Transcriber’s Notes
Texts between _underscores_ and =equal signs= represent texts
printed in italics and bold face, respectively. Small capitals are
transcribed as ALL CAPITALS. ~U~ stands for a U-shaped symbol rather
than for the letter U.
More Transcriber’s Notes may be found at the end of this text.
POLITICAL AND COMMERCIAL
GEOLOGY
AND THE
WORLD’S MINERAL RESOURCES
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POLITICAL AND COMMERCIAL
GEOLOGY
AND THE
WORLD’S MINERAL RESOURCES
A SERIES OF STUDIES BY SPECIALISTS
J. E. SPURR, EDITOR
FIRST EDITION
SECOND IMPRESSION
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PREFACE
The purpose of the accompanying series of studies is to shed light
upon the vast importance of commercial control of raw materials by
different powers, or by the citizens of those powers, through invested
capital. The question of domestic and foreign governmental policies
of the United States is closely involved. It appeared to many of us
who were engaged (as all the authors of these papers were) in studying
the mineral problems during the war, that our Government had never
grasped the vast political significance of commercial domination,
and especially of the control of mineral wealth; and that other more
seasoned nations had done so, and thereby affected the interests of
America and her policy very deeply, without her being aware of the
circumstance.
With the rapid increase of the world’s population and the exploring and
exploiting of the hitherto undeveloped natural resources, competition
for this wealth has become and will still become keener. In past ages
war, pestilence, and starvation held down the earth’s population; and
in the last few years all these grim spectres have returned in force,
suggesting the possibility of a permanent return of the old primitive
days. Nevertheless, modern science and organization, if not quenched
by vast social disorders, will so safeguard life, as in recent times,
that the world is in a fair way to become crowded. All of us, like
Germany, yearn for our “place in the sun,” and our share of comfort
and power. Of all the fundamental necessities for this, nothing is so
much in the nature of a fixed and unmultipliable quality as the metals;
they constitute the basis and foundation of our modern civilization
and power over man and natural forces. Other raw materials are of
vegetable or animal origin; they propagate and duplicate themselves in
successive incarnations according to the law of life; they are born in
some magical fashion of air and water, with a minimum of the earth,
and they return their loans faithfully to air and water and earth with
the passing of each generation and the dawning of a new. There is the
hint of such a law of growth in the mineral kingdom, but it is so
vastly slow that the evanescent animal man has no personal interest
in it; for all his purposes and by all his standards of measurement
it is inert, and these riches, once dug and used, will never again be
available. The treasures of commercially valuable ore-deposits have
been hid by nature whimsically throughout the earth, here and there,
by no rule of geography or latitude, and with a great disregard of
equality. A nation’s needs or desires for mineral wealth have no stated
relation to its actual mineral possessions; what it needs is often in
the territory of another nation which does not need it. Commerce is
thus born, and the nation which must have the metal or ore in question
backs up its commerce and helps it to fasten its claims for permanent
control of the deposits in question, by legislation, by diplomacy, and,
if need be, by war. In the case of war, the metallic prize falls to the
strongest--usually the nation which before, through its necessities,
exercised only commercial control, but which, as the result of the
trial of strength, now frankly asserts its sovereignty.
Have we as Americans realized these forces? Absolutely not, I should
say. How many realize that the Alsace-Lorraine question is and was
not a sentimental one, but a struggle for the greatest iron deposits
of Europe and the second largest in the world, which gave Germany her
immense growth and power, and may now transfer that wealth and power
to France? That the dispute between Poland and Germany as to Upper
Silesia is not a question of nationality, sentiment, or even territory,
but concerns the greatest coal field of Europe as well as great
deposits of lead and zinc? If Poland gets this, she may rival Germany
in wealth and importance; if Germany loses it, she may drop into the
position of a second-rate power, now that she has also had to give up
Alsace-Lorraine. To submit such a question to the vote of the native
population is of the same order of fitness as tossing a coin for it;
but how many of us have understood this? Population shifts and changes,
swells or shrinks, may be at one time predominantly Polish and at
another time mainly German; but the coal deposits are fixed. To clarify
these things we should in place of Silesia say Coal, in the place of
Alsace-Lorraine, Iron, and so on.
The reason we have not realized these facts is on account of our own
vast mineral wealth, so abundant that not till recently has American
capital and enterprise found it necessary to adventure into the outside
world, as the European nations had long ago done. Their natural wealth
was limited so that they have become familiar with those fundamental
principles and laws of which we have been unconscious. From this has
arisen European foreign policies, the protection of their national
commerce and national capital in foreign enterprises and consequently
at home; governmental participation in business combinations, as in
Germany, England, France, and Italy; while the United States has
been engaged in “trust-busting” and has neglected the protection of
its investors in foreign countries. This illustrates the difference
between European diplomacy and American guilelessness. How well this
played into the hands of foreign powers it is unnecessary to explain.
The spectacle of the United States maintaining a Monroe Doctrine of
protection over Latin-American republics which she took no vigorous
steps to unite with her by the powerful bonds of commerce, must well
have excited the amusement of those European commercial nations like
Germany who have been strengthening themselves in those countries by
the closest commercial, and hence political, ties.
This volume simply takes up the study of the actual situation, as to
the distribution and ownership of mineral supplies in the world, and
the author of each chapter is a well-known specialist.
First is considered the question of petroleum, source of power and
light, the key to the mastery of the air, and, on account of its fluid
and easily transportable condition, of extraordinary future importance.
Next are taken up the great fuel mineral, coal, and its ally, the great
metallic mineral, iron, which must go together for the manufacture of
iron and steel, the backbone of all our mechanical achievements. Next
come those metals indispensable in steel making and in the manufacture
of specially hard or tough steels. These are of great importance, and
include manganese, chromium, nickel, tungsten, vanadium, antimony,
molybdenum, uranium, and zirconium. Radium is closely associated with
uranium and is considered with it. Closely allied with zirconium are
thorium and mesothorium, and their treatment therefore closely follows
that of zirconium.
The next great group is that of the major metals, other than iron
and the ferro-alloy metals: copper, lead, zinc, tin and mercury, and
aluminum. Aluminum ores are used not only as sources of the metal,
but for the manufacture of refractories and abrasives. Therefore they
are classed partly with the metallic and partly with the non-metallic
minerals; and the other non-metallic minerals, used likewise for
abrasives, refractories, and other uses--such minerals as emery and
corundum, magnesite, graphite, mica, and asbestos--follow.
The next great group is that of the fertilizer minerals--phosphate
rock, potash, nitrates and nitrogen, and pyrite and sulphur, all
essential for agriculture.
The last group is that of the precious metals, gold, silver, and
platinum, essential for coinage and in the arts.
These various studies are essentially both inclusive and elementary:
together they form almost the first contribution to the branch of
investigation--that of the relation of geology to industry, commerce,
and political economy--which they cover; and it is natural that
beginnings should be rather crude. Moreover, many of the chapters were
written a year or more previous to the publication of the volume,
and although brought to date to the extent possible in the brief
time available, are considered inadequate by the authors themselves.
Apologies for shortcomings and possible inaccuracies are therefore
very much in order. Nevertheless, it is felt that the volume merits
publication, and that the beginning here made is far better than no
start at all.
JOSIAH EDWARD SPURR.
CONTENTS
PAGE
PREFACE v
CHAPTER
I. PETROLEUM, BY JOHN D. NORTHROP 1
II. COAL, BY GEORGE S. RICE AND FRANK F. GROUT 22
III. IRON, BY E. C. HARDER AND F. T. EDDINGFIELD 55
IV. MANGANESE, BY D. F. HEWETT 90
V. CHROMIUM, BY E. C. HARDER 109
VI. NICKEL, BY C. S. CORBETT 129
VII. TUNGSTEN, BY FRANK L. HESS 142
VIII. VANADIUM, BY R. B. MOORE 163
IX. ANTIMONY, BY H. G. FERGUSON AND D. A. HALL 172
X. MOLYBDENUM, BY R. B. MOORE 191
XI. RADIUM AND URANIUM, BY R. A. F. PENROSE, JR. 201
XII. ZIRCONIUM, BY H. C. MORRIS 209
XIII. MONAZITE, THORIUM, AND MESOTHORIUM, BY R. B. MOORE 216
XIV. COPPER, BY F. W. PAINE 223
XV. LEAD, BY FREDERICK B. HYDER 261
XVI. ZINC, BY FREDERICK B. HYDER 294
XVII. TIN, BY JAMES M. HILL 317
XVIII. MERCURY, BY F. L. RANSOME 337
XIX. BAUXITE AND ALUMINUM, BY JAMES M. HILL 349
XX. EMERY AND CORUNDUM, BY FRANK J. KATZ 356
XXI. MAGNESITE, BY R. W. STONE 363
XXII. GRAPHITE, BY H. G. FERGUSON, FRANK F. GROUT, AND GEORGE
D. DUB 372
XXIII. MICA, BY DURAND A. HALL 380
XXIV. ASBESTOS, BY OLIVER BOWLES 388
XXV. PHOSPHATE ROCK, BY R. W. STONE 402
XXVI. POTASH, BY HOYT S. GALE AND A. W. STOCKETT 411
XXVII. NITROGEN, BY CHESTER G. GILBERT 421
XXVIII. PYRITE AND SULPHUR, BY A. G. WHITE 447
XXIX. GOLD, BY JOHN E. ORCHARD 462
XXX. SILVER, BY F. W. PAINE 495
XXXI. PLATINUM, BY JAMES M. HILL 506
XXXII. WHO OWNS THE EARTH? BY J. E. SPURR 522
POLITICAL AND COMMERCIAL GEOLOGY
AND THE
WORLD’S MINERAL RESOURCES
CHAPTER I
PETROLEUM
BY JOHN D. NORTHROP[1]
[1] In this article, prepared in June, 1918, by Mr. Northrop, have
been incorporated certain notes and additions; as, for example,
information furnished by E. Russell Lloyd, of the United States
Geological Survey; A. G. White and W. E. Perdue, of the Bureau of
Mines, and others. (J. E. S.)
INTRODUCTION
BY J. E. SPURR
Coal and iron are the backbone of industrial civilization, and should
be considered first in any attempt to analyze the ownership and
control, as between nations, of the world’s mineral resources. Kin to
coal in growing importance, however, is the lighter, fluid and volatile
mineral substance, petroleum, whose significance is vast and as yet
not wholly defined. More easily transportable than coal, and yielding
refined products whose explosive action in internal-combustion engines
furnishes greater power in proportion to weight than was once deemed
possible, petroleum and its products, apart from their immense direct
economic importance, may, in the automobile, the submarine, and the air
plane, and through numerous other applications, control strategically,
from a nationalistic standpoint, the more inert foundations of
civilization. Moreover, the use of crude petroleum as fuel, especially
for ships, is of the most vital importance in these days of greater
competitive plans for expanding world-wide commerce, and establishing
the strength and ready efficiency of navies. Great maritime nations
must have, for their oil-burning ships, oil-bunkering stations under
their own control in all parts of the world where they wish their
commerce to dominate, and their navies to protect their interests
efficiently.
The recognition by certain strong and aggressive nationalities of
this critical factor has brought about a situation that is perhaps
unparalleled in the mineral history of the world. Coal and iron
have always been decidedly static as to control--they have remained
largely under the supervision and direction of the countries in which
they occur. Transportation costs, the conjunction of iron and coal
deposits, and other factors have prevented these minerals, in spite
of their vast importance, from being fully used as a world commodity.
By contrast, petroleum is coming to be universal, like gold, in its
acceptance and applicability; but, unlike gold, it is essential in the
highest degree to the advance of modern civilization. The fluidity
of this mineral, its consequent amazingly cheap transportation and
handling by pipe lines, the completeness with which it can be utilized,
all combine toward making it in the future the crucial factor of
commercial and of political control. Moreover, this fluidity of form
and ease of application facilitate the control of petroleum by vast
commercial organizations, like the Standard Oil of America, and
others in various parts of the world; and even make its world control
feasible and probable. Recognizing this tendency, many nations, like
England, France, Holland, Argentina, and Mexico, have taken steps
looking toward a partial nationalization of their petroleum resources,
in order to protect themselves against foreign commercial aggression
in this particular. England has gone farthest in this direction, and
has reached and is reaching out aggressively into other countries to
secure, through commercial control, backed where necessary by political
pressure, a world empire of petroleum to serve her world-wide colonial
empire. The United States, on the other hand, has dominated the world’s
petroleum industry through her own vast resources, worked by interests
which have grown without conscious governmental help or even in spite
of governmental and popular opposition, and have reached out and
secured footholds in other countries.
In the past the mineral development of the world has led to great
changes in political sovereignty. Important as these have been, the
events that may result from the nationalistic competitive exploitation
and control of the world’s petroleum supply bid fair to exceed in
importance all similar changes of the past. The perception of the
problem and of the necessity, and the advantage of the initiative,
naturally belongs to those nations with restricted area and resources,
that have grown great by trading and by exploiting the resources of
other countries. Such a nation, for example, is England, a country
that is fortunately the natural ally of the United States. By
contrast, in the United States, a nation concerned hitherto only with
the development of its own vast resources, commercial enterprise in
foreign countries has been backed by no fixed national policy, and
indeed has often been treated as unworthy. In the new international era
that was initiated by the World War, however, this policy of Chinese
self-sufficiency and exclusion can not be safely continued, and the
United States must not only perceive clearly the tendencies and
movements of other nationalities, but consider how best to direct its
own commercial and political plans so as to uphold its independence and
power. Such a policy would naturally lead to international agreements
as to the distribution and division of petroleum lands, resources, and
production, and probably no one thing would contribute more to the
promotion of frank understanding between nations and the removal of
obstacles to permanent peace.
Mr. Northrop’s paper follows:
USES OF PETROLEUM
In its crude or semi-refined state, petroleum is extensively utilized
as fuel under locomotive and marine boilers and to a small extent in
internal-combustion engines of the Diesel type. Certain grades of
petroleum are utilized in the crude state as lubricants.
The principal use of petroleum is for the manufacture of refined
products, of which the number and uses are legion. The lightest
gravity, etherial products are employed as anaesthetics in surgery.
The gasolines are the universal fuels of internal-combustion engines,
and the naphthas are widely used as solvents and for blending with
raw casinghead gasoline in the manufacture of commercial gasoline.
The kerosene group includes a variety of products utilized primarily
as illuminants, but in annually increasing quantities as fuel in farm
tractors. The lubricating oils and the greases derived from petroleum
are indispensable to the operation of all types of machinery. The
waxes derived from petroleum of paraffin base are utilized in many
forms as preservatives and as sources of illumination, and in the
last three years have become indispensable constituents of surgical
dressings in the treatment of burns. Petroleum coke, because of its
purity, is in demand for use in certain metallurgical processes and for
the manufacture of battery carbons and arc-light pencils. Fuel oils
obtained as by-products of petroleum refining satisfy the fuel needs of
many industrial plants, railroads and ocean steamers. Road oils, as the
name implies, are employed for minimizing dust on streets and highways;
and artificial asphalt, a product of certain types of petroleum, has in
many localities superseded the use of other forms of asphalt for paving
purposes.
=Substitutes.=--For petroleum as a fuel under boilers in the generation
of steam there are numerous substitutes, including wood, charcoal,
coal, peat, natural gas, artificial gas, and electricity; as a fuel in
internal-combustion engines some demonstrated substitutes are natural
gas, artificial gas, benzol, and alcohol, and in the Diesel type of
engine certain vegetable and fish oils can be utilized.
For illuminating purposes, animal fats, oils distilled from coal,
natural gas, artificial gas, acetylene gas and electricity may be
substituted for kerosene.
For certain types of lubrication carefully refined vegetable and
mineral oils are acceptable, but for lubricating high-speed bearings
and for all lubrication in the presence of high temperature and of
steam no satisfactory substitutes for mineral lubricants derived from
petroleum are known.
Substitutes for petroleum asphalt are available in the form of native
asphalts, bituminous rocks, and coal-tar residues. For petrolatum,
animal fats and vegetable oils can be substituted, and for paraffin
wax, ozokerite might be made to satisfy such essential requirements as
could not be met by refrigeration or by vegetable and animal oils.
CHANGES IN PRACTICE
Probable changes in practice that may be expected to affect the
petroleum industry within the next ten years include an increased
dependence by oil producers on geologic investigations in advance of
drilling, the development of methods for deeper drilling than is now
practicable, and the more efficient handling of individual wells and
of entire properties, with a view to the ultimate recovery, at minimum
cost, of a higher percentage of the oil originally present.
The tendency toward amalgamation of individual producing, transporting,
refining and marketing interests into strong units capable of
competition in domestic and foreign markets on relatively equal terms
with each other and with pre-existing combinations of equivalent
strength will doubtless increase, and with the growing strength of the
several units will come an efficient and thorough quest for petroleum
in all parts of the world.
In the refining of petroleum it is probable that methods will be
devised and perfected for recovering more of the light-gravity products
from low-grade petroleum and for the conversion of the less-salable
products of petroleum into products of greatest current demand.
Moreover, it is believed that internal-combustion engines will be
so modified as to run successfully on petroleum products of lower
volatility than gasoline. The use of petroleum as railroad, marine, and
industrial fuel is destined to increase enormously in the next decade.
Although an important contributor to the oil-supply of Great Britain,
the shale-oil industry has received little attention in recent years
outside of Scotland. Investigations by the United States Geological
Survey have demonstrated that the United States contains vast deposits
of oil shale in Utah, Colorado, Wyoming and Nevada, much of which will
average higher in oil content than the Scottish shale. Efforts already
begun to develop methods for the recovery of shale oil on a commercial
scale in the United States will undoubtedly result in the establishment
of a shale-oil industry in this country within the next two or three
years. The future growth of this industry will depend largely on the
rapidity of the decline in the domestic production of petroleum.
GEOLOGICAL DISTRIBUTION
Commercial accumulations of petroleum are everywhere restricted
to strata of sedimentary origin. In the United States petroleum
is produced commercially from strata of all periods from Cambrian
to Quaternary, the most prolific sources being in strata of the
Carboniferous and Tertiary systems. The geological age of the chief
sources of petroleum production in each of the other oil-producing
countries of the world is indicated in the table following:
TABLE 1.--GEOLOGIC AGE OF PETROLEUM-BEARING FORMATIONS
Country System
_North America_
Canada Silurian and Devonian
Mexico Cretaceous and basal Tertiary
Alaska Tertiary (?)
_West Indies_
Trinidad Tertiary
Cuba Cretaceous and pre-Cretaceous
_South America_
Colombia Cretaceous and Tertiary
Venezuela Cretaceous and Tertiary
Peru Tertiary
Argentina Jurassic, Cretaceous and Tertiary
_Europe_
Russia Tertiary
Roumania Tertiary
Galicia Tertiary
Italy Tertiary
Germany (Alsace) Tertiary and pre-Tertiary
_Asia_
India Tertiary
Turkestan Tertiary
Persia Tertiary
_Africa_
Algeria Tertiary
Egypt Tertiary
_Oceania_
Japan Tertiary
Dutch East Indies Tertiary
New Zealand Cretaceous and Tertiary
From the foregoing table one might conclude that a direct relation
exists between the distribution of Tertiary rocks and the supply of
petroleum, but in the United States, which produces two-thirds of the
world’s current supply, the quest for petroleum has, under scientific
direction, included the entire range of the stratigraphic column, and
has found petroleum in considerable quantities in the rocks of each
geologic system younger than the Cambrian.
The fact that seeps and other surface indications of petroleum are
generally more pronounced in the relatively younger Mesozoic strata
than in the older Paleozoic formations, and the further fact that
geologic exploration for oil and gas in countries other than the
United States has been restricted in the main to areas containing the
most pronounced indications of petroleum, tend to account for the
predominance of the Tertiary system in the foregoing table and to
indicate the fallacy of attempts to estimate the world’s reserves of
petroleum on stratigraphic evidence alone.
Despite the broad geologic range of petroleum, its occurrence in
specific members, formations, groups, series or systems is by no means
universal. On the contrary, its occurrence is restricted to specific
localities in which are fulfilled certain variable relations, as yet
but little understood, that involve (1) the constitution, sequence
and content of organic matter of the sediments; (2) the nature and
degree of metamorphism they have undergone; (3) their structure; and
(4) their degree of saturation with salt water. Because the most
detailed geologic work is insufficient to provide a basis for the
appropriate evaluation of the numerous factors involved, and because
only a relatively small percentage of the areas of sedimentary rocks in
the world have been examined geologically in appreciable detail, any
estimate of the future supply of petroleum in the world is peculiarly
hazardous.
GEOGRAPHICAL DISTRIBUTION
The geographical distribution of petroleum is as wide relatively as
its geologic range. The oil fields of present commercial significance
are situated, in the order of their importance as contributors to the
world’s production of petroleum in 1917, in the United States, Russia,
Galicia, Mexico, Dutch East Indies, India, Persia, Japan and Formosa,
Roumania, Peru, Trinidad, Argentina, Egypt, Germany, Canada, Venezuela
and Italy. Small quantities of petroleum have also been reported from
Guatemala, Honduras, Costa Rica, Panama, Haiti, Porto Rico, Bolivia,
Chile, Spain, Arabia, China, Australia, Papua, Philippine Islands,
Nigeria, Belgian Congo, Gold Coast, Madagascar, and elsewhere. The
geographical distribution of petroleum in the world is shown on the
accompanying map. (Plate I.)
[Illustration: PLATE I.--Geographical distribution of the producing
petroleum fields of the world. By John D. Northrop.]
In the opinion of the author the most conspicuous developments of the
world’s supply of petroleum in the next decade will take place in the
countries that border the Caribbean Sea and the Gulf of Mexico. The
trend in this direction is unmistakable. From 1913 to 1917, the annual
production of petroleum in Mexico increased from 21,000,000 barrels to
56,000,000 barrels, and the potentialities of future production in that
country have been demonstrated to be almost beyond comprehension. The
output, originally considered valuable only as a source of fuel oil,
is now yielding, by modern refining methods, increasingly important
percentages of illuminating oils and gasoline. The only obstacles to
enormously increased production are unsettled political conditions and
inadequate facilities for marine transportation. These obstacles will
doubtless be overcome within the next few years, and barring unforeseen
contingencies Mexico will soon rank second among the oil-producing
countries of the world.[2] Judged by the results of exploratory work
already done in Venezuela and Colombia, both of those countries are
destined to contribute appreciably to the world’s supply of petroleum
within the next decade. Recently Colombia has given enough evidence of
ability to furnish high-grade petroleum from wells of large individual
capacity to warrant the large interests holding concessions there to
exert every effort to overcome the adverse natural conditions that
have so long barred the way to exploitation. Enough drilling has
already been done in Venezuela to demonstrate that the resources of
heavy-gravity asphalt-base petroleum in that country are large, and the
recent installation of a modern petroleum refinery for the treatment
of these oils on the island of Curacao, off the Venezuelan coast, has
provided the market necessary to active field development.
[2] Mexico ranked second in 1918 and 1919.
In Trinidad the production of petroleum exceeds 1,500,000 barrels
a year and has doubled in the last few years. With the increased
facilities for ocean transport of petroleum that are becoming
available, a large output is assured.
Cuba is not expected to become an important producer of petroleum, and
present knowledge concerning the petroleum resources of the Central
American countries is not such as to warrant the belief that oil fields
of material consequence will be developed in any of them.
Petroleum production in the United States is expected to reach its
maximum within the next two or three years and to decline steadily
thereafter, although this country is expected to remain the leading
oil-producing country of the world for the greater part, if not all, of
the coming decade.
As regards those oil-producing countries of North and South America
that have not been already mentioned, no significant changes in their
present status are anticipated.
The petroleum resources of Russia (including Asiatic Russia) are
believed sufficient to assure that country retaining its position
as the leading producer of petroleum in the Eastern Hemisphere far
beyond the next decade. During the last few years the output has
been obtained under increasing difficulties, and as a consequence
there has been no measure either of present productive capacity or
of potentialities. Concerning the future of Russia as a source of
petroleum Arnold[3] says: “Such large areas, both in European and
Asiatic Russia, yield unmistakable evidence of the presence of oil in
large quantities that it is to this country, among those of Europe and
Asia, to which the future must look for a supply.”
[3] ARNOLD, RALPH: “The World’s Oil Supply”: Report Am. Min. Cong.,
19th annual session, 1917, pp. 485-486.
Russia being endowed with petroleum reserves, both proved and
prospective, of great magnitude, the ultimate position of that country
as the leading oil-producer of the world seems reasonably assured.
Its immediate future is too intimately dependent on the progress from
political turmoil to warrant a forecast.
The oil fields of both Roumania and Galicia are believed to have passed
their maximum yield, and the possibilities of opening new fields of
consequence in those countries are not considered large enough to
justify a forecast of anything but a moderate decline of production in
future years. No material change in the status of the negligible oil
fields of Italy or of Alsace is anticipated at any time in the future.
With regard to the situation in Asia, the writer believes that the next
decade will witness a steady increase in the output of petroleum in
India, and the probable development of one or more important oil fields
in Persia and possibly of fields in Asia Minor, Turkestan and China.
In Oceania the same period will doubtless witness a material increase
in the production of petroleum in Japan and Formosa and in the Dutch
East Indies, together with the possible opening of new fields in Papua.
Africa will doubtless receive considerable attention from oil operators
in the next ten years, but on the basis of available evidence the
results obtained in that period will probably not be large enough to
affect the petroleum situation of the world.
POLITICAL CONTROL OF PRODUCTION
The status of the political control of the world’s output of petroleum
in 1917, as determined by the best data now available, is indicated in
the table following.
The accompanying diagram (Figure 1) shows the proportion of the world’s
production of petroleum contributed annually by each of the principal
producing countries in each of the last ten years.
TABLE 2.--POLITICAL CONTROL OF THE WORLD’S PRODUCTION OF PETROLEUM IN
1917
-----------------+-----------+----------+-------------
Source of | | |Country
production |Quantity of| |exercising
| production|Percentage|political
| (barrels)| of total |control
-----------------+-----------+----------+-------------
United States |335,315,601| 66.17 |United States
Russia | 69,000,000| 13.62 |Russia
Mexico | 55,292,770| 10.91 |Mexico
Dutch East Indies| 12,928,955| 2.55 |Holland
India | 8,078,843| 1.59 |Great Britain
Persia | 6,856,063| 1.36 |Persia
Galicia | 5,965,447| 1.18 |Poland (?)
Japan and Formosa| 2,898,654| 0.57 |Japan
Roumania | 2,681,870| 0.55 |Roumania
Peru | 2,533,417| 0.50 |Peru
Trinidad | 1,599,455| 0.32 |Great Britain
Argentina | 1,144,737| 0.23 |Argentina
Egypt | 1,008,750| 0.20 |Great Britain
Germany | 995,764| 0.20 |Germany
Canada | 205,332| 0.04 |Great Britain
Venezuela | 127,743| 0.03 |Venezuela
Italy | 50,334| 0.01 |Italy
Cuba | 19,167| |Cuba
+-----------+----------+
|506,702,902| 100.00 |
-----------------+-----------+----------+-------------
[Illustration: FIG. 1.--Proportion of the world’s output of petroleum
contributed annually by each of the chief producing countries,
1908-1917.]
Aside from the control exercised by Great Britain through its
protectorate relation over the petroleum resources of Egypt, control
of the petroleum resources of the various countries is mainly by
virtue of state sovereignty. This political control is in proportion
to the strength of the government in the country exercising it. Recent
developments whereby the British government becomes the majority
stockholder of a corporation controlling the oil resources of Persia,
practically transfer the political control, as well as the commercial
control, of Persian petroleum from Persia to England. Mexico’s recently
attempted firm political control of her vast petroleum resources
depends for its success upon her diplomatic ability in dealing with the
stronger governments of England and the United States, whose nationals
have acquired a commercial control that is threatened by Mexico’s new
and decided nationalistic policy.
COMMERCIAL CONTROL OF PRODUCTION
The commercial control of the world’s production of petroleum, as far
as nations are involved, is determined in the main through direct
ownership, of lands, leases and concessions, or by the control, through
holding corporations, of subsidiary companies holding fee, leases,
mineral rights or concessions of petroleum land. Except in Argentina,
where the domestic petroleum industry is owned and operated by the
state; in Germany, where the government participates directly in the
financing of petroleum enterprises through the Deutsche Bank; and in
Persia, where the British government owns a substantial interest in
a company owning and operating extensive concessions, the commercial
control of the petroleum industry is determined almost wholly by
aggregations of private capital acting in their own interests.
TABLE 3.--NATIONALITY AND EXTENT OF CONTROL OF DOMINANT INTEREST
------------------+-----------+----------------+------------------
| | |Approximate extent
| Production| Nationality | of control by
| in 1917 | of dominant |dominant interests
Country | (barrels) | interests | (per cent.)
------------------+-----------+----------------+------------------
United States |335,315,601|United States | 96
Russia | 69,000,000|British-Dutch | 40+
Mexico | 55,292,770|United States | 65
Dutch East Indies | 12,928,955|British-Dutch | 100
India | 6,078,843|British | 100
Persia | 6,856,063|British | 100
Galicia | 5,965,447|German | 100
Japan and Formosa | 2,898,654|Japanese | 100
Roumania | 2,681,870|British-Dutch | 36
Peru | 2,533,417|United States | 70
Trinidad | 1,599,455|British | 80
Argentina | 1,144,737|Argentinian | 100
Egypt | 1,008,750|British-Dutch | 100
Germany and Alsace| 995,746|German | 100
Canada | 205,332|United States[4]| 80-
Venezuela | 127,743|British-Dutch | 80 (?)
Italy | 50,000|French | 96
------------------+-----------+----------------+------------------
[4] By control of refining facilities.
So far as the author is aware, Canada is the only country in which the
petroleum industry may be said to be controlled by foreign (United
States) interests, this control being by virtue of an essential
monopoly of pipe-line and refining facilities.
The preceding table shows, according to the best information available,
the nationality and approximate extent of control exercised by the
dominant interest in each of the principal oil-producing countries of
the world in 1917.
POLITICAL AND COMMERCIAL CONTROL OF RESOURCES
The accompanying diagram (Figure 2) shows graphically the approximate
commercial control of the world’s production of petroleum in 1917.
[Illustration: FIG. 2.--Approximate commercial control of the world’s
production of petroleum in 1917.]
Commercial control of the petroleum industry in the _United States_
is in the hands of the so-called “Standard Oil Group” of companies,
through their control of most of the great pipe-line systems of the
country, of probably 75 per cent. of the refining facilities and of a
substantial part of the actual production. Other domestic interests
having important shares in the control of the petroleum industry in
the United States include the Southern Pacific Railroad Co., Cities
Service Co. (Doherty interests), General Petroleum Corporation, Gulf
Oil Corporation, Ohio Cities Gas Co., Cosden & Co., Sinclair Oil &
Refining Corporation, The Sun Co., the Texas Co., the Tide Water Oil
Co., and the Union Oil Co. Foreign interests in the United States
include purely British companies, which control a production of
about 2,000,000 barrels a year; British-Dutch companies represented
by the Royal Dutch-Shell Syndicate, which control a production of
about 9,000,000 barrels a year, together with refining and marketing
facilities; and Franco-Belgian companies controlling a yearly
production of about 1,000,000 barrels. Aside from the very probable
holdings by individual Germans of shares in companies engaged in one or
more phases of the petroleum industry of the United States, the author
is aware of no organized German interest in any phase of the domestic
industry.
Commercial control of the petroleum industry of _Russia_ is, under the
political conditions now existing in central Europe, largely a matter
of speculation. As nearly as can be ascertained, the dominant control
is in the hands of purely British, Franco-British, and British-Dutch
(Royal Dutch-Shell Syndicate) interests. Certain of the second-named
interests are allied closely with an additional group of capitalists
represented by the firm Nobel Bros., of much importance, the present
control of which is by no means clear, from the literature available
on the subject. Though originally Swedish, the financial interests now
involved in Nobel Bros. are believed to include representatives of
financial groups in England, France, and Germany as well, with control
probably lying with the Anglo-Swedish interests. Before the war, direct
German interest in Russian petroleum included control by the Deutsche
Bank through a Belgian company (the Petrole de Grosny) of the important
producing and refining company, A. I. Akverdoff & Co., control of which
is now in British or British-Dutch hands. As in the United States,
a considerable part of the actual production of petroleum in Russia
is distributed among a large number of individually weak companies,
dominated, through the control of pipe-line or refining facilities, by
one or another of the principal groups.
Of considerable importance in Russian petroleum affairs at one time was
the European Petroleum Union, organized for combat in the world markets
with the Standard Oil trust. This union included among others such
important petroleum operators as Nobel Bros., the Rothschild interests
(now Dutch-Shell), Mantaschoff (now Russian General Oil Corporation)
(British), and the Deutsche Bank, the latter controlling Akverdoff and
Spies in Russia, together with important companies in Roumania and
Galicia. How far this union controlled the affairs of its constituent
companies is not evident from available data, and its present influence
on companies now operating in Russia is uncertain.
Conditions in Russia make impossible any definite statement on the
petroleum situation. A decree of the Bolsheviki government, dated June
20, 1918, on the nationalization of the petroleum industry, declared as
the property of the state all movable and immovable property employed
in and belonging to that industry. Trading in oil was declared a state
monopoly and was delegated to the chief petroleum committee of the fuel
department of the supreme Council of National Economy. As the chief
producing areas are now under British military control, this decree is
ineffective.
Commercial control of petroleum in _Mexico_ is divided among United
States, British, and British-Dutch interests, which controlled about
65, 30 and 2 per cent., respectively, of the production in 1917. The
interests of the United States include the Doheny group, operating
principally as the Huasteca and Mexican Petroleum companies; the
Standard Oil Co. of New Jersey, operating as the Penn-Mex Fuel Co.;
the Sinclair interests, operating as the Freeport and Mexican Fuel Oil
Co.; the Texas Co.; Gulf Co.; Southern Pacific Railroad; and others.
The British interests are represented by the Pearsons, operating as
the Mexican Eagle Oil Co.; and the British-Dutch interests by La
Corona Petroleum Co., and Chijoles Oil, Ltd., controlled by the Royal
Dutch-Shell Syndicate. No exclusively German interests are known to
hold a substantial portion of any important company operating in Mexico.
Formerly concessions were freely granted to foreign individuals and
companies for the exploitation of mineral deposits, and oil lands were
sold by the native owners to foreigners. Article 27 of the constitution
of 1917 expressly forbids any but Mexican companies acquiring directly
or operating directly petroleum lands in Mexico.
All recent concessions for the exploitation of oil properties contain a
provision stating that the concession will be declared null if any of
the rights are transferred to any foreign government. The provisions
and the intent of a series of presidential decrees issued on February
19, 1918, July 8, 1918, July 31, 1918, and August 1, 1918, are to
nationalize all petroleum lands and to permit them to be worked only
by Mexican citizens or by companies that agree to consider themselves
Mexican and further agree not to invoke the protection of their
governments. A bill was presented in December, 1918, to carry out
Article 27 of the new constitution, but thus far no action has been
taken in the matter. The decrees and legislation growing out of Article
27 have been protested by the chief petroleum companies operating in
Mexico and by their respective governments.
Commercial control of the petroleum resources of the _Dutch East
Indies_ is in the hands of the Royal Dutch-Shell Syndicate and is
essentially absolute by reason of the restrictions contained in the
Netherlands East India Mining Act and subsequent supplements on foreign
acquisition of mining rights in the East Indian Archipelago. Actual
control is in the hands of the Bataafsche Petroleum Maatschappij,
which has a capital of $56,000,000 divided into five shares, three of
which are owned by the Royal Dutch Petroleum Co., and two by the Shell
Transport Trading Co. (British). Purely British interests control an
inconsequential production of petroleum in British North Borneo and in
Sarawak.
Prospecting licenses and concessions are granted only to Dutch subjects
and to Dutch companies. It is officially stated that the object of
these restrictions is not to exclude foreign capital; this is precisely
their effect, and on account of the economic monopoly which the Royal
Dutch-Shell now has of the petroleum industry of the Dutch East Indies,
it would be very difficult for any new enterprise to gain a foothold.
Commercial control of the petroleum resources of _India_ is exercised
by the Burma Oil Co. through its dominance of production, refineries,
and pipe-line facilities, and by reason of agreements as to marketing
with its principal competitor, the British Burma Petroleum Co., both
controlled by British capital. The Burma Oil Co. is allied with, if not
directly controlled by, a group of British financiers, one or more of
whom is interested in companies in Trinidad and in Persia.
During the war the petroleum industry of _Roumania_ was temporarily
wholly in control of German and Austrian interests. The advanced stage
of development of the oil fields prior to the war and the intentional
damage, much of which is irreparable, wrought in the fields by British
detachments in 1916, when capture of the fields by Austro-German forces
became inevitable, are believed, however, to have deprived Germany of a
large part of the fruits of her conquest, as it is considered doubtful
if the Roumanian fields can ever again be made to yield petroleum at
the pre-war rate of 12,000,000 barrels per annum.
The American Petroleum Institute states that “Roumania is considering
the erection of a state monopoly of both production and distribution on
the ruins of the monopoly which Germany sought to establish there but
was compelled by the armistice to renounce.”
Prior to the war Dutch or rather British-Dutch (Dutch-Shell) interests
controlled about 30 per cent. of the annual production of petroleum in
Roumania, German interests about 26 per cent., United States interests
(Standard Oil Co. of New Jersey) about 18 per cent., French interests
about 16 per cent., purely British interests about 6 per cent., and
Belgian and Roumanian interests the remainder.
Through the Austrian “Society Gaz” and the German “Deutsche Erdoel
Aktien-gesellschaft,” German interests have dominated the petroleum
industry of _Galicia_ for years through the direct control of the
larger producing and refining interests and by reason of the fact
that the smaller scattered interests were dependent almost entirely
on the two leading companies, the Galizische Karpathen Petroleum A.
G. (controlled by Society Gaz), and the Premier Oil & Pipe Line Co.
(controlled by the Deutsche Erdoel A. G., which is in turn controlled
by the Diskonto und Bleichroeder, a branch of the Deutche Bank) for
their transportation and refining facilities. British and Dutch capital
were involved in the Galician fields prior to the war, but not, it is
believed, to a controlling extent in either of the dominant companies.
The petroleum industry of _Japan_ is controlled wholly by Japanese
interests and to a preponderant extent by a single company, the Nippon
Oil Co. So far as the author is aware, no foreign interests share
in any way in the development or control of the Japanese petroleum
industry.
Commercial control of the petroleum industry of _Peru_ is exercised by
the Standard Oil Co. of New Jersey through its subsidiary, the Imperial
Oil Co. of Canada. This control involves about 70 per cent. of the
annual production, the remaining 30 per cent. being divided in the
ratio of 27 to 3 between British and Italian interests respectively. So
far as is known no other interests are involved.
The interests engaged in the petroleum industry of _Trinidad_ include
financial groups purely British, controlling about 57 per cent. of
the production; British-Dutch interests (Dutch-Shell) controlling
about 23 per cent., and United States interests (General Asphalt Co.),
controlling the remainder. The leading operator in Trinidad is the
Trinidad Leaseholds, Ltd., a British company that in 1917 produced
about 42 per cent. of the petroleum output credited to Trinidad that
year.
Commercial control of the petroleum resources of lower _Alsace_
has been in the hands of the Vereinigte Pechelbronner Oelbergwerke
Gesellschaft and the Deutsche Tiefbohr A. G. Both of these companies
are believed to be controlled by the Deutsche Bank through the Deutsche
Erdoel A. G., and the Diskonto und Bleichroeder. The negligible
production of petroleum in _Hanover_ is doubtless under the same
financial control, although data that would warrant a positive
statement to that effect are not at hand.
The petroleum reserves of _Argentina_, which comprise the only areas
from which petroleum is being commercially produced in that country,
are operated by the state through the Comodora Rivadavia Petroleum
Commission. German interests are thought to have been involved in two
or three unsuccessful efforts in the last decade to obtain petroleum on
tracts adjacent to the government reserves in the Comodora Rivadavia
district.
The petroleum industry in _Egypt_ is controlled wholly by British-Dutch
capital operating as the Anglo-Egyptian Oilfields, Ltd., a subsidiary
of the Royal Dutch-Shell Syndicate, through the Anglo-Saxon Petroleum
Co., the last-named company being predominantly British.
Commercial control of the petroleum industry in _Canada_ is exercised
in effect by the Standard Oil Co. of New Jersey, through its subsidiary
the Imperial Oil Co. of Canada. This control is exercised through a
virtual monopoly of pipe-line and refining facilities, and by the
producing interests, though British and Canadian, being individually
small and unorganized.
The production of petroleum in _Italy_, which is small, represents the
output of two companies, the Petroli d’Italia, in which French capital
is predominant, and the Petrolifera Italiana, which is believed to be
essentially Italian.
Financial groups interested in petroleum in _Venezuela_ include the
Royal Dutch-Shell Syndicate (British-Dutch), the General Asphalt
Co., (United States), and a group of British financiers who control
properties in Trinidad as well as the most important group of
companies, other than Nobels and the Dutch-Shell, in Russia.
United States interests, including the Standard Oil Co., the Doherty
interests, the Texas Co., the Gulf Corporation, and the Island Oil
Transport Corporation, are predominant in the quest for petroleum in
_Colombia_. The Venezuelan Oil Concessions, Ltd., an English company
operating in Venezuela, is reported to have obtained a concession to
explore for oil in the northwest district of _British Guiana_.
The Sinclair interests (United States) are particularly active in
the search for petroleum in _Costa Rica_ and _Panama_; and the Sun
Co. (United States) is understood to be investigating petroleum
possibilities in other Central American republics.
The Pearson interests (British) have expended considerable effort in
the quest of petroleum in _Algeria_ and _Morocco_, and in the former
country American interests (E. E. Smith) are reported to have recently
sought petroleum concessions from the French government.
British interests, including the British government, control extensive
petroleum concessions in _Persia_, from which oil in unreported
quantities is now being produced.
The most promising oil territory of Persia has recently been closed
to American activity through the granting of a concession aggregating
approximately 500,000 square miles to a British concern, the
Anglo-Persian Oil Co., a majority of whose voting stock is owned by the
British government. This concession runs until 1961. The importance of
the oil territory is indicated by its reported potential capacity of
30,000,000 barrels yearly, with tremendous reserves undeveloped.
United States interests (Standard Oil Co. of New York) are understood
to still retain control over the petroleum rights in certain provinces
in _China_, where active prospecting in two or three localities a few
years ago was reported to have yielded unfavorable results.
Petroleum in small quantities is produced in _New Zealand_ by purely
British interests.
POSITION OF THE LEADING POWERS
=United States.=--As regards probable developments in the petroleum
industry within the next decade, the United States, thanks to the
enterprise and foresightedness of financial interests of domestic
origin, seems to have a strong position. United States interests
are practically supreme in the commercial control of the petroleum
resources of the Western Hemisphere, dominating the petroleum
industry in the United States, Canada, Mexico, and Peru, holding
substantial interests in Trinidad and Venezuela and in the prospective
petroliferous areas in Central America and Colombia. Its only
competitors are British and British-Dutch interests, which control the
petroleum situation in Trinidad and are not only strongly intrenched in
the United States, Mexico, and Venezuela, but are aggressively seeking
to enlarge their holdings in those countries and to gain footholds
elsewhere. Unless the United States adopts measures, such as Federal
operation of the trunk pipe-lines, to limit the aggressions of foreign
capital in this country, and erects a firm forward-looking governmental
policy toward the protection of investments of its citizens in
petroleum properties in other countries, particularly Latin-American
countries, it may witness its commercial supremacy in petroleum affairs
wane and disappear, while it is yet the largest political contributor
to the world’s supply of petroleum.
As contrasted with the strongly nationalistic and deliberately
aggressive governmental policy adopted by Great Britain, France,
Holland and some other nations, the United States has never adopted
any policy founded on recognition of the importance of political and
commercial control of petroleum. American companies may not own and
operate oil lands in the British Empire, in the French possessions,
or the Dutch colonies, but the only American restrictions on foreign
activity in the petroleum industry are those which cover all minerals
contained in public lands. Only American citizens, or those who have
declared their intention of becoming American citizens, can apply for
patents to such land. However, after the application is made, there is
no restriction on transfer of the mineral rights thus secured.
=Great Britain.=--British and British-Dutch interests easily dominate
the petroleum situation in the Eastern Hemisphere by supremacy in the
petroleum industries of Russia, Persia, India, and the Netherlands
East Indies. Domination of the petroleum situation in Russia alone
is believed tantamount to dominion of the petroleum situation in the
entire Eastern Hemisphere for the greater part of the next century. The
strength of Great Britain’s present position in the world’s petroleum
affairs lies in a strong governmental policy and in the wide scope of
British petroleum investments, embracing practically every country
where petroleum is an important product and nearly every country where
it is a product of potential importance. The general policy of the
British Empire seems to be to control all oil development and restrict
operations by foreign capital. In Australia licenses are required for
the exploitation of oil lands, and only companies incorporated in the
United Kingdom or a British possession may receive such licenses. The
Governor General has the right of pre-emption of all oil produced
and in case of war may take control of all oil properties. In Canada,
in those western provinces where minerals are the property of the
Crown, petroleum and natural gas lands may be leased only to British
companies. A similar restriction exists in Burma. In Burma a monopoly
of the petroleum industry for 99 years was granted to the Burma Oil Co.
in 1865. This grant seems to have been inspired by fear of the Standard
Oil Co. of the United States, for the agreement between the company
and the government stipulates that the former shall not amalgamate
with other oil companies. Regulations of like effect exist in other
British colonies where oil exists; in Barbados the British government
has the right of pre-emption of all oil residues; in British Guiana,
non-British companies can only hold lands by special license of the
Governor; in British Honduras all mineral oil is reserved to the Crown;
in southern Nigeria, the Gold Coast, Trinidad, and Tobago the British
government has the right of pre-emption over all petroleum.
The recent granting of a concession amounting to a monopoly in the
most promising oil district of Persia (a region that many oil experts
believe likely to become one of the most important in the world) to a
British company controlled directly (by stock ownership) by the British
government, signifies an aggressive policy of England, outside of her
own dominions, to secure and hold, under government control, oil lands
in all parts of the globe.
It is understood that the best-known oil territories in Venezuela are
already covered by concessions that are practically all controlled
either directly or indirectly by British interests, chiefly the
Dutch-Shell Syndicate.
So far as observed, German interests actually dominate the petroleum
industry in Galicia and at home. Whether forced back on its own
petroleum resources or on these reinforced by those of Galicia, Germany
will obviously have an inadequate supply, and in consequence German
interests are likely to be particularly aggressive in seeking petroleum
in Mesopotamia, Africa and South America.
=France.=--Since control of the petroleum interests of the
Rothschilds passed into the hands of the Royal Dutch-Shell Syndicate
(British-Dutch), the influence of French finances in petroleum affairs
has been negligible, outside Galicia and Italy, where its potency was
not great. French capital will undoubtedly participate in efforts
to determine the petroleum reserve of the Barbary States, French
dependencies, but it will hardly be much involved in organized efforts
to control the world situation with respect to petroleum.
The French mining law holds that oil and gas belong to the state, and
may be exploited under concessions, the area and time limit of which
are matters of negotiations between the applicant and the authorities.
It is understood that the French government is unwilling to grant oil
concessions except to companies the majority of whose stock is held by
French citizens. A company incorporated recently to work the Algerian
oil fields contains in its articles of incorporation the provision that
60 per cent. of its stock must be held by French citizens.
=Japan.=--Japanese investments in the world’s petroleum industry have
not yet attained significant proportions outside Japan itself, though
the Japanese government is officially alive to the importance of
Japanese investments in petroleum properties in Mexico, particularly
Lower California and Sonora; China; and undoubtedly Russia. Hence large
investments of Japanese capital in the petroleum industry in one or all
of those countries may be expected in the near future.
SUMMARY
Petroleum in its crude or semi-refined state is used as fuel under
locomotive and marine boilers and as a lubricant. The principal use
of petroleum, however, is in the manufacture of numerous refined
products. Some of the more important products and their uses are
as follows: ether, as an anæsthetic in surgery; gasoline, as fuel
in internal-combustion engines; naphthas, as solvents and in the
manufacture of commercial gasoline; kerosene, as an illuminant and as
a fuel for farm tractors; lubricating oils; waxes, as preservatives,
illuminants, and surgical dressings in treatment of burns; petroleum
coke, in metallurgical processes and in the manufacture of battery
carbons and arc-light pencils; heavy fuel oils; road oils; artificial
asphalts, for pavements. The use of petroleum and its products as fuel,
as a lubricant, and for illumination may be considered essential.
Substitutes for most of these uses are known, but they are either
inefficient or not readily available.
The most prolific sources of petroleum are in sedimentary strata of the
Carboniferous and Tertiary periods. Because the most detailed geologic
work is insufficient to provide for the appropriate evaluation of the
numerous factors involved in the occurrence of petroleum, and because
only a relatively small percentage of the areas of sedimentary rocks
throughout the world have been examined geologically in any appreciable
detail, it is difficult to estimate the future supply of petroleum
or to predict that large accumulations will be discovered in any
particular region.
The principal countries contributing to the world’s production of
petroleum rank as follows in general order of importance: United
States, Russia, Mexico, Dutch East Indies, Roumania, India, Persia and
Galicia. Other countries produce less than 2 per cent. of the annual
total. The greatest change that is likely to come in the geographical
distribution of production is a larger output from the countries
bordering the Caribbean Sea and the Gulf of Mexico, and from the
Persian and Mesopotamian fields. Mexico now ranks second to the United
States, and South American countries promise to become more important
contributors to the world’s production than they now are. Russia is
expected to become ultimately one of the chief producers of petroleum.
Within the next decade, through improved methods of production and
through the further amalgamation of producing, transporting, refining,
and marketing companies into strong units, the output will undoubtedly
be larger and will be more economically produced. In the refining of
petroleum it is probable that improved methods will make possible the
recovery of a larger percentage of lighter products from low-grade
petroleum. Internal-combustion engines are being modified so as to
run on petroleum products of lower volatility than gasoline. The use
of petroleum as fuel under railroad and marine boilers is expected to
increase enormously in the next decade. As the output of the producing
fields declines, the vast deposits of oil shale in the western United
States will be developed as a source of oil.
So far as is known, political control of the petroleum resources of
the world is determined by state sovereignty (see Plate I, page 7).
In normal times, the United States controls politically over 66 per
cent. of the present output of petroleum. Russia and Mexico ranked
second and third in 1917, controlling 13.6 per cent. and 10.9 per
cent., respectively. The remaining 9 per cent. was controlled by
Great Britain, Holland, Persia (British government owned), Roumania,
Austria-Hungary, Japan, Peru, Germany, Argentina and Italy in the order
named.
The table showing the nationality and the approximate extent of the
commercial control exercised by the dominant interests in each of
the principal oil-producing countries, and Fig. 2 (page 12) are the
best possible summaries of commercial control. United States capital
is supreme in the commercial control of the petroleum industry of
the Western Hemisphere. British and British-Dutch interests easily
dominate the petroleum situation in the Eastern Hemisphere. France no
longer exercises control over any important fields. Japanese interests,
controlling at present all the oil fields of Japan, may be expected to
make large investments in the petroleum fields of Mexico, China and
Russia.