Drilling for Black Gold: “Mining and Oil Bulletin,” January 1918

by Paul R. Spitzzeri

California’s oil industry, a huge part of the state’s diverse economic success in the 20th century, began north of Los Angeles in 1865 with the Pioneer Oil Company’s rudimentary efforts in the mountains near modern Santa Clarita.  In the following decade, others followed there in what was called the San Fernando oil district, including F.P.F. Temple, whose work did yield some modest production briefly before his financial empire collapsed with the failure of his Temple and Workman bank.

Just months after the bank went belly-up, Star Oil Company struck the first significant amount of oil in the area.  A decade later, in 1885, the Puente Oil Company, headed by William R. Rowland, former sheriff and youngest child of Rancho La Puente co-owner John Rowland, found a good quantity of crude in the Puente Hills in modern Rowland Heights.

It was in 1892, when Edward Doheny and Charles Canfield, with a modest investment and basic equipment, hit it big in an area northwest of downtown Los Angeles and ushered in the Los Angeles field and the onset of the modern oil age in the region.  Doheny followed up with the 1897 discovery of oil at Olinda in northeastern Orange County.  The early years of the new century found oil discoveries throughout the region, expanding dramatically through the 1920s.

As the industry matured, so did its marketing and lobbying efforts and one tool for this was the creation of the Los Angekes-based Chamber of Mines and Oil and its publication, Mining and Oil Bulletin, launched in the early 1910s.  Today’s entry in the “Drilling for Black Gold” series looks at an issue of the publication from the Homestead’s collection and dating to a century ago, January 1918.

There are two main items to note about the magazine.  First, is the purpose of the chamber, which was “a non-profit making civic organization representing the collective business interests of the mining and oil industries of the western states.”  Also, it was stated that the publication was established “with the object of bringing into closer business relations the mining and oil industries and the manufacturing and commercial interests of the Southwest in general and of Los Angeles in particular.

Chamber President Mericos (Max) H. Whittier brought to a head the second major issue in a letter headed “Necessity for an Oil Man’s Organization.”  This had to do with actions of the federal government with regard to the industry during the ferment of America’s recent entry in World War I.  In his missive, Whittier referred to “the stress of war” leading to “government actions . . . [which] exaggerated the necessity for and importance of an oil men’s organization . . . presenting a solid front.”

The letter also called upon anyone involved in the oil industry as producers and developers; lessees or lessors (so Walter P. Temple, for example, could have been a member); refiners; contractors; supply dealers and superintendents, but, obviously, not workers to join.  Among the success stories of the chamber cited by Whittier were the exemption of those workers from the military draft, as well as political lobbying efforts.

One of the lobbying efforts underway had to do with a “war excess profits tax,” which was part of an October 1917 act to raise $1 billion in revenue from income and property taxes (which had only been reintroduced in 1913, after first appearing during the Civil War) for the war effort.

Basically, the chamber was calling for determining the value of oil and mining property by invoking a formular of capitalizing income after allowing a deduction for depletion of profit.  The idea was to place more of a tax burden on those firms that earned higher profits since the onset of the war.

Another matter of importance concerned the fact that, since America’s entry in the conflict, “President Wilson has taken over for the period of the war all the railroads, placing them under national control” under Secretary of the Treasury William Gibbs McAdoo, later a resident of Los Angeles.  This process also involved shipping lines and the gist of an article in the publication was regarding the challenges and lessons learned of trying to reposition America’s transportation system to a massive war mobilization when that had never been done.  Obviously, this situation was greatly magnified a quarter-century later duing World War II.

Then, there was the question of a proposed bill in Congress that would permit the Navy, looking to appropriate oil in the three existing “naval oil reserves,” one in Wyoming and the others in California for the use of the fleet.  The concern of the chamber was the private lands within these reserves could be taken by the Navy with compensation determined through litigation and it called for a process of appraisals and arbitration instead.  The body felt that a proposed appropriation of $1 million to the Secretary of the Navy was vastly lower than the value of the land, improvements, and personal property held privately in these reserves.  It also worried that an existing shortgage of petroleum would be worsened.

Another interesting article concerned the formation of a “Petroleum War Service Committee” appointed by the Chamber of Commerce of the United States to assist in integrating the oil industry’s provision of petroleum supplies (including gas and oil, products used for munitions creation, and transportation and logistics) with government war efforts.  Among the members of this committee were E.W. Clark, general manager of Union Oil, a major firm in greater Los Angeles, and Edward Doheny.  Representatives from Texaco, Gulf, Standard, Sinclair and Atlantic (ARCO) as well as hads of petroleum producing and refining associations and the head of the federal Bureau of Mines also served.

Non-war related material included one piece on the “Adjustment of Labor Situation in Oil Fields,” with pointed reference to the fact that “California has established a national reputation for successful experimentation in agriculture and politics.”  The President’s Mediation Commission of a Federal Oil Inspection Board represented “an additional opportunity for selfish exploitation” in implementing labor standards on oil companies.

Just before Christmas, this commission advised firms that, as of the new year, an eight-hour work day was to be followed, unless in cases of emergency and appropriate compensation paid in such events; that a minimum wage of $4 per day be applied as of the first of December; that no worker face discrimination for being a member of a union; and that any disputes arising between laborers and companies because of these changes.  Still, the article concluded by noting “that the ruling was favorably received by both operators [producers] and workers and that it will be rigidly observed by all parties.”

The production of oil in California was the topic of an article, which noted that  in 1917, just short of 100 million barrels of oil were extracted from the state’s fields (about a third of national output), an increase of about 6-7% from the prior year, and about 110 million barrels shipped to refiners and consumers.  All of this was “despite all handicaps imposed by legislators and litigation.”

The shortage of production related to consumption, however, was expected to increase in 1918 unless the discovery of new sources of crude could be made, especially in the southern San Joaquin Valley, or the deepening of current wells could lead to increased production.  One issue, resolved over the following decade, was the quality of the drill bits and tools to get to deeper pools through hard material that broke the equipment of the late 1910s.

One bit (!) of good news, though, was that oil prices were on the rise from about 60 cents per barrel in 1916 to nearly $1 the next year.  Consequently, the publication averred that “substantial advances in price may be reasonably expected during 1918,” perhaps as high as $1.30 a barrel.  Despite the shortage, it was expressed that there was plenty of crude in the state “to supply the needs of the Pacific Coast for years.”  Otherwise, it was believed that neighboring states, such as Nevada, Utah and Colorado, as well as in California, had oil shale deposits to be tapped.  It was also felt that, despite high cost, extracting oil from coal was a future possibility.

A separate table of production statistics for November 1917 showed that, of the ten defined districts producing 8.2 million barrels from about 7,700 wells, over a third came from the famous Midway-Sunset area in Kern County.  Discovered in 1894, the field remains the largest in the state and the third biggest in America.  In generated nearly 3 million barrels on almost 2,000 wells in that month.  The Whittier-Fullerton field, which would have included the brand new Montebello area where the Temple family’s first two wells came into production in the last half of the year, was second at 1.7 million barrels.

Finally, the publication has the necessary advertisements to provide revenue for its production and these, naturally, come from firms that manufactured tools, engines, electrical equipment, raw materials, tanks, derricks, drills and other industry-related items.  Others included Red Crown gasoline from Standard Oil of California, an employment agency, the Security National Bank in Los Angeles.  A several-page buyer’s guide is also at the back.

Publications like the Mining and Oil Bulletin give great insight into the operations of California’s burgeoning oil industry, a major player in the state’s diversified and powerful economy, even if solely from the perspective of oil companies and allied and affiliated firms.  This is especially notable from issues like this coming during the challenging time of the First World War.