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the former allied parts, it also paved the way for the oil industry as we know it today, dominated by multiple, large, fiercely competitive, multinational corporations Other events of the period also contributed to oil s rise and dominance: the introduction of thermal cracking by Standard Oil of Indiana in 1913 (a process that more than doubled the amount of gasoline recoverable from a barrel of crude oil, up to 45 percent); discovery of oil near Tampico, Mexico in 1910; discovery of oil in Persia (Iran) that led to construction of an Abadan refinery in 1912 by Anglo-Persian (a pre World War I strategic decision by Winston Churchill gave the British government, through British Petroleum, 51 percent ownership of Anglo-Persian after it ran into financial difficulties); and World War I itself Meanwhile, other internal combustion engine vehicle innovators were busy too: Walter Chrysler, John and Horace Dodge (the brothers who began as captive suppliers to Ford), and numerous others provided innovations that survive to the present day William Durant incorporated General Motors in September 1908, and by the 1920s its major divisions (Buick, Oldsmobile, Cadillac, Oakland, Chevrolet, GM Truck) and its supporting divisions (Fisher Body, Harrison Radiator, Champion Spark Plug, DELCO, Hyatt Roller Bearing, and others) were household names in the United States While Durant acquired valuable assets in assembling GM s acquisitions under one holdingcompany umbrella, it was the talent he obtained (such as Alfred Sloan from Hyatt and Charles Kettering from Cadillac) that paved the way for GM s later rise to dominance GM innovations such as color, streamlining, smoother, more-powerful six-cylinder engines, and annual model styling changes made Ford s Model T obsolete, despite its $290 price in 1924 The internal combustion vehicles were now on their way In 1900, half of the 80 million people in the United States lived in a few large (mostly Eastern) cities with paved roads, and the other half in towns linked by dirt roads or in countryside with no roads at all Less than 10 percent of the 2 million miles of roads were paved More than 25 million horses and mules provided mobility for the masses Electric lighting in the larger cities was dwarfed by the use of kerosene lamps, popularized by the discovery of plentiful amounts of oil, in the countryside Coal- or wood-burning steam engine locomotives were high tech Only 200,000 miles of railroad track existed, but some of it provided fast, efficient transportation between major locations New York to Chicago on the Twentieth Century Limited took 20 hours While a New York-to-California railroad ticket cost $50, vehicles of any kind cost around $5,000 to $50,000 in today s dollars, putting them out of the hands of all but the well-to-do Three types of vehicles came into this turn-of-the-century United States environment Almost 3,000 manufacturers experimented with various combinations of propulsion (steam, electric, or internal combustion engine); fuel (water/kerosene, battery, gasoline/ oil); cooling (air or liquid); mounting (front, rear, or middle); drive (front or rear wheels via shaft, gear, chain, or belt); chassis (three- or four-wheel, independent suspension, or leaf/coil springs); and tires (pneumatic or solid) By the time World War I was over, the internal combustion vehicle had emerged as the clear victor
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Internal combustion engine vehicle growth in the United States exploded with World War I After World War II, world internal combustion engine automotive growth was even more dramatic What made all this possible was the unprecedented oil availability, and the relative price stability shown in Figure 3-5, which allowed United States gasoline
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Figure 3-5
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prices to move from roughly $010 to $030 during this 50-year period Yet in terms of inflation-adjusted real dollars, the cost of gasoline actually went down Is it any wonder that no one cared how large the cars were in the 1950s or how much gas they guzzled in the 1960s Gasoline was cheaper than water But there were also some problems: no major discoveries since the Alaskan and North Sea fields of two decades ago; the increasing concerns with oil supplies, beginning during World War II; the introduction of nuclear and natural gas energy alternatives in the 1950s; and the hardening of public opinion with the increasing frequency of smog and air-quality problems, oil and nuclear environmental accidents, and the foreign oil shocks Already forced to comply with more stringent emission standards by the Clean Air Act of 1968, the first oil shock of 1973 caught the big three United States automobile manufacturers with their pants down Japanese and European auto manufacturers had smaller, more fuel-efficient internal combustion vehicle solutions as a result of years of higher gasoline prices (due to higher taxes earmarked for infrastructure rebuilding) The market share lost by the big three to foreign automakers has never been regained By the early 1990s, the wild oil party of the preceding 75 years was over Environmental problems, the need for energy conservation, and the instability of foreign oil supply all signal that the sun is setting on the internal combustion vehicle It will not happen overnight In the near term the industrialized nations of the world and emerging Third World nations will consume ever greater amounts of foreign oil But it s inevitable that a replacement of the fossil fuel burning internal combustion vehicle will be found
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