The oil industry was born in the United States around the time of the Civil War. As the world’s largest oil producer and exporter, the US supplied the oil on which the Allied Forces floated to victory in World War 1. In 1920, 64% of the world’s oil was produced in the US. The growing uses of petroleum in modern American industrial society led several domestic companies to secure oil concessions in Mexico but foreign production was not actively sought after the First World War.
In the early 1920s, however, two fears seized the American oil industry. First, it was feared that in the not too distant future,” The position of the US regarding oil”, wrote the Director of US Geological Survey, “can best be characterized as precarious.”
Second, while a domestic oil shortage seemed imminent, so did the possibility that the major sources of petroleum outside North America would soon be locked up by foreign interests- primarily by British Petroleum and Royal Dutch Shell. This fear was mixed with indignation over the fact that British appeared to be ungrateful for America’s wartime effort and seemed to be doing everything in their power to consolidate their foreign petroleum supply positions at the expense of US nationals.” The British position is impregnable,” wrote Sir Edward Mackey Edgar, a British oilman, “All the known oil fields, all the likely or probable fields outside of the United States itself, are in British hands or under British management or control, or financed by British capital.”