Empire of Oil: how hydrocarbons remade the world

Historians like to tell the story of the industrial revolution, with the second phase—the technological age—starting around 1870. Oil barely gets a mention.

With rapid economic growth from innovations around mass production, assembly lines and electrification, hydrocarbons hide in plain sight. But transformations in lighting, then transportation, in petrochemical products like paint and plastics, in improvements in living standards, oil breathed—and continues to breathe—life into the modern global economy.

We could sit back and marvel at the many accomplishments. But the world does not stand still. Instead, this prosperity is often taken for granted in the West and is still sought out by resource-rich regions in the Global South as the debate over oil and energy investments shows no sign of resolution.

Policymakers would do well to remember the past as they remake the future: one of poverty, one of a lack of mobility, one of brutal free market opportunism, one of collusion and power grabs, one of war and price shocks, one of newfound global cooperation and competition and one of huge improvements to standards of living.

A world map that was redrawn and remade many times over, with the US, Russia and Saudi Arabia (as part of the wider the Middle East) emerging as the key players. When Petroleum Economist was first published 90 years ago to cover the incredible story, the oil age had just moved on from its preface. A handful of big companies jostled for power over resources, Saudi Arabia stood on the cusp of entering the energy arena, and traditional empire had yet to be fully usurped by advanced capitalist power.

But the motorcar was a mass-produced phenomenon and commercialisation of products was evolving. The Second World War would soon accelerate the geopolitics of oil and change the energy environment for good. NOCs would assert their authority; OPEC, the OECD and the IEA would all rise; China and India would become economic powerhouses; and new forms of oil would arrive such as North Sea volumes and US shale; and gas and LNG would be transformed.

Policymakers would do well to remember the past as they remake the future

And in 90 years’ time where will oil—and gas—be on this journey? Will they have gone the same way as whale blubber, which oil first replaced in lamps? Or will they still play a smaller but important role, just like the way coal today still makes up almost 30% of the energy mix despite the transition drive?

Will we have solved the decarbonisation challenge with or without oil and gas? Will the terms ‘energy trilemma’ and ‘climate change’ be but footnotes in the world and oil’s history or will they define the period that is to come? Will an energy source that is clean, cheap and practical emerge to truly lead the transition or will there be mistaken false dawns and badly pushed agendas as we scramble for direction?

One should keep in mind how oil transformed the world and that this was both revolution and renaissance. To quote philosopher George Santayana, who was born around the time of oil’s first discovery in the US: those who cannot remember the past are condemned to repeat it.

Maybe the real question here is what parts do we want to emulate from oil’s journey and what parts should go the way of whale blubber? The time to decide that is now.