by Paul R. Spitzzeri
A century ago, oil was a huge part of greater Los Angeles’ burgeoning economy with rapidly growing uses of the natural resource for manufacturing of many products, as well as fuel for machinery, a power source for railroad locomotives and, of course, refining into gasoline for the increasingly common use of the automobile.
While the first regional drilling for oil began in 1865 and then picked up during the following decade, including F.P.F. Temple’s significant efforts in what is now the Santa Clarita area north of the Angel City, the local industry’s big boost came in the 1880s with William R. Rowland’s wells in the Puente Hills where Rowland Heights meets La Habra Heights. In the 1890s came the work of Charles Canfield and Edward Doheny to open the Los Angeles oil field, followed soon by the rise of Union Oil Company and Doheny’s efforts to inaugurate Orange County’s oil industry, among others.
About a quarter of a century after the Los Angeles field was opened, a new one in a southeast line extending to Olinda in northeastern Orange County was brought into being at Montebello. This was spurred by 9-year-old Thomas W. Temple II’s astounding discovery of oil indications on the 60-acre ranch his father, Walter, purchased from the daughters of “Lucky” Baldwin, who, in turn, acquired it as part of a foreclosure of a loan to the bank his father, F.P.F., and grandfather William Workman, owned in Los Angeles.
Over about a half-decade after 1917, the Temples realized a fortune from their one-eighth royalty on more than a dozen producing wells, including some gushers, and that led Walter to embark on his independent oil ventures, along with real estate development and, as we noted yesterday, the construction of his family’s remarkable residence, La Casa Nueva. It was no wonder that, in a collage of stained glass in the house’s master bedroom, oil wells (where else has these depictions in stained glass?) take center stage.
This post again highlights an issue of California Oil World, a Los Angeles newspaper which promoted the fact that it was “The Only Newspaper in the World Devoted Exclusively to Oil.” As was typical the top of the front page featured editorial comment, this one expressing concern over a proposed bill in Congress that would apply regulatory standards used for the coal industry to oil. The editors informed readers that this made no sense as “there are no two industries in the world that compete with each other in any way that are so far apart as are oil and coal.”
For one, it noted,
The oil operator must drill 1000 to 5000 feet to get what he seeks. The coal miner has no such difficulty confronting him at the very outstart. Seeking new sources of supply the wildcatter [working in a geologically unproven field] must spend as much as $150,000, sometimes much more on a single hole solely in the hope that he may possibly get oil; and often fails, and gets for his money only the poor satisfaction of knowing that there is no oil where he drilled. Sometimes, owing to financial inability to go a little further, or mechanical accidents, he does not even get this satisfaction. Sometimes another drills where he failed and wins a fortune. The coal miner faces no such risk.
The piece added that the financial burden on oil producers were significant in a highly speculative endeavor and it remarked that, as pools of crude are drained, the lack of new fields was a threat to the industry. Those seeking coal were not asked to contribute to or refute these points, especially as it was remarked that the oil producer expends further funds on refining or selling crude to firms, usually large corporations, that refine and market finished products, but it asserted “the coal miner sells his product directly to consumers as it comes from the mine.”
While those employed in the oil industry “are more nearly all Americans than almost any other class of labor,” it was added that skilled workers possessed talents in mechanics and science, along with drive, while field workers possessed “high courage and bodily strength.” The suggestion was that these conditions were not to be found in the coal business and, therefore, oil workers fetched “much higher wages than the coal miners.”
Lastly, it was concluded, “despite popular impressions to the contrary, there is no monopoly in oil” and “the general public [frequently] threw many millions in the business,” with it claimed that “coal draws no such sums outside the ranks of the industry itself.” The problem, the paper commented, was that “few persons outside of the ranks of the oil industry realize these facts” but “they must be taught or the consequences will be serious.” Not stated was the importance of lobbyists to make these points clear to federal legislators.
Below the editorial were a pair of pieces concerning tours of California oil fields by members of Congress. One observed that more than fifty industry officials, including the president of the American Petroleum Institute (API), and journalists, such as from California Oil World, took part in the trip. The other went into detail about the excursion, which covered all facets of the oil production process from the drilling of the “wildest wildcat” to the making of cases for exporting refined products.
The four-day trip began at Santa Fe Springs, a booming field southeast of Los Angeles and ended at Standard Oil’s massive refinery at Richmond (its first in California—the second, or El Segundo, was on the coast southwest of the Angel City) and was organized by Golden State directors of the API. Local sites visited included the Alphonzo Bell lease at Santa Fe Springs, the Murphy wells at the Los Coyotes oil field in the Whittier/La Habra area, Huntington Beach (where Temple was recently invested), Signal Hill (where he soon drilled), the Watson field near Carson, and refineries and storage and transport facilities near and at the Port of Los Angeles.
API President Thomas O’Donnell remarked to the press that
We have asked the congressional representatives to come as our guests and go through the oil fields of California from A to Z and view all of the resultont [sic] development from the well to the consumer. We have no particular objective in doing this. We are not asking for any kind of legislation. We are not asking these men to view us with any particular favor. But we do believe that a part of the world that is producing more than one-third of all the oil in the United States and more than one-fourth of all there is in the world—in view of the tremendous importance of that product to industrial life—is entitled to the very closest consideration by everybody who was anything to do with legislative matters which may pertain to that industry.
There is nothing on the Pacific Coast that is of more importance to all the people, as well as to the petroleum industry, than is petroleum. Our very industrial life is dependent upon it. It is our fuel, it is our motive power. It is quite natural that we should feel that these gentlemen representing us and the other people of this district would be interested in knowing something about it.
O’Donnell added that oil companies were under significant financial stress and “had to strain its credit to the limit” with hundreds of millions of dollars involved in maintaining the industry “as well as overturning the markets of the world.” He asserted that, while benefits accrued to regions and their industries, if not necessarily to the producers as it should and claimed that the environment “has brought disturbance and confusion to the minds of the American people and that is dangerous for the future.”
The Institute chief executive averred that “the petroleum industry needs unlimited credit” and blasted those who “attack the petroleum industry to the extent of impairing its credit” as “a destructive element in our industrial life.” As prior posts here have noted, a major problem at the time was over-production and this “has thrown the petroleum industry out a balance” as “it came on us with a rush.” But, continued O’Donnell, despite this, “there has been no waste of that material that is so beneficial to the human race” and “this has been due to the courage of the petroleum industry in California in meeting the problems and taking care of them and in straining financially in order to do it.”
The last major front page feature was under the headline of “WELLS FALL OF RAPIDLY; OUTLOOK O.K.” and was based on a statement made by the chair of a committee of the Southern California Oil Producers Association concerning reductions in production of petroleum, which included, “to get quick action . . . an arbitrary curtailment of 30 per cent was asked,” though after a survey was undertaken, “an additional cut of 15 percent was asked,” this followed by another request for a reduction of up to 25% on old wells and half on new ones.
A sidebar adjacent to the piece recorded that daily production at the three largest fields in the region included 338,000 barrels at Santa Fe Springs, 254,000 at Long Beach and just under 100,000 at Huntington Beach and these were, obviously, the key areas targeted. An emphasis was made on careful research and the accumulation of data for informed decision-making, though it was added that “still further curtailment would have to be asked” at some point, though conditions were such that existing restrictions were successful enough that “it will not be necessary to put any further curtailment into effect.”
The results were also such that a projection that peak production would be reached in late August was adjusted back a month and the Association was “confident that the peak has been passed and that the production will fall materially below our estimates for September through November. At Santa Fe Springs, for instance, there were some wells producing 10,000 barrels weekly, but the reduction was such that it was rare for wells to breach 4,000. At Signal Hill, the cuts were sometimes 80%, from 10,000 to 2,000 barrels at high-producing wells, while, at Huntington Beach, it was reported that “the peak has been passed for some time and water conditions there will very seriously curtail the production.”
Further analysis revealed that levels of exports to foreign nations and other parts of the United States would allow for the tapping of oil in storage, though it was remarked that “very few wells, upon which drilling is commenced after this date, in the heart of Santa Fe Springs or Signal Hill, will ever repay the cost of drilling.” This was especially the case with “pumping . . . deep wells after they cease to flow” at the 3,000 foot level or further, down to around 6,000, because “the production will drop to almost nothing,” while the presence of water was also an issue, especially when unmixed with oil and, therefore, harder to pump out of the well.
With respect to new fields, it was commented that “the limits of the three fields under consideration are now so well defined that it is safe to say that we need have no fear of any large new productive areas” opening in the near future because “it requires two to three years to bring any new fields into a large production.” Outside of these three massive fields, statewide production was about 300,000 barrels daily and no new work was underway, with any such likelihood to take a half-year and no real impact made on existing levels including the reductions.
The big issue, of course, concerned falling prices during over-production, so the article concluded that,
The present price for oil of high gravity is out of all proportion to its value and cost of producing; and when it becomes necessary to pump oil from these deep wells it will not be possible at present prevailing prices. Fortunately we believe that there will be such a decline in production in the near future that the price must increase as the production falls to meet market requirements.
In the “Gossip of the Petroleocrats” column, mention was made a new booklet from the Pacific Coast office of the API, The Oil Industry of California, which declared that “in all industry are few enterprises more complex, more specialized, than the business of discovering and producing petroleum, transporting it from oil fields by pipe-lines to refineries, manufacturing it into a multitude of petroleum products, and distributing these products to millions of consumers all over the country.” The 23-page publication also observed that the industry was to be recognized for “maintaining an adequate and unfailing supply of petroleum to meet the demand of the consuming world.”
Elsewhere, it was reported that tropical storms in August limited exports of oil from the Port of Los Angeles by some 20% as the number of tankers dropped from 209 to 150 and the barrels of oil contained in them diminished from about 15.7 million to 12.3 million. In the first ten days of September, however, there was an increase of eight tankers and about 600,000 barrels from the same period the prior month. Moreover, Shell Oil opened a new wharf on Mormon Island, which was cited as important in relieving congestion in the harbor—separately, it was noted that another wharf there was soon to be opened by the C.C. Julian Oil Company, which later was the cause of immense controversy over its operations.
A chart of American oil production for the week ending 8 September showed that California yielded close to 40% of all crude in the nation, with 863,000 barrels, close to double the next highest state, which was Oklahoma, while central Texas produced about a third that number. In all, about 2.28 million barrels were pumped across the country during that period.
A new local field was at a local area founded by F.P.F. Temple and partner Fielding W. Gibson just about 60 years prior, with the paper remarking, “land owners at Compton have pushed prices up to the limit with the coming in of the Callendar well and are exacting the strictest terms as to immediate and continuous drilling, regardless of the market.” Given the over-production discussed above, this was considered problematic as “with wild rivalry among companies for leases some are yielding without reservation to these demands” and would result in having “ranchers, merchants and others who do not know the A.B.C. of oil” and revive issues that came up at Santa Fe Springs and Signal Hill, as well as follow similar questions at the new neighboring field of Torrance.
Many large firms acquired property in the Compton area prior to any knowledge of what success might be had there, with such firms as General Petroleum, Union and Shell mentioned, along with George F. Getty, whose 31-year old son J. Paul was not well-known at this time, but would go on to become the world’s richest person. It was added that “the town is talking only oil” although “the extent of the field is only speculation” and “it may readily prove to be a small field.” Some experts asserted that the field was broken geologically, which would indicate the presence of small areas of crude rather than a big, uniform field and a brief separate note referred to excitement in adjacent Lynwood regarding its oil possibilities.
On 15 June 1917, just days prior to the first Temple oil well coming in at Montebello, Walter and Laura Temple wrote a short note in answer to one three days prior from Fred H. Hillman, vice-president of Standard, agreeing to have the firm handle oil produced from the family’s lease at the one-eighty royalty “at the most advantageous price that the market may afford.” Of course, over-production was certainly a general industry concern, but, at Montebello, which proved to be a shallow field, there was a steep decline in yields after an initial abundant amount was pumped.
While the aforementioned delegation was touring the Murphy-Coyote lease in northwestern Orange County, Hillman was quoted as rapturously hailing Providence in exclaiming,
To me this is the most beautiful and inspiring sight in all of the world. In the far distance are the hills and under them God placed the oil which is being taken out through the derricks you can glimpse through the haze. On the mountain sides are the orange groves, in the valleys beautiful homes nestling amidst trees and vineyards, up this hill side, more oil wells and off to the rear and in the valley again the flowers, the trees, the oranges climbing to the tops of the mountains.
A little over a hundred years later, very little oil is being pumped from greater Los Angeles and, not far east of where Hillman stood, among the last wells in the once-productive Olinda field are being capped and the land undergoing mitigation for the Brea265 project bringing hundreds of new housing units. The relentless unearthing, refining and burning of fossil fuels, moreover, is a core element of the climate change that yielded that hottest August ever recorded and, as the Super El Niño condition this winter is a near certainty, we will see what results.
Artifacts like these in the Museum collection not only afford us opportunities to better understand the history of the Workman and Temple family and greater Los Angeles during our interpretive period of 1830 to 1930, but also to compare and contrast that era with our own as we hope that a historical perspective is both interesting and instructive going forward.