The Prize, Chapter 19 Overview

The Prize, Chapter 19 Overview

In 1937, before the outbreak of war and in anticipation of war, a special committee was formed to examine the possibility of Britain adopting an “oil from coal” synthetic fuels strategy similar to what Germany had done in WWI. The strategy was rejected, as importing through many ports was deemed less vulnerable than easily bombed hydrogenation plants. Besides, it would have been more costly compared to the cheaper and readily available oil. Also, 85% of Britain’s domestic refining marketing was in the hands of three western/friendly companies, Shell, Anglo-Iranian, and Standard Oil of New Jersey’s (SONJ) British subsidiary, and two of these had their home in Britain. The British government also decided in 1938 that in case of war the entire British oil industry would be run under one organization and not through three separate competing companies.

Fears of oil shortage led to rationing being imposed on recreational vehicles in Britain, which led to a big boom in bicycling. Under the threat of German invasion, 17,000 gasoline stations in England were shut down, leaving 2,000 stations that could at least be defended.

The two critical questions of importance to Britain for war with the Germans were whether oil would be available and if they could pay for it. The United States was responsible for two-thirds of total world production and, therefore, the answer to whether oil would be available was yes. To help Britain overcome the question of payment, on March 1941, the Lend-Lease was instituted. This removed the problem of finance as a constraint on American supply to Britain, since, with the Lend-Lease, American oil could now be lent and repaid later. The neutrality legislation which had placed restrictions on the shipment of supplies was also gradually lifted to help loosen restrictions on shipment of supplies to Britain. Thus, by spring 1941, all the important steps had been taken to ensure an adequate flow of oil from America to Britain.

We have learned so far this semester that having access to oil reserves is not helpful if you cannot get to it and move it around. Vulnerability of supply lines could result in shortages even if there is plenty of oil. The vulnerability issue became a key element of World War II, and we think of it as the German U-Boat crisis.

An alternative to tanker shipment came into being when pipeline construction (dubbed Big Inch) from Texas to the East Coast, was initiated in August 1942. Within a year and a half of construction, Big Inch was carrying one-half of all crude moving East through its 1,254 miles by the end of 1943. Little Inch, which was 1,475 miles, was built between April 1943 and March 1944 to carry gasoline and other refined products also from the Southwest to the East Coast. By the end of 1944, about 42% of all oil was transported to the east coast through pipelines, compared to just 4% at the beginning of 1942. We see as history unfolds that pipelines revolutionize the oil industry, even in peacetime.

Coordinating unity among the many competing US forces (Congress, the Administration, the companies, the press, etc.) in the US was very difficult. To address this challenge, an effective government-industry partnership was gradually established and sought antitrust exemption from the Justice Department. Although there were temporary shortages, there was never a serious oil supply crisis in the US. The overall production record in the US was quite good. Meanwhile, between December 1941 and August 1945, the Allies consumed 7 billion barrels of oil, 6 billion of which came from the United States. It is also interesting to note that the wartime oil output was more than 25% of all oil produced in the US from the time of Colonel Drake to 1941!

To accommodate the war oil output, consumption/rationing was considered. Efforts were made to get industrial users to switch from oil to coal, and President Roosevelt took strong interest in the potential of America’s largely underutilized natural gas resources. However, gasoline was still the focus of contention. America, which had rejected voluntary conservation, now accepted enforced rationing because there was a war.

Oil clearly was demonstrated to be essential in WWII as it played a significant role for the Army. Before WWII, the Army did not even keep records of its oil use. While WWI had been a static, more relatively stationary war, WWII was a war of motion, and, at the peaks, the American forces in Europe used one hundred times more gasoline in WWII than in WWI. A number of innovations were also created to facilitate the use and flow of petroleum. A simple innovation that had a profound effect on the conduct of the war was the 5-gallon gasoline can. This was based on an improved design on captured German cans that led to the common nicknames “jerrycan” and “blitz can.” Other innovations included the all-purpose motor fuel and all-purpose diesel fuel and the development of the 100-octane fuel, through catalytic cracking, for better aircraft performance. The 100-octane fuel provided greater bursts of speed, more power, quicker takeoff, longer range, and greater maneuverability.