by Paul R. Spitzzeri
Gradually, we are seeing the increasing decommissioning of oil drilling and extraction sites in our region, for a variety of reasons, and that physical presence and reminder of an industry that was a major driving force of the greater Los Angeles economy, of course, diminishes as homes, shopping centers, schools, parks and others replace the derricks, outbuildings and so on from the drilling.
As has been noted here previously, local oil prospecting began in 1865 just several years after the American petroleum industry was born in Pennsylvania, and efforts continued for the next decade, including projects carried out by F.P.F. Temple in what is now Santa Clarita and then called the San Fernando field. In 1876, just months after Temple’s spectacular financial failure, the Star Oil Company brought in a well in that area that was the first sustained and substantial producer.
In the early 1890s, the Los Angeles field, west of downtown, was brought into production by Charles Canfield and Edward L. Doheny, who used scanty funds and primitive equipment to realize their efforts, with both become major tycoons in the rapidly expanding industry. Doheny soon opened up the Orange County oil industry with a successful well (still operating today) at Olinda in modern Brea.
By the end of the first decade of the 20th century, oil wells were being drilled and, in many cases, successfully extracting crude in many areas of greater Los Angeles, Ventura and Santa Barbara counties, and through much of the San Joaquin Valley, including Coalinga, Bakersfield, Maricopa, among others.
The State of California and the federal government devoted more effort and resources to promoting the industry and other elements of boosting the search for and production of oil included publications like today’s highlighted artifact from the Homestead’s collection: the 15 April 1909 edition of The Oil Industry, a Los Angeles-based magazine which billed itself as “The Oil Authority of the Pacific Coast.”
The Oil Industry Publishing Company, was based in a top-floor office of the Citizens’ National Bank Building at the corner of Main and Third streets. Its editor Allen G. Nichols was born in Indiana and worked in Texas oil (he was married there) before migrating to Los Angeles and working as an oil geologist and oil company owner.
Nichols launched the publication with William Nelson Shell, who was the business manager, in spring 1908, but the monthly did continue very long, being published for only about two years. This issue includes some interesting material relating to the industry.
One is a short black-bordered notice, with the cover photograph as well, about the death of prominent oil company owner Wallace L. Hardison and consists of a tribute to the “trail blazer” in California’s petroleum prospecting world. Hardison, a native of Maine, had experience in the Pennsylvania oil fields before coming to the Golden State. He was a founder of the well-known Limoneira, a citrus processing business that still survives, at Santa Paula east of Ventura and then joined Thomas Bard and Lyman Stewart in founding Union Oil Company of California in the 1880s.
He made a significant fortune and sold out his interest in Union. For a few years he was the owner and publisher of the Los Angeles Herald newspaper and then got back into oil, serving, at his death, as vice-president of the Columbia Oil Company, which included his brother-in-law, William B. Scott, Los Angeles Times executive Harry Chandler, and former Los Angeles County sheriff and Puente Oil founder William R. Rowland, as major partners. The company had, among its operations, wells in the Puente Hills on Rowland’s share of Rancho La Puente inherited from his father John, and at Olinda.
On 10 April, Hardison left his South Pasadena home and drove to his Monte Vista ranch in the community of Roscoe, now known as Sun Valley, in the eastern portion of the San Fernando Valley. After settling in at the ranch, he headed towards San Fernando to pick up some supplies and was crossing the Southern Pacific railroad track, but, because of heavy brush, he could not see a light engine approaching at 20 miles per hour. Hardison tried to veer out of the way, but his vehicle was crushed by the impact. Hardison survived just a few moments and his body was so entangled in the wreckage, it took considerable time to remove his remains.
Other contents of The Oil Industry include a discussion about excess production of oil above consumption as differentiated from demand, especially in terms of storage capacity. The article talked about the need for oil companies which produced oil to work together more cooperatively with marketers and distributors and likened the dilemma to that of wheat being turned into flour or tobacco into cigarettes.
Also noted was the need for the federal government to become a larger purchaser by converting, for example, naval ship fuel from coal to oil and with greatly enhanced storage capacity, something soon realized with the reserves at Teapot Dome in Wyoming and Elk Hills in the San Joaquin Valley. In the Harding administration in the early 1920s, Secretary of the Interior Albert Fall executed no-bid leases with powerful petroleum producers and pals Harry Sinclair and Doheny, whose provisions of cash and bonds were clear bribes and led to the notorious Teapot Dome scandal, from which Doheny alone was spared jail time.
A separate piece concerned “Exports of Petroleum” with the observation that federal reports recently began to include statistics on oil exported from San Francisco to Pacific Rim markets. Given the effects of the Depression of 1907, it was notable that the oil industry was deemed “the only important one that did not decline during the year [1908] just past.”
Nearly 1.2 billion gallons at a valuation of well over $100 million were shipped to foreign nations that year, even as refined prices were stable for a few years running. In January 1909, there were 11.6 million gallons exported from San Francisco and it was clearly expected to sharply increase, especially with respect to crude and lubricating oils.
Another major article dealt with a tariff bill in the House of Representatives, including a 1% ad valorem [meaning, assessed valuation) duty on imported oil products. Our own recent struggles with the wisdom of tariffs as perceived protection for American industries has interesting historical antecedents in the early 20th century and earlier.
For example, sugar tariffs were designed to protect producers in Louisiana and California from competition from places like the independent Kingdom of Hawaii, at least until Hawaii was annexed at the end of the 1890s. While much of the developed world employed protective tariffs, Great Britain stood apart as a “free market” promoter free of the duties—eventually, tariffs became less utilized over time, but remain a potent economic and political issue, as we’ve seen under the current administration.
The issue in 1909, however, was also about ongoing concerns with the enormous control of the American oil market by John D. Rockefeller’s Standard Oil Company and attempts made to deal with lost federal revenue by Standard’s practices. The Oil Industry was clearly against what it perceived was the vilification of Standard, while noting that the 1% duty was a pittance and almost worthless and pointed out that it would hardly prevent Standard (which was broken up after a federal Supreme Court ruling in 1911) and other companies from having imported oil brought in and refined domestically.
This was also a bone of contention because duty-free imports of oil were seen as a way to force Standard into competition, but, while much of the concern was about oil coming from such countries of Russia, the publication worried about the future from a nation far closer: Mexico. Specifically, the explosion of prospecting and extraction from the Tampico region on the Gulf coast of that country would, the magazine feared, lead to a flood of cheap imported oil, hurting production by oil companies operating in the United States.
There is also an informative chart of national oil production for 1908, with the summary that almost 600,000 barrels of oil were produced each day from nearly 175,000 wells. Interestingly, California was tied for fourth with West Virginia in having 14,000 wells, but, while Pennsylvania and Ohio topped the list with about 45,000 wells each, production was only 25,000 barrels per day in the former and 45,000 in the latter.
California, by contrast, produced 120,000 barrels per day, second to the 180,000, from 13,000 wells, in Oklahoma and Kansas (mainly the Sooner State). Third in production was Illinois, which generated 110,000 barrels daily from 18,000 wells. Texas, which would soon become a behemoth in the industry, had 8,000 wells yielding 40,000 barrels, and Louisiana, which would also become a major player, had just 800 wells, but these produced a high yield of 12,000 barrels.
The chart also noted that the United States produced 70% of all global output–it is less than 20% now, though the nation is the top producer at about 15 million barrels per day (what a difference from 600,000 in 1909!) with Saudi Arabia at about 12 million and Russia at under 11 million, according to 2019 statistics. Mexico, incidentally, is 12th in output now at near 2.2 million barrels daily. The U.S. exported 65% of its oil in 1908 with a value of more than $104 million.
It was added that Standard Oil operated all but 74 wells in Oklahoma, where there were probably a large majority of the 13,000 wells listed with it and Kansas. Another interesting statistic was that 2.5 million people were “gaining their livelihood from the oil industry of the United States. The entity producing this data, the Mid-Continent Oil and Gas Producers Association, dealing in Oklahoma and nearby states, argued that
The changed conditions of the crude oil industry throughout the world caused by the large production in Mexico require for the protection of those engaged in the business [in America] an ad valorem duty of at least 40 percent, and we believe that we are entitled to such protection.
Such protective measures, proposed or realized, continued to remain controversial and here is an interesting and brief summary of oil tariffs.
Among more local articles is a short one on the California asphalt industry, of which there were over two dozen refineries producing some 100,000 tons of the material each year. It was noted that this amount was more than was demanded in the west coast market, so much of it had to be exported east.
There was concern about the low profit margin, due partially to high shipping costs, and the low tariffs on exports. Still, it was reported that six miles of New York City streets were paved with California asphalt. The piece concluded with a call to raise the tariff 67% from $3 to $5 per ton to help producers become more profitable.
In its “The Fields” section discussing activity in the state’s oil regions, the publication provided detailed summaries for Coalinga, Midway, Sunset, McKittrick, Kern River and other San Joaquin fields, but nothing in the Los Angeles area. There was, however, discussion of the expansion of local oil supply businesses, principally, Western Pipe and Steel, located at a new facility on Downey Avenue in East Los Angeles, soon renamed Lincoln Heights, (the company was formerly on North Main Street closer to the Plaza) next to the Los Angeles River and the tracks of the Los Angeles, San Pedro and Salt Lake Railroad. The concern, which had three times the manufacturing capability to meet the demand for its well casings, pipelines, and storage tanks, expanded its operations further because of the two world wars and was sold to Consolidated Steel Company of California in 1945.
Other notable items include March transactions involving oil companies on the stock exchanges of Los Angeles and San Francisco; new incorporated firms; and news from “The Sump Hole.” With the first, it is interesting to see the capitalization, both of authorized and issued stock, of oil companies.
By far the largest firms were Union, with $50 million in authorized and $24 million in issued stock and Associated ($40 million for both). Two others (Union Provident and Mexican Petroleum of California) were between $10 and $15 million of authorized stock) and two others (United Petroleum and Amalgamated) were between $5 and $10 million.
For newly incorporated firms, there were thirty, presumably all formed within the previous month and many from Los Angeles and nearby areas. Some started with small capital investment of $10,000 or $50,000, while others were at a half million or a million. None of those shown became well-known players in the oil game, it being intensely competitive, though a couple had names with historic associations, including the Wolfskill Ranch Oil Company and the Pico Oil Company.
“The Sump Hole” was a column with short bits of news, including references to companies and individuals, such as that the Associated Supply Company opening a Los Angeles store with drilling equipment or that Frank Fether of Standard Oil was named an assistant general superintendent in the Los Angeles office. The publication also found it encouraging that the New York Commercial, a financial markets paper, requested copies of The Oil Industry.
More local to the Homestead was news that:
Dr. W.F. Fundenberg, of Riverside, but formerly of Pittsburg[h], is one of the latest wealthy eastern men to enter the oil game in California. He recently purchased 500 acres of land in the Puente Valley, between the properties of the Puente Oil Co., and the Olinda Oil and Land Co., and it said he purposes to begin development work shortly. The land is well thought of as prospective oil territory and it is said that both the Standard and Union companies were negotiating leases on it.
Fundenberg’s purchase, as noted here before, was the 9,000-acre Rancho Los Nogales, which included a Mexican-era land grant of about 1,000 acres and former public land merged with it later. Fundenberg’s 1907 acquisition was, as the quote noted, predicated on his belief that oil would be found there and he spent several years and considerable funds for nought.
After a decade or so, he sold the Los Nogales, which was split into two large parcels. The western portion became the Diamond Bar Ranch, out of which the city of that name was formed about 1960. The eastern section was acquired by Harry Chandler, William R. Rowland, and William B. Scott, mentioned above as key players with Wallace Hardison in the Columbia Oil Company. Chandler, Rowland and Scott dubbed their new gentlemen’s ranch, Tres Hermanos (Three Brothers), though their kinship and genealogy was in the oil industry.
Most publications, naturally, were funded with advertising revenue, so it is interesting to peruse the ads, which are, of course, mainly industry based and of which some examples are replicated here. This issue of The Oil Industry is instructive as being from the first decade of the 20th century as the oil industry in California continued to mature.
Nichols, however, soon decided to withdraw from the business and Shell, who formed a competitor called The Oil Age, merged the two publications. Shell continue to operate The Oil Age well into the 1920s and the Homestead collection has a trio of issues, so look for those in future installments of “Drilling for Black Gold.”