Appendices - Hirohito's War
APPENDIX N: THE ROLE OF OIL 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 . 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  and the Synthetic Oil Production Industry Act . 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