Oil, as I have said before, has incredible significance, but why is this the case?  Oil is deeply ingrained into our culture as it was the driving force (and still is in the developing regions of the globe) behind industrialization. There is no country or area in the world today that can insulate itself from problems in the oil market, as the recent shortages in Europe highlight.  Oil affects every nation on earth with no exceptions.  In this section I hope to highlight briefly the history of oil and it's development into attaining such a level of importance.

The extraction of oil is certainly not a new idea.  In ancient times, Babylonians exploited petroleum seepages for their advantage.  It is only recently, however, that it has developed into an organized force. On December 30th 1854, the first American oil company - The Pennsylvania Rock Oil Company - was formed (Chester, 1983, p1).  In 1870, Rockefeller created Standard Oil.  This company was to grow to monolithic proportions until, in 1911, it was broken up by the original anti trust lawsuit.  This break up provided the basis for the current oil multi-national companies.  There are currently 7 major oil companies, though this figure is liable to change with a number of potential mergers on the horizon.  These corporations are: Standard Oil of New Jersey, Royal Dutch Shell, British Petroleum, Mobil Oil (previously Standard Oil of New York), Gulf Oil, Texaco and Chevron (previously Standard Oil of California) (Odell, 1971, p13).  The ownership of these organizations was, at a time, limited to 3 countries, mainly the USA.  For a period, these companies were incredibly powerful, controlling 80% of oil production and 70% of total global refining capacity (Odell, 1971, p13).  This, however, was not to last.

On 14th September 1960, The Organization for the Petroleum Exporting Countries (OPEC) was formed in Baghdad.  This organization was created to basically serve the interests of the oil states and represented a huge shift in the balance of power away from the companies.  It was now the countries that held the power over oil supply and price.  This influence was exemplified in the 1970s oil crisis.  In 1973, the Arab-Israeli war broke out.  There was a two-fold response.  Firstly, OPEC raised prices dramatically.  Eventually, prices rose by 1000% for a barrel of crude oil (Harf, 1986, p69).  In addition, OPEC introduced a trade embargo on all allies of Israel, America included.  6 years later, the Iranian Revolution and the Soviet invasion of Afghanistan also led to a rise in prices and contributed to the ongoing period of economic recession.

Nowadays, oil is remarkably pervasive in society and can be found in a multitude of commodities.  It is a misconception that oil is merely present in petroleum fuel for cars.  Oil is used for heating homes, running electric power plants, fertilizers and pesticides (Harf, 1986 ,p65) and a whole variety of plastics.  In fact 1/3 of all oil consumed in America is for stationary uses, such as industries, businesses and residencies.  It has also grown into a huge factor in international trade.  Primary energy fuels represent 3.3% of total world GNP (Fried, 1993, p2), with oil making up 2/3 of that.  In addition, oil represents 7% of world exports (Fried, 1993, p2).

Overall, oil now fulfills many important roles:  Key global commodity, political bargaining chip, economic catalyst or, as the Gulf War showed us, excuse for military aggression.  In any of these roles, oil is undoubtedly very important.