# When did crude oil become a valuable commodity? **URL:** \ **Category:** Factual Questions\ **Created:** [January 1, 2012, 10:10am UTC](https://boards.straightdope.com/t/when-did-crude-oil-become-a-valuable-commodity/608027 "2012-01-01T10:10:43Z")\ **Posts on this page:** 20\ **Page:** 1
**Author:** ![bardos](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/bardos/32/1069_2.png) [@bardos](https://boards.straightdope.com/u/bardos)\ **Post date:** [January 1, 2012, 10:10am UTC](https://boards.straightdope.com/t/when-did-crude-oil-become-a-valuable-commodity/608027/1 "2012-01-01T10:10:43Z")
Believe it or not I am watching re-runs of the Lone Ranger series from the 50’s. Episode s01E26 (1950) is very typical of the genre, some unknown person (well it’s obvious who it is) is trying to stop a rancher from making a scheduled mortgage payment so that (according to the contract) she (the original seller) can annul the sale and get the land back. After the first two minutes of watching the episode I said “Ok, there’s gold on the land or the railroad is coming through”. 🙂 Surprise, it turns out there is oil on the land and the Lone Ranger tells the ranch owner that he’ll be rich. So my question is, in the old west, say 1870’s or thereabouts, was oil really a valuable commodity. When did oil become really valuable? ---
**Author:** ![Little\_Nemo](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/little_nemo/32/3120_2.png) [@Little\_Nemo](https://boards.straightdope.com/u/Little_Nemo)\ **Post date:** [January 1, 2012, 10:48am UTC](https://boards.straightdope.com/t/when-did-crude-oil-become-a-valuable-commodity/608027/2 "2012-01-01T10:48:02Z")
Crude oil was a salable commodity in the 1870’s. It could be refined into kerosene for use as a lamp fuel and there were some early gasoline-fueled engines in use. But oil didn’t really take off until the early twentieth century. ---
**Author:** ![Alessan](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/alessan/32/465_2.png) [@Alessan](https://boards.straightdope.com/u/Alessan)\ **Post date:** [January 1, 2012, 11:06am UTC](https://boards.straightdope.com/t/when-did-crude-oil-become-a-valuable-commodity/608027/3 "2012-01-01T11:06:40Z")
Some historians set a key date at 1914, when Minister of the Navy Winston Churchill ordered that the Royal Navy (at the time the largest fleet in the world) charge from coal to diesel power. All other navies followed suit, which led to a massive explosion in oil exploration. Everything else followed from that. ---
**Author:** ![bardos](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/bardos/32/1069_2.png) [@bardos](https://boards.straightdope.com/u/bardos)\ **Post date:** [January 1, 2012, 11:08am UTC](https://boards.straightdope.com/t/when-did-crude-oil-become-a-valuable-commodity/608027/4 "2012-01-01T11:08:31Z")
Thank you for the replies. But my question is: Was this as rich a find as portrayed in the episode? Would it lead to wealth at this time in history? ---
**Author:** ![Little\_Nemo](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/little_nemo/32/3120_2.png) [@Little\_Nemo](https://boards.straightdope.com/u/Little_Nemo)\ **Post date:** [January 1, 2012, 1:25pm UTC](https://boards.straightdope.com/t/when-did-crude-oil-become-a-valuable-commodity/608027/5 "2012-01-01T13:25:08Z")
Oil would have been a newsworthy commodity in the 1870’s. Oil prices had fluctuated wildly in the 1860’s. (In 1861, the price of a barrel of oil dropped from ten dollars in January to ten cents in December.) John D. Rockefeller founded the Standard Oil Company in 1870 and started buying up oil refineries and oilfields. I couldn’t find figures for the entire decade but the price of a barrel of oil was $4.00 in 1870, $4.50 in 1871, $3.75 in 1872, and $1.85 in 1873 (these are the averages for the year). According to the 1870 census, the average American worker earned $129 a year. The 1880 census figure was $116. So in 1870, 32 barrels of oil was the equivalent of an average annual wage. I’ve read of top oil wells in the 1870’s pumping 5000 barrels a day. (Pennsylvania, which was the world’s leading oil producing region in the 1870’s produced around 10,000,000 barrels a year.) So let’s say it was a smaller well producing about 200 barrels a day (73,000 barrels a year). That would give you an annual income that about 2300 times higher than the average. To put that in modern figures, the average annual American salary is now around $42,000. So it would be the equivalent of about $96,000,000 a year. ---
**Author:** ![bardos](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/bardos/32/1069_2.png) [@bardos](https://boards.straightdope.com/u/bardos)\ **Post date:** [January 1, 2012, 1:40pm UTC](https://boards.straightdope.com/t/when-did-crude-oil-become-a-valuable-commodity/608027/6 "2012-01-01T13:40:17Z")
Little Nemo – brilliant answer, thank you very much. Hi-yo Silver! ---
**Author:** ![Xema](https://avatars.discourse-cdn.com/v4/letter/x/9de053/32.png) [@Xema](https://boards.straightdope.com/u/Xema)\ **Post date:** [January 1, 2012, 2:42pm UTC](https://boards.straightdope.com/t/when-did-crude-oil-become-a-valuable-commodity/608027/7 "2012-01-01T14:42:47Z")
> [@Little\_Nemo](#): > > John D. Rockefeller founded the Standard Oil Company in 1870 … It’s notable that he was seriously rich from oil (and related ventures, like transporting it) before the advent of the automobile. ---
**Author:** ![SandyHook](https://avatars.discourse-cdn.com/v4/letter/s/dec6dc/32.png) [@SandyHook](https://boards.straightdope.com/u/SandyHook)\ **Post date:** [January 1, 2012, 5:08pm UTC](https://boards.straightdope.com/t/when-did-crude-oil-become-a-valuable-commodity/608027/8 "2012-01-01T17:08:04Z")
> [@Little\_Nemo](#): > > Oil would have been a newsworthy commodity in the 1870’s. Oil prices had fluctuated wildly in the 1860’s. (In 1861, the price of a barrel of oil dropped from ten dollars in January to ten cents in December.) John D. Rockefeller founded the Standard Oil Company in 1870 and started buying up oil refineries and oilfields. > > I couldn’t find figures for the entire decade but the price of a barrel of oil was $4.00 in 1870, $4.50 in 1871, $3.75 in 1872, and $1.85 in 1873 (these are the averages for the year). > > According to the 1870 census, the average American worker earned $129 a year. The 1880 census figure was $116. So in 1870, 32 barrels of oil was the equivalent of an average annual wage. > > I’ve read of top oil wells in the 1870’s pumping 5000 barrels a day. (Pennsylvania, which was the world’s leading oil producing region in the 1870’s produced around 10,000,000 barrels a year.) > So let’s say it was a smaller well producing about 200 barrels a day (73,000 barrels a year). That would give you an annual income that about 2300 times higher than the average. > > To put that in modern figures, the average annual American salary is now around $42,000. So it would be the equivalent of about $96,000,000 a year. **Little Nemo** has pretty much given us the answer. Yeah, it was enough to make you rich by almost any defination of rich. But I don’t think the lucky rancher would have been $96,000,000 rich. The $4/bbl price would have to include the cost of extraction, transportation to a refinery, and other costs of production. It’s typical in the oil business for the land owner to get to get a percentage of the price. So unless the rancher is doing his own drilling and hauling he’s just going to have to learn to get along on something like $9,000,000 a year. ---
**Author:** ![Snnipe\_70E](https://avatars.discourse-cdn.com/v4/letter/s/b5a626/32.png) [@Snnipe\_70E](https://boards.straightdope.com/u/Snnipe_70E)\ **Post date:** [January 1, 2012, 5:52pm UTC](https://boards.straightdope.com/t/when-did-crude-oil-become-a-valuable-commodity/608027/9 "2012-01-01T17:52:08Z")
> [@Alessan](#): > > Some historians set a key date at 1914, when Minister of the Navy Winston Churchill ordered that the Royal Navy (at the time the largest fleet in the world) charge from coal to diesel power. All other navies followed suit, which led to a massive explosion in oil exploration. Everything else followed from that. From coal to diesel? The Royal Navy has steam ships I would expect the switch would have been to black oil, either bunker “C” or something like Navy special. ---
**Author:** ![Little\_Nemo](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/little_nemo/32/3120_2.png) [@Little\_Nemo](https://boards.straightdope.com/u/Little_Nemo)\ **Post date:** [January 1, 2012, 6:39pm UTC](https://boards.straightdope.com/t/when-did-crude-oil-become-a-valuable-commodity/608027/10 "2012-01-01T18:39:45Z")
> [@SandyHook](#): > > But I don’t think the lucky rancher would have been $96,000,000 rich. The $4/bbl price would have to include the cost of extraction, transportation to a refinery, and other costs of production. > > It’s typical in the oil business for the land owner to get to get a percentage of the price. So unless the rancher is doing his own drilling and hauling he’s just going to have to learn to get along on something like $9,000,000 a year. I’ll also admit I pretty much just made up that 200-barrels-a-day figure. I found references to 5000 barrel a day wells but those were top producers. I couldn’t find a reference to what a “typical” well produced. ---
**Author:** ![thelabdude](https://avatars.discourse-cdn.com/v4/letter/t/dc4da7/32.png) [@thelabdude](https://boards.straightdope.com/u/thelabdude)\ **Post date:** [January 2, 2012, 3:12am UTC](https://boards.straightdope.com/t/when-did-crude-oil-become-a-valuable-commodity/608027/11 "2012-01-02T03:12:50Z")
I think when the Indians found uses for the black scum off Oil Creek. How do you think Colonel Drake knew to drill at Titusville? Hijack, are there other places in the world where oil was found naturally on waters? ---
**Author:** ![MarcusF](https://avatars.discourse-cdn.com/v4/letter/m/67e7ee/32.png) [@MarcusF](https://boards.straightdope.com/u/MarcusF)\ **Post date:** [January 2, 2012, 9:17am UTC](https://boards.straightdope.com/t/when-did-crude-oil-become-a-valuable-commodity/608027/12 "2012-01-02T09:17:26Z")
> [@Snnipe\_70E](#): > > From coal to diesel? The Royal Navy has steam ships I would expect the switch would have been to black oil, either bunker “C” or something like Navy special. Correct, the switch was to fuel oil to fire the boilers not to diesel engines. ---
**Author:** ![Alessan](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/alessan/32/465_2.png) [@Alessan](https://boards.straightdope.com/u/Alessan)\ **Post date:** [January 2, 2012, 9:18am UTC](https://boards.straightdope.com/t/when-did-crude-oil-become-a-valuable-commodity/608027/13 "2012-01-02T09:18:56Z")
My mistake. I knew they shifted to oil; diesel was my uninformed assumption. ---
**Author:** ![Xema](https://avatars.discourse-cdn.com/v4/letter/x/9de053/32.png) [@Xema](https://boards.straightdope.com/u/Xema)\ **Post date:** [January 2, 2012, 3:11pm UTC](https://boards.straightdope.com/t/when-did-crude-oil-become-a-valuable-commodity/608027/14 "2012-01-02T15:11:11Z")
> [@Little\_Nemo](#): > > To put that in modern figures, the average annual American salary is now around $42,000. So it would be the equivalent of about $96,000,000 a year. Using the ratio of average annual salaries is a rather non-standard way to compare the relative value of old dollars to new. Various online calculators suggest that the inflation factor from 1870 to the present is around 20, making the value of 73,000 barrels of 1870 oil something like $6 million in today’s dollars. Interestingly, that’s pretty close to what that much oil would fetch today. ---
**Author:** ![JohnT](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/johnt/32/15048_2.png) [@JohnT](https://boards.straightdope.com/u/JohnT)\ **Post date:** [April 9, 2012, 3:13am UTC](https://boards.straightdope.com/t/when-did-crude-oil-become-a-valuable-commodity/608027/15 "2012-04-09T03:13:26Z")
> [@bardos](#): > > Believe it or not I am watching re-runs of the Lone Ranger series from the 50’s. Episode s01E26 (1950) is very typical of the genre, some unknown person (well it’s obvious who it is) is trying to stop a rancher from making a scheduled mortgage payment so that (according to the contract) she (the original seller) can annul the sale and get the land back. > > After the first two minutes of watching the episode I said “Ok, there’s gold on the land or the railroad is coming through”. 🙂 > > Surprise, it turns out there is oil on the land and the Lone Ranger tells the ranch owner that he’ll be rich. > > So my question is, in the old west, say 1870’s or thereabouts, was oil really a valuable commodity. When did oil become really valuable? In the real world, the plot doesn’t make any sense in the timeline you give: US oil production in the 1870’s was based in Pennsylvania and Lima, OH… that’s it. Texas didn’t even become a player in the US market until Spindletop, in 1901. The earliest discovery of oil in TX took place 7 years earlier, in 1894. Oil wasn’t even discovered W. of the Mississippi river until the 1890s - Kansas, Oklahoma, California, and Texas fields were discovered in that decade. So, to answer your question: Oil was a valuable commodity, but it wasn’t available in the “Old West” until early in the 20th century, long after it stopped being the “Old West.” ---
**Author:** ![thelabdude](https://avatars.discourse-cdn.com/v4/letter/t/dc4da7/32.png) [@thelabdude](https://boards.straightdope.com/u/thelabdude)\ **Post date:** [April 9, 2012, 11:23am UTC](https://boards.straightdope.com/t/when-did-crude-oil-become-a-valuable-commodity/608027/16 "2012-04-09T11:23:29Z")
Hollywood never would let a reality like that get in the way of a good story. ---
**Author:** ![rbroome](https://avatars.discourse-cdn.com/v4/letter/r/838e76/32.png) [@rbroome](https://boards.straightdope.com/u/rbroome)\ **Post date:** [April 9, 2012, 12:10pm UTC](https://boards.straightdope.com/t/when-did-crude-oil-become-a-valuable-commodity/608027/17 "2012-04-09T12:10:02Z")
> [@Xema](#): > > Using the ratio of average annual salaries is a rather non-standard way to compare the relative value of old dollars to new. Various online calculators suggest that the inflation factor from 1870 to the present is around 20, making the value of 73,000 barrels of 1870 oil something like $6 million in today’s dollars. > > Interestingly, that’s pretty close to what that much oil would fetch today. Remember that the inflation adjusted price of gasoline has been steady or falling since widespread use began. The peak average cost of gasoline occurred in 1918. > **[Inflation adjusted Gasoline Price Chart](https://inflationdata.com/inflation/images/charts/Oil/Gasoline_inflation_chart.htm)** ---
**Author:** ![Ludovic](https://avatars.discourse-cdn.com/v4/letter/l/7ab992/32.png) [@Ludovic](https://boards.straightdope.com/u/Ludovic)\ **Post date:** [April 9, 2012, 12:22pm UTC](https://boards.straightdope.com/t/when-did-crude-oil-become-a-valuable-commodity/608027/18 "2012-04-09T12:22:12Z")
> [@thelabdude](#): > > Hijack, are there other places in the world where oil was found naturally on waters? Hijack to your hijack: there are lots of places in the world where _asphalt_ is naturally found – the Dead Sea most famously: it was even called The Asphalt Sea by the Greeks. ---
**Author:** ![Try2B\_Comprehensive](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/try2b_comprehensive/32/65_2.png) [@Try2B\_Comprehensive](https://boards.straightdope.com/u/Try2B_Comprehensive)\ **Post date:** [April 9, 2012, 2:15pm UTC](https://boards.straightdope.com/t/when-did-crude-oil-become-a-valuable-commodity/608027/19 "2012-04-09T14:15:53Z")
> [@thelabdude](#): > > I think when the Indians found uses for the black scum off Oil Creek. How do you think Colonel Drake knew to drill at Titusville? > > Hijack, are there other places in the world where oil was found naturally on waters? There is a scene in the historical novel Julian where, while invading Iraq, Julian orders a pool of petroleum (in the sand) to be set aflame. This would be around ~400 AD. I think people used naptha back then for a few things, which I _think_ comes from petroleum. ---
**Author:** ![ralph124c](https://avatars.discourse-cdn.com/v4/letter/r/8797f3/32.png) [@ralph124c](https://boards.straightdope.com/u/ralph124c)\ **Post date:** [April 9, 2012, 3:42pm UTC](https://boards.straightdope.com/t/when-did-crude-oil-become-a-valuable-commodity/608027/20 "2012-04-09T15:42:39Z")
A bit of information: when the 1907 Rond The World auto race was on, it was reported that the only supplies of gasoline (in Russian Siberia) were in the hands of dry cleaners. Outside of kerosene, there wasn’t much demand for refined petroleum in 1907 Russia. The large demand for oil/gasoline only came when automobiles began mass production. [Next page](https://boards.straightdope.com/t/when-did-crude-oil-become-a-valuable-commodity/608027.md?page=2)