48
had brought in enough money to allow Thomas Williams to establish a cosmetics
factory in Chicago, which he named Maybell Laboratories in honor of his sister.
Williams also gave his Vaseline-based mascara and cosmetic products the new and
much more memorable name “Maybelline.” The creation of similar unexpected
byproducts from the petroleum industry continues into the present, with the most
recognizable example being plastics.
The oil rush in northwestern Pennsylvania resulted in wide swings in petroleum
prices during the first decade of oil production. Within 2 years of the completion of
Drake’s well, the proliferation of production from Oil Creek valley caused the price
of oil to drop from $10 a barrel to 10 cents a barrel (Hildegarde 1959). Producers
banded together in 1861 to create the Oil Creek Association in an attempt to restrict
output and maintain a price of at least $4 a barrel. They were possibly the world’s
first oil cartel.
Oil economics are driven almost purely by supply and demand. When demand is
high and the supply low, prices go up. This marks the beginning of a boom cycle as
people rush in to capitalize on the high prices. In short order, the frenzy of production activity causes the supply to greatly exceed demand, and prices drop. Wells are
shut in, people lose their jobs and production falls in a bust. This drop in production
then reduces the supply, and with demand continuing, shortages soon develop and
prices climb again. The economics are of course more complicated than this simple
example, but the boom and bust nature of the oil and gas business has existed since
the beginning. People who work in the industry have an understanding of the cycle
and generally possess a gallows sense of humor about it. Typical joke: “What do
you call a geologist in Houston during an oil bust? Hey, waiter!”
As oil production was peaking in Pennsylvania in the 1880s, natural gas began to
be produced in Ohio and Indiana. Most of the gas used in the nineteenth century for
lighting and cooking was a manufactured fuel known as “town gas.” This was made
by heating up coal and water in the absence of oxygen. The heat would dissociate
the H 2 O water molecules into two hydrogen atoms and a single oxygen. The hydrogens would combine to create H 2 or hydrogen gas, and the oxygen would partially
combust the carbon in the coal to create CO or carbon monoxide. Both of these
gases will burn in air, and the substance was piped into residences and businesses.
It is hard to fathom today how folks could have allowed the deadly CO gas into their
houses. Those were the days when you could literally put your head in the oven and
end it all by taking a few deep breaths. Gas leaks often killed entire families quietly
while they slept.
Natural gas is composed of non-toxic methane and is much safer than town gas.
Systems for capturing it at a wellhead and transporting it to a customer were in their
infancy, however, and drillers often hit gas at pressures they could not contain.
Some of the resulting flares were nothing short of spectacular, including the “Karg
Well” drilled in 1886 at Findlay, Ohio. The site historical marker states that it produced 12 million cubic feet (340,000 m
3
) of gas per day at a pressure that could not
be contained and shot a plume of fire a 100 feet (30 m) high for 4 months. The flare
was said to be visible from more than 30 miles (48 km) away.
3 The History of Oil & Gas Development in the U.S.
had brought in enough money to allow Thomas Williams to establish a cosmetics
factory in Chicago, which he named Maybell Laboratories in honor of his sister.
Williams also gave his Vaseline-based mascara and cosmetic products the new and
much more memorable name “Maybelline.” The creation of similar unexpected
byproducts from the petroleum industry continues into the present, with the most
recognizable example being plastics.
The oil rush in northwestern Pennsylvania resulted in wide swings in petroleum
prices during the first decade of oil production. Within 2 years of the completion of
Drake’s well, the proliferation of production from Oil Creek valley caused the price
of oil to drop from $10 a barrel to 10 cents a barrel (Hildegarde 1959). Producers
banded together in 1861 to create the Oil Creek Association in an attempt to restrict
output and maintain a price of at least $4 a barrel. They were possibly the world’s
first oil cartel.
Oil economics are driven almost purely by supply and demand. When demand is
high and the supply low, prices go up. This marks the beginning of a boom cycle as
people rush in to capitalize on the high prices. In short order, the frenzy of production activity causes the supply to greatly exceed demand, and prices drop. Wells are
shut in, people lose their jobs and production falls in a bust. This drop in production
then reduces the supply, and with demand continuing, shortages soon develop and
prices climb again. The economics are of course more complicated than this simple
example, but the boom and bust nature of the oil and gas business has existed since
the beginning. People who work in the industry have an understanding of the cycle
and generally possess a gallows sense of humor about it. Typical joke: “What do
you call a geologist in Houston during an oil bust? Hey, waiter!”
As oil production was peaking in Pennsylvania in the 1880s, natural gas began to
be produced in Ohio and Indiana. Most of the gas used in the nineteenth century for
lighting and cooking was a manufactured fuel known as “town gas.” This was made
by heating up coal and water in the absence of oxygen. The heat would dissociate
the H 2 O water molecules into two hydrogen atoms and a single oxygen. The hydrogens would combine to create H 2 or hydrogen gas, and the oxygen would partially
combust the carbon in the coal to create CO or carbon monoxide. Both of these
gases will burn in air, and the substance was piped into residences and businesses.
It is hard to fathom today how folks could have allowed the deadly CO gas into their
houses. Those were the days when you could literally put your head in the oven and
end it all by taking a few deep breaths. Gas leaks often killed entire families quietly
while they slept.
Natural gas is composed of non-toxic methane and is much safer than town gas.
Systems for capturing it at a wellhead and transporting it to a customer were in their
infancy, however, and drillers often hit gas at pressures they could not contain.
Some of the resulting flares were nothing short of spectacular, including the “Karg
Well” drilled in 1886 at Findlay, Ohio. The site historical marker states that it produced 12 million cubic feet (340,000 m
3
) of gas per day at a pressure that could not
be contained and shot a plume of fire a 100 feet (30 m) high for 4 months. The flare
was said to be visible from more than 30 miles (48 km) away.
3 The History of Oil & Gas Development in the U.S.