for illuminating oil but perfect for marine engines, Samuel saw an opportunity and he signed a 20 year purchase contract with James Guffey whose Spindle Top in Beaumont, Texas, became the world’s largest gusher, at 100,000 barrels a day, when it blew on 10 January 1901. Spindle Top would spawn both Gulf Oil and Texaco. For Samuel the deal also enabled him to diversify his company’s interests from its high dependence on Russian supply – a main reason too for his merger with Royal Dutch Petroleum.

It proved a wise move. In 1904 a worker insurrection in the oilfields of Baku, Azerbaijan, during the Russo-Japanese War brought a major disruption to the global oil market. In part it led to Czar Nicholas II’s introduction of a Duma (parliament), a liberalisation that far from staunching the call for social change, dramatically increased it. In 1907, a young Stalin was sent by the Bosheviks to stir up worker unrest in Baku. Seeing the gathering storm and rising anti-Semitism, the Rothschilds sold out their family interests in Russia to Shell in 1911 in return for stock – They too were keen to diversify their political risk. In the newly booming oil fields of Persia, Shell was less successful. Here the British government, spurred on by Winston Churchill, and wishing to rid itself of its dependence on Shell and Standard Oil, invested directly in the Anglo-Persion Oil Company, itself a listed subsidiary of Burma Oil, in order to secure supplies of oil for its Navy, which was in the process of converting from coal to oil.

After the war experiments continued with Swan Hunter licensing a diesel designed by AB Diesel Motorer of Stockholm. Camell Laird also built three experimental facing piston Fullager diesels. William Doxford & Son on the Weir developed a similar diesel technology, which they licensed. Doxford would have even more success with its long stroke, balanced diesel engine developed in 1926, which was selected by Furness Withy for its new luxury liner, the Bermuda.

In spite of technical problems that continued to plague the industry throughout the 1920s, the trend to diesel appeared unstoppable. By the 1930s the marine industry began a rapid conversion from coal power steam turbines to diesel-powered turbines. Fuel efficiency and space economy would prove decisive. Based on a 2,400 BHP merchantman the running cost savings over a year (based on 200 days of travel) were estimated at £27,000 per annum in 1920. Coalbunkers took up much more space and coal-fired steam units, though similar in size and weight to diesel units needed larger engine room crews. Steam ship engines were typically 22—25 percent larger than those of diesel equipped ships of a similar size. Diesel ships could travel further without bunkering and as ports around the world increasingly fitted diesel bunkers to their facilities, the switchover speeded up. As the Chief Superintendent Engineer of Blue Funnel Line, a leading merchant ship owner, noted in 1924, ‘Oil for marine purposes has come to stay.’4

In spite of the huge installed base of coal powered steamers, new ships were increasingly fitted with diesel engines to the extent that by 1940 coal accounted for less than 50 percent of the market. Relatively the UK, with the world’s largest merchant fleet, lagged, with diesel penetration in overseas market almost 50 percent greater than in the UK, where the coal lobby fought a fierce rearguard action even in the House of Commons. By contrast German producers of diesel engines, particularly Deutsche Werft were particularly successful; this Hamburg based company would later build 113 Type IX and Type XXIII U-boats for the Kriegsmarine.

The Rise of the Automobile: The economics and importance of the auto-industry in America has been substantially covered in Appendix C. Suffice to say that the growth of the automobile demand was one of the main drivers of the oil industry. In 1905 US auto production amounted to just 20,000 units. It was only recently that the combustion engine had replaced steam powered and electric cars. A contemporary writer noted, “The automobile is the idol of the modern age. The man who owns a motorcar gets for himself, besides the joys of touring, the adulation of the walking crowd, and… is a god to the women.”5

Thereafter the growth in the industry was spectacular; 200,000 units in 1910, 800,000 units in 1915, 1.45m units 1920 and peaking at an astonishing 4m units in 1929. Between 1914 and 1920, World War I notwithstanding, the stock of automobiles in the United States grew from 1.8m to 9.2m. Growth was such that George Otis Smith, Director of the United States Geological Survey, in a refrain that has been familiar every decade or so since, warned that oil would run out within the decade. The need for America to follow ‘open door’ trade policies had never been clearer.

Although the Great Depression pegged back growth to between 2.3 – 3.0m units per annum in the 1930s, the stock of cars in the United States grew immeasurably. [See Chart N.4] In 1929 America accounted for 78 percent of the world automobiles. With the introduction by Ford of a mass produced V-8 engine, gas consumption per vehicle also grew rapidly. In 1936 the state of Texas alone had over 1.5m cars, more than the whole of Japan. Spurred by the Federal Aid Highway Act [1921] by the end of the decade more than 21,000 miles of road had been built. America was transformed. Where once it was railway towns that boomed, now it was towns along the highways. In Only Yesterday [1931] the historian Frederick Lewis Allen, later editor of Harper’s Magazine, noted that “villages on Route 61 bloomed with garages, filling stations, hot-dog stands, chicken-dinner restaurants, tearooms, tourists’ rests, camping sites and affluence.”6

Tanks and Trucks Transform Battlefield Mobility: The idea of a tracked armed vehicle had been circulating for over a decade before World War I. Famed futurist author H.G. Wells had even described such a beast in a article, The Land Ironclads, which he wrote for The Strand Magazine in December 1903. However it was the exigencies of war that focused military minds.

British Colonel Ernest Swinton was one of the first men to identify the problem of immobility. Having written the official British History of the Russo-Japanese War, Swinton identified the problem of troop mobility created by the development of the machine gun as he analysed the long drawn out static siege of Port Arthur (now Lushunkou) in Manchuria. Having identified the problem, Swinton became the first British Army officer to identify the solution as an armored vehicle powered by an internal combustion engine that could move forward unencumbered by either machine guns or barbed wire.

The problem was that industrialization had brought the means of transporting and supplying mass armies that could construct machine gunned and barbed wire defenses over vast distances – in the case of the World War I the entire Western front. Outflanking the enemy was no longer possible. For the first time in history war had become immobile.

At sea it was the same story. Attempts in the air and at sea to break the resulting deadlock failed. The Battle of Jutland on 31 May 1916 had forced the German fleet to retire, its strategy of destroying the British fleet a failure; in the ensuing stalemate Germany could no longer threaten supply to the Allied ground forces across the Channel. Neither could bomber aircraft, still in their infancy, disrupt movement on ground. Indeed the only flanking movement that worked to a degree was underground… where the digging of tunnels and the mining of enemy positions did allow a modest degree of movement. It was a tactic that reached its apogee in the destruction of the Messines Ridge by 19 underground mines on 17 June 1917.

By then caterpillared tractors patented by Benjamin Holt of Stockton, California had already become a familiar part of the battlefield. By 1916 more than 1,000 had been produced under license in the UK to be used for the haulage of heavy artillery over the often impenetrably muddied landscapes of the front; the number of Holt tractors increased to over 10,000 by the end of the war. In 1914 exploratory tests of caterpillared tractors, as a means of traversing trenches, was abandoned until Winston Churchill, then First Lord of the Admiralty, insisted on renewed efforts. He ordered the development of 18 experimental landships, which subsequently became known by their codename ‘Tank’. On 15 September 1916 Field Marshall Haig deployed 49 tanks at the Battle of the Somme but the first notable success in bringing mobility to the field was at the Battle of Cambrai on 20 November 1917 when 400 tanks penetrated seven miles through German lines. From now on the role of the tank in modern warfare was assured.

The restoration of mobility to modern warfare achieved by the development of the tank had other implications. At the Battle of Cambrai troops had been unable to follow up the hole punched in the German lines. Troops too needed to be made mobile. Hitherto troops had walked to the front lines from the nearest train depots. From now on they would have to trucked as tanks increased the pace of battle. Mule trains for supply were also going to replaced by motorized transportation. As historian Daniel Yurgin noted, World War I changed, “ How much could be carried, how far and how fast…”7

At the start of the war the British Expeditionary Force that went to France in August 1914 had 827 automobiles and 15 motorcycles; all but 80 of the cars had been requisitioned from private owners. By the end of the war the British Army had 56,000 trucks, 23,000 automobiles and 34,000 motorcycles. The increasing military demands for horsepower were such that 1916 saw a petroleum supply crisis as the US, which provided 80 percent of the Allies supply, failed to keep up. The sinking of tankers by German U-boats hardly helped the situation. The British Admiralty reserve supply fell to 3 months, half the required minimum level. The crisis was such that thought was given to switching the Navy back to coal. France was similarly inconvenienced. Meanwhile Germany needed to invade Rumania to boost their supply of oil – a task not helped by ‘Empire Jack’, Colonel John Norton-Griffiths MP who took destruction teams to Rumania to make their well inoperable. Ultimately Germany was at the point of exhaustion of its oil stocks when it surrendered.

War was on the way to becoming ever more energy intensive. It was estimated that in the twenty years between the end of World War I and the start of World War II, the oil usage per capita of a modern army had increased a hundred fold. As General George Patton pithily put it to Supreme Allied Commander General Eisenhower in 1944, “my men can eat their belts, but my tanks have gotta have gas.”8 An even more desperate General Rommel, forced to lead his Africa Corp without adequate supplies of oil noted, ‘neither guns nor ammunition are of much use in mobile warfare unless there are vehicles with sufficient petrol to haul them around.”9

Aviation Gasoline: In World War I aviation was still in its infancy and gasoline used for airplanes was essentially the same as that used for motor vehicles. Previously, dealing with the problems arising from the quality of fuel was not prioritized. If a car engine came to a halt nobody died; the same was not true in the air. During the war stricter rules were developed for the production of aviation gasoline; these included selection of suitable crude sources and the use of natural gasoline with kerosene distillate. Interest in aviation gasoline regressed after the war though in the mid 1920s oil companies did begin to ship their production with specification as to color, odor, un-saturation (the percentage soluble in sulphuric acid), Doctor Test gravity and distillation range. Only in 1927 did government first intervene to specify the qualities of aviation gasoline and indeed motor gasoline. Prior to that the seeming indifference to gasoline standards not only reflected the relatively novel technologies of the user industries but also the lack of methodology for testing petroleum quality.

As the 1930s progressed the oil companies produced higher and higher octanes of fuel, which allowed engines to burn fuel at higher temperature and higher power output – without the ‘knocking’ sound that characterized fuel with more impurities. Higher octanes allowed engines to operate at higher compression rates. By the later 1930s the US had developed aero engines that could use fuel refined at 100 octanes. By comparison Japanese pre-war engines were designed to operate at 87 octanes.

Perhaps most importantly the development of higher performing aero engines and fuel, combined with advances in airframe design, had by the early 1930s transformed the potency of aircraft; like the tank it was another weapon that massively increased the mobility of firepower.

Interwar Development of the Aeronautical Industry: Before World War I, France’s General Ferdinand Foch described aviation as “good sport, but for the Army the aero plane is worthless.”10 In Britain it was a minnow of an industry employing just 1,000 people in the UK and producing a few hundred aircraft a year – a high proportion of them experimental prototypes. The next four years saw a rapid transformation. By the end of the war aircraft speeds had doubled to 120 mph while operating ceilings rose to 27,000 feet. From simple reconnaissance functions aircraft increasingly developed not only fiercesome machine gun firepower but also developed bombing capability. The rise in production was dramatic. By the end of World War I France had produced 64,000 aircraft, Britain 55,000, Germany 48,000 and Italy 20,000.

Post-World War I federal regulation had helped the development of the nascent aeronautical industry, which it recognized as essential both to national prestige and defense. The National Advisory Committee on Aeronautics had been established by Congress in 1915 and its engineers helped bring about critical technological advances including more efficient propellers, wing design, engines, instrumentation, wing flaps, new materials and streamlining. A new generation of metal skinned streamlined aircraft emerged including the Boeing 247D in 1933 and the Douglas DC-3 in 1935.

The Kelly Mail Act of 1925 authorised the use of private companies to fly mail for the first time. A Bureau of Aeronautics within the Commerce Department was established by the Air Commerce Act [1926]. Pilots were now licensed and aircraft had to be certified. As commercial passenger flights were developed safety became an issue. Rules were later established by the Civil Aeronautics Act [1940] and regulation was further enhanced by the Civil Aeronautics Board and Civil Aeronautics Administration Act [1940].

While passenger aircraft had begun to fulfill the commercial needs of America’s rapidly expanding cities, diffusion of aircraft also penetrated the countryside where crop spaying developed a cadre of rural flyers. The US Agricultural Department developed modern crop dusting with the Army Signal Corps. A first outing was made on 3 August 1921 by test pilot John Macready in a Curtiss JN4, who spread an arsenic formula designed to eliminate catalpha sphinx caterpillars outside Troy, Ohio. Crop dusting soon became ubiquitous on America’s vast midwestern farms. Curtis went on to develop more exotic military aircraft over the next twenty years.

The 1930s proved to be a golden era of flight exploration and daredevilry. Long distance flying, racing and air displays captured the public imagination. Fliers such as Charles Lindbergh, Amelia Earhart, Jimmy Doolittle and Howard Hughes became some of the highest profile celebrity superstars of their era.

Jimmy Doolittle won the 1925 Schneider Trophy held at Chesapeake Bay. Flying the same Curtiss R3C the following day, Doolittle recorded a world record speed of 245.7mph. Curtiss would go on to become the United States’ biggest aircraft manufacturer during the war, producing famous aircraft such as the P-40 Warhawk fighter and the B-26 Commando (transport plane). Doolittle would go on to achieve even greater fame for his daring exploits in the Pacific War.

Global Oil Output: Output of crude oil, which had taken a generation to reach 200m barrels of oil per annum in 1910, exploded as the mechanized demands of the auto sector and World War II grew exponentially. By 1920 oil output had quadrupled from a decade earlier and by 1930 had reached 1.5bn barrels. The Great Depression brought an oil glut and collapsing prices but ten years later output had risen to 2.0bn barrels and added another 500m barrels during World War II in spite of the forcibly collapsed demand from the auto sector.

The main producer of this remarkable rise in output was the United States, which by 1940 accounted for 62 per cent of global output. Venezuela and the USSR accounted for approximately 10 percent of global output each while the Dutch East Indies, the nearest major oil-producing nation to Japan produced just 2.6 percent of global output. Japan, which produced just 7 percent of the energy it consumed, was thus almost entirely dependent on the output of Standard Oil of California, which supplied over 80 percent of their needs; the Dutch East Indies provided the balance of about 10 percent. [See Chart: N.2 and Chart: N.3] As Japan embarked on its attempt to conquer China in 1937, the paradox was that they were doing with California oil. As one American pamphlet protested, “America furnishes the airplane, gasoline, oil, and bombs for the ravaging of undefended Chinese cities.”11

In the early 1930s foreign companies controlled 60 percent of Japan’s internal oil market with Rising Sun, an affiliate of Royal Dutch Shell and Standard Vacuum, dominating a market that had some 30 Japanese companies sharing 40 percent of the market. In order to obtain more control of their market the military forced that passage of the Petroleum Industry Law [1934]. The legislation gave the government power to control imports, set inventory levels and prices. In large part the aim was to build up Japan’s domestic refining capacity to make it less dependent on foreign made high margin products, particularly aviation fuel. Meanwhile in its newly acquired Manchukuo, the Japanese government established a government owned petroleum monopoly.

Realizing the importance of increasing self-sufficiency, Japan passed the Imperial Fuel Development Company Act [1937] and the Synthetic Oil Production Industry Act [1938]. With some 22bn tons of coal reserves Japan planned to utilize these resources to create oil self-sufficiency. The first of these laws presaged the establishment of Teikoku Nenryo Kogyo KK (the Imperial Fuel Development Company) to manufacture and sell synthetic fuel using the mainly the low technology LCT (Low-Temperature Carbonisation) method. Some of the synthetic oil used the Fischer-Tropsch (F-T) method but the synthesis gas process required sophisticated and expensive high-pressure apparatus and catalysts. The Japanese government planned to build eighty-seven synthetic fuel plants by 1944 producing 6.3m barrels of synthetic oil and gasoline per annum.

Almost immediately it was a plan that was hampered by shortages of strategic metals such as nickel and iron. In practice by 1945 only 15 synthetic plants had been built producing a peak production of 717,000 barrels of oil. In large part Japanese technicians failed to make the transition from laboratory to large-scale manufacture. As Historian, Anthony Stranges has concluded, “Curtailing or by-passing the intermediate pilot-plant stage of development led to serious operating problems and doomed their synthetic fuel program to technological failure.”12

Oil and the Decision for War: In the context of Japan’s desperate pre-war search for oil it is perhaps not surprising that Japan viewed America’s de facto oil embargo in July 1941 as an existential threat to Japan’s economic fortunes and its ability to sustain an Asian Empire. As historian Louis Morton noted in Command Decisions [1983] “The shortage of oil was the key to Japan’s military situation. It was the main problem for those preparing for war, at the same time, the reason why the nation was moving toward war… Without oil, Japan’s pretensions to empire were empty shadows.”13 Roosevelt was fully aware of the implications of an oil embargo. Joseph Grew, Ambassador to Japan, met Roosevelt twice in the autumn of 1939 and wrote afterwards in his diary, “I also said that if we cut off Japanese supplies of oil and if Japan then finds that she cannot obtain sufficient oil from other commercial sources to ensure her national security, she will in all probability send her fleets down to take the Dutch East Indies.”14

Ultimately the oil embargo was the trigger for Japan’s attack on America; believing that it could obtain all the oil it required from the Dutch East Indies, the Imperial General Staff received Hirohito’s approval for an attack on South Asia and the United States, whose Empire in the Philippines stood in its way – thus enabling, so Japan leaders thought, to sustain its war machine and its empire. It was a fatally flawed assumption. Even before the war Admiral Yamamoto was limiting naval exercises to home waters to conserve oil stocks. In a symbolic gesture Japanese authorities in Tokyo cut oil supplies to the American and British Embassies.

In spite of the importance of oil in Japanese thinking, curiously Yamamoto neglected to target US oil storage facilities at Pearl Harbor. It was a target that was far more important than battleships. “We had about 4.5 million barrels of oil out there,” observed Admiral Nimitz, “and all of it was vulnerable to 0.50 caliber bullets. None of the oil tanks had bomb-proof covers. Had the Japanese destroyed the oil it would have prolonged the war another two years.”15 As Admiral Husband E. Kimmel told the Joint Committee on the Investigation of the Pearl Harbor Attack, “The thing that tied the fleet to the base [Pearl Harbor] more than any one factor was the question of fuel.”16 The failure to target the oil facilities at Pear Harbor was not a mistake of intelligence. As historian Gordon Prange has noted, ‘The Japanese knew all about those oil storage tanks. Their failure to bomb the Fleet’s oil supply reflected their preoccupation with tactical rather than logistical targets…”17 In hindsight the failure to attack US oil facilities at Pearl Harbor can be seen as one of the most significant tactical mistakes of the Pacific War.

As Chart N.5 illustrates, Japanese oil inventories fell from a peak of nearly 50,000 barrels in 1941 to less than 5,000 barrels by 1945. A combination of a lack of technological sophistication to sustain let alone develop the oil fields of the Dutch East Indies combined with an inadequate supply of oil tankers [See Chart C.13], meant that Japan was never able to make up for the oil that it could no longer purchase from the world’s dominant supplier, the United States. It is notable that during the war America became supplier of oil to the world; Standard Oil of New Jersey alone supplied 25 percent of all oil used by the Allies in World War II. By comparison at the end of the war the Japanese Navy was having fill oil bunkers of its battleships with edible soya oil.

Conclusion: On 17 July 1913 Winston Churchill, then First Lord of the Admiralty, warned parliament of the essential role of oil to secure trade and geopolitical stability: “If we cannot get oil, we cannot get cotton and we cannot get a thousand and one commodities necessary for the preservation of the economic energies of Great Britain.”18

Arguably the Pacific War was the first war in which oil played a significant determinant part. In the interwar period the growth in oil output and the industries that depended on oil transformed the industrial economies of the west. Russia and Japan too joined in the oil economy. By the end of World War I, the importance of oil, because of its military utility, had advanced apace. The mobility enabled by oil was transformational not only for the new technologies of the automobile and the airplane that surged ahead in the interwar period in spite of the Great Depression, but also for how World War II would be fought and won.

The trench warfare deadlocks of World War I were in the past; thereafter the development of oil powered submarines, aircraft carriers, long range airplanes capable of delivering massively increased bomb loads, tanks and trucks to transport troops restored mobility to the battlefield. Governments could rapidly exert military power over distances that would have been inconceivable in World War I. Hand in hand with the military range extension enabled by the new technologies was a political and commercial world in which the geopolitical possibilities for existential change had been transformed. Military regimes in Germany and Japan could not only dream of a new world order, with the advance of the 20th Century’s new oil economy, they now had the military means to make it happen.

However the Axis powers, neither Germany, Japan or Italy had easy access to oil. As Professor Wakimura of Tokyo University observed during a post-war interrogation, “God was on the side of the nation that had the oil.”19 That nation was indisputably the United States.

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