Good Bye Horsey … Or Have You Driven a Ford Lately?
(This is Chapter Six from my book, Rocket Science It’s Not.)
Nothing changed America in the twentieth century as drastically as gasoline and cars did. Their proliferation utterly transformed this country’s social, political, and geopolitical conditions. In the mid-1800s, most Americans lived in the countryside and worked on farms. The country ran mainly on wood fuel and was not a major power in global politics. Only a hundred years later, the U.S. had become the world’s largest producer and consumer of fossil fuels, and most Americans were city dwellers. In the space of a century, the United States tripled its per capita consumption of energy and became a global superpower.
Horses, mules, and other draft animals were rapidly displaced by fossil-fuel engines. As late as 1870, they accounted for more than half of the total horsepower we used in this country. With the advent of fossil-fuel engines the horse population dropped from about 21 million in the U.S. in 1915 to about 2 million in the early 1950s. (It has since rebounded to about 9 million.) The alternative forms of transportation that replaced them expanded the ease and freedom of Americans to move thousands of miles to find a better job or start a new company and to create a single vast market with a single currency, a single language, and a single set of laws. As much as any other single technology, the car homogenized America.
The invention of the car led to the building of the interstate highway system along with such all-American inventions as the fast-food restaurant, the motel, the drive-in, and the billboard — all byproducts of the road, all powered by electricity. The new highways made railroads seem antiquated, further spurred the suburban growth that started with the streetcar, and firmly enshrined the automobile at the center of American culture and lifestyle. The interstates bound America together. They provided us the freedom to move fast and dream big.
Trucks and automobiles drive oil consumption in the U.S. Alone they use over 64 percent of all the oil consumed in the U.S., and all forms of transportation combined consume approximately 27 percent of all U.S. energy used. Like the growth of electricity, our thirst for oil started with the search for light. Benjamin Silliman, Jr., one of the original entrepreneurs in the oil industry, was hired in 1854 by a group of businessmen and investors to research the qualities of petroleum. He determined that petroleum could be used for many purposes, including kerosene for lighting. With that information, the financiers set off looking for sources of oil to exploit. Well before this venture, a small oil industry had developed in parts of Poland, Austria, Russia, and Romania. Workers dug shallow wells with shovels, unearthing petroleum that was used to make kerosene. What the Eastern European industry lacked was a better way to reach the underground stores of oil that were typically too deep to reach by currently conventional means.
Recognizing this, the American investors adapted a technology for salt boring to drill for oil instead of digging for it. Salt drilling tools in mind, the investors hired Edwin L. Drake to search for oil to make them rich beyond their wildest dreams. They sent Drake to Pennsylvania and gave him the prestigious but unearned title of Colonel. Drake’s first had to procure rights to prospective oil land. Once he did that, he hired a salt driller to test the theory that they could also drill for oil. The theory proved correct on August 27, 1859. The drillers found oil at 69 feet below the ground in Titusville, Pennsylvania. They used every whiskey barrel they could find in which to collect the oil. Suddenly there was no shortage of oil — only of whiskey barrels.
Drake’s discovery started a frenzy of people thronging to Western Pennsylvania (where I was born and raised), paying huge amounts of money for land with hopes of finding oil. Some, like Drake’s backers, became very wealthy. Others did not. By 1866, Drake himself had lost all his money and became a semi-invalid, living in pain and poverty. It was an ignominious end for a man whose discovery of oil in America became a major turning point in the transformation not only of this country but also all of human society.
The frenzy of an oil rush results from a principle known as the rule of capture: basically the rule is that the first one to discover the resource owns the resource. What happens with oil is the owners of land over an underground oil reservoir can pump all the oil they can get from a reservoir even if they don’t own land over the entire reservoir. By pumping it as fast as possible they disproportionately drain the pool and reduce the output of nearby wells and neighboring producers tapping into the same reservoir. The rule of capture puts the owners of adjacent wells in furious competition to produce as much as they can as fast they can in order to not lose out. The rule was distracting and wasteful, but it also reduced barriers to entering the oil business and created room for many more people to learn and master the necessary skills than would have been possible under more restrictive rules. And, with all the oil being pumped, the industry was forced to hunt for a wider market for the oil it was furiously pumping out of the ground.
The initial market for oil was kerosene burned for light. But, at the end of the nineteenth century, Thomas Edison commercialized the light bulb, which was much more suitable and pleasing for lighting than the kerosene lamp. With the successful marketing of his invention, Edison effectively killed the market for kerosene. The rapid development of the electric generation industry created great anxiety for the oil industry, which feared enormous losses. But fate intervened: just as the lighting market was running out of gas, the market for the horseless carriage was generating a whole new market.
The growth of the automobile industry was phenomenal. Henry Ford introduced the utilitarian Model T in 1908. Automobile registrations in the United States catapulted from 8,000 in 1900 to 902,000 in 1912. Until then, gasoline was a byproduct of oil refining, with some small value for use as a solvent or stove fuel. That changed radically with the growth of the automobile. In addition, a second major new market for petroleum was developing with the need for fuel oil in boilers at factories, in trains, and on ships.
Parallel with the growth of the market for petroleum was the growth of the Standard Oil Company. Today we know this company by its successor companies’ names: ExxonMobil, ChevronTexaco, Amoco, and Conoco, to name the most prominent ones. Standard Oil was broken up in the early 1900s because the U.S. government was going through an anti-big business phase and felt that the company was a monopoly. Ultimately, the Standard Oil breakup was positive for the growth of the oil industry because the company had become too bureaucratic and its system of controls too rigid stifling innovation. After the breakup, Standard Oil was divided into several different corporate entities, which operated almost like franchises in that they retained their original brand names and regions.
The breakup liberated business management and technology development. Standard of Indiana, for instance, moved quickly with a breakthrough in refining petroleum to help support the still-infant automobile industry, preserving at a critical moment what would become oil’s most important market in the United States. Prior to this discovery, gasoline was difficult to produce and more costly than other fuels. But what Standard of Indiana discovered was cracking, the breaking down of large hydrocarbon molecules left over from the refining process into smaller molecules that provided additional fuel. One of modern industry’s greatest inventions, cracking more than doubled the share of usable gasoline from a barrel of crude, making the petroleum industry the first big industry to be revolutionized by chemistry.
But in the beginning the use of gasoline to fuel cars was not a foregone conclusion. Among the other fuels tried were steam, kerosene, and alcohol. In 1902, when these contenders were road tested, the New York Times reported that alcohol motors had the best showing. Gasoline came in second.
The ability to refine more gasoline went hand in hand with the growth of automobiles. As more and more people developed a love affair with the automobile, the United States became a nation on wheels. But we didn’t come to this love affair on our own. We were wooed by a variety of suitors who employed an assortment of courtship strategies. The auto industry vigorously promoted gas-powered cars. In 1910, the American Automobile Association staged a competition to prove that the car was superior to the horse and buggy. The automobile won with an average operational cost of $3.15 per mile. The horse and buggy crossed the finish line at $3.69 per mile. As new oil reserves were discovered, it became increasingly abundant and inexpensive, and preferable to other fuels for cars, let alone as fuel for other forms of transportation and industrial applications.
Henry Ford, foreseeing our future consumer economy, created the Model T for the mass market of potential automobile owners: ordinary people like his own factory workers, whom he paid well enough to endure the mind-numbing, lightning-paced assembly line and to buy cars. To Ford, the auto was an appliance for getting from Point A to Point B. He wasn’t market-driven, but rather he focused his efforts on improving production techniques.
As a contrast to Ford, General Motors president Alfred Sloan saw GM’s cars not simply as point-to-point transportation but as lifestyle accessories. He came up with innovations like painting cars in a variety of colors that customers could choose themselves and introducing new lines of cars annually, thereby rendering last year’s models passé. Sloan also introduced the idea of offering different styles of cars to different customers, depending on their means and needs; this innovation was captured in the GM slogan, “A car for every purse and purpose.” GM’s marketing and product development efforts sought to make consumers feel that their choice of a car was a reflection of their position in life, a statement about their very identity.
But ultimately, America’s car buying frenzy — Americans bought 16 million cars in the 1920s — was enabled by easy credit. GM, Ford, and the other big car companies offered loans and leases so people could buy cars with low monthly payments; that’s the real reason the car market took off. With that innovation, the U.S. car population rose from 7 million to 23 million in only 10 years.
With these sorts of marketing breakthroughs, automobiles evolved into the dream machines that Americans adored and soon discovered that they could not live without. Along with the ease and convenience of personal transportation, cars were positioned to offer independence, self-expression, and a sense of style, fun, and adventure. And Americans responded to that message. Many claim to have personal bonds with their cars. Today 4 in 10 Americans claim that their cars have personalities of their own: 2 in 10 give their cars nicknames, usually, female.
When large new oil reserves were discovered in Texas in the 1930s, oil became so abundant that it was touted to be cheaper than water. America quickly went from being a farming-based society to an industrialized behemoth where the new cultural hero — personified by Ford himself — was the big-company capitalist. (Ford also became the anti-hero as the role model for Aldous Huxley’s Brave New World.) Horse drawn carriage production dropped tenfold by the early 1920s.
Despite Ford’s focus on production techniques, from the beginning America’s cars were presented to the public just as much for a better lifestyle as they were for practical uses. Advertising in a variety of forms cultivated that lifestyle image. In the 1910s and 1920s, Ford Motion Pictures was the biggest film producer in the world. It made and distributed films free of charge to theaters all over the U.S. about the glories of industrialization, automobile travel, and urbanization.
In the early years, car technology evolved rapidly. Hundreds of innovations helped achieve reliable performance. They appeared separately on different vehicles, but were quickly synthesized into the design of the more successful products. By 1920 these improvements resulted in vehicles not unlike those of today. At that point, cars were reliable enough to go somewhere and back, a feat we take for granted today, but back then it was still something of a marvel. By 1925, the average auto ran about 25,000 miles before it headed to the junkyard; by 1930 it ran about 40,000 miles. Refinements in the manufacturing and marketing process reduced the costs to the point the average person could afford to buy a car. With both the capability and the low price required to replace other means of transportation, people started buying them for everyday use. Independent auto dealers became the main distribution channel, and service stations began popping up. Roads were paved and driving laws developed.
By the close of the 1920s there were approximately three cars registered for every four households. The automobile had transformed the paradigm of personal transportation. However, society had yet to change enough to require an automobile for everybody in every circumstance. In the cities of the early 1900s, before the automobile became popular, horses and carriages were generally owned by the well to do. The ordinary citizen commuted to work by foot, bicycle, or public transit. The grocery store was on the corner and would often provide a delivery service. By 1929, even with the new and widespread availability of cars, the environment had not changed significantly. Less than two decades had passed since the car was first introduced, and by that time 1 in every 100 people owned one. A single car was sufficient for most urban families. Many still had no need for a car at all, and few needed more than one. Few women drove; only 25% of all drivers in the late 1920s were women. Most women in that era didn’t work outside the home and could shop at nearby stores that were accessible by foot or streetcar.
Due to the greater distances involved in farm families’ day-to-day life, rural residents needed personal transportation more than city dwellers did. By 1929 there were from 5 million to 5.5 million cars and trucks on 6.5 million farms.
With individual families having become comfortable with the automobile and its fuel source, the country started adapting to it. These adaptations included innovations and changes in living and purchasing patterns, of which supermarkets, suburbs, and shopping centers stand out as classic examples. These shrines and suppliers of domesticity brought an increase in female drivers that almost equaled the number of males.
As car ownership and the oil business grew, the American economy and culture continued changing to exploit the opportunities that the car offered. A remarkable number of industries were connected to the automobile business, including steel, rubber, plastics, and petroleum. At its peak, one in six jobs in the U.S. was related to the auto industry, a claim no other industry could ever make. The car had a huge effect on America’s infrastructure development, of which the creation of the suburbs may be the most significant. Suburbs, which first developed when electric streetcars expanded the boundaries of cities, expanded more readily with the car, which, of course, made the decentralization and eventual near bankruptcy of cities even easier for the developer and more convenient for the consumer. The increased distance to almost everything worth going to, coupled with the lack of public transportation that characterized the suburbs, achieved the dubious goal of making the automobile a necessity.
Along with the growing suburbs, supermarkets were born from the automobile. With a growing, less rural population, the number of grocery stores topped out in the late 1930’s and declined by 40 percent through the postwar years as the larger supermarket became dominant. Then came the great consumer oasis — the suburban shopping center, which grew at a pace similar to the supermarket. More than one-third of the nation’s retail trade in metropolitan areas was occurring in shopping centers by 1950. Then fast-food restaurants appeared. In the 1950s, Ray Kroc, who sold food mixers to the McDonald brothers, saw that they had a successful restaurant in San Bernardino, California and thought that if it expanded to more locations, he could sell more of his mixers. In 1954, Kroc became McDonald’s first franchisee. In 1961, he bought McDonald’s outright for $2.7 million. Four years later, 96 percent of American children knew who Ronald McDonald was. Only Santa Claus was better known.
Without the car, Ray Kroc’s vision of franchising a restaurant in order to sell more mixers could not have so profoundly influenced American life or made Ray so rich. Burger eaters simply couldn’t have gotten to McDonalds fast enough unless they could drive there. In 2002, Americans spent more money on fast food — $110 billion — than they did on higher education, movies, books, magazines, newspapers, videos, and recorded music combined. Every month, more than 90 percent of American children eat at McDonald’s. The average American downs three hamburgers and four orders of French fries every week and has the waistline to prove it. Without the car, the fast-food industry would not, could not have transformed our diet, our landscape, our economy, our workforce, and our culture, not to mention our health. An estimated one out of every eight workers in America has been employed at some point by McDonald’s. And the 3.5 million fast-food workers are the largest group of minimum-wage earners in the country. Almost all of them drive to work.
In the 1950s, women who entered the labor force became the predominant source of growth for automotive transportation, a trend that continued in the 1960s and 1970s. While the number of men with a driver’s license increased by one third during this period of time, the number of licensed women increased by a factor of three. Multi-car families became commonplace. It is no longer strange to find more cars in the garage and the driveway than people in the house.
With all the lifestyle innovations and societal changes that the auto enabled, most of all, the auto made the auto ever more desirable and necessary. It was self-perpetuating. And we were so busy buying and driving cars that we didn’t pay much attention to what was fueling those vehicles, where the fuel was coming from, and the impact of our driving and fuel use on our lives and our world. From the beginning, “Americans were guzzling gasoline like partygoers around the punchbowl.” (This quote is from a New York Times article which is noted in the bibliography.)
In 1948, the supply and demand balance in the U.S. began to shift, and we became a net importer of oil, a practice that never stopped once it started. Larger reserves of oil were found outside of the country in places like Indonesia, Iran, Iraq, Kuwait, Saudi Arabia, and Venezuela. Close cooperation was forged between Saudi Arabia, a major producer of oil, and the United States, the largest consumer of oil. The oil industry and its span of influence grew because, initially at least, these countries relied on the investment and technical expertise of the major oil companies aka Big Oil, to determine the rate of production and pricing of oil, both in the United States and abroad. To continue their profits and influence in the world markets the oil companies walked a tightrope between world oil production rates and pricing of world oil supplies. This policy assured the relentless growth U.S. oil consumption.
In 1960, spurred by the growing nationalism and rising oil profits, the producing countries began to push back against the oil industry and formed the Organization of Petroleum Exporting Countries (OPEC). OPEC’s founding members were Iran, Iraq, Kuwait, Saudi Arabia, and Venezuela. Eight other countries — Qatar (1961), Indonesia (1962), Libya (1962), United Arab Emirates (1967), Algeria (1969), Nigeria (1971), Ecuador (1973), and Gabon (1975) — joined later. Daringly, OPEC began to demand higher taxes and an increased share of oil profits from Big Oil; they somehow believed that because the oil was under their countries, they should have a larger financial stake in its extraction and distribution than Big Oil had originally given them. But OPEC was slow to develop and had no real bargaining power in the 1960s. However, by the early 1970s, America was importing one-third of its consumption and world demand was increasing at a rate of two million to three million barrels per day per year. Most of this new demand would have to be supplied with Middle East oil, a region where political conflict between Israel and her supporters was increasing.
In October 1973, OPEC finally flexed its muscles. The 1973 oil crisis began on October 17th, when the members of the Organization of Arab Petroleum Exporting Countries (OAPEC, which consisted of the Arab members of OPEC, Egypt, and Syria) decided, as a result of the ongoing Yom Kippur War, that they would no longer ship oil to nations that had supported Israel in its conflict with Syria, Egypt, and Iraq. The embargoed countries included the United States, its allies in Western Europe, and Japan. Additionally, OPEC members agreed to raise world oil prices after negotiations with the major oil companies failed earlier that month. The embargo was in place for four months, but its impact lasted much longer. In the short term, the price of gasoline rose dramatically with long lines of cars snaked endlessly at gas pumps across the nation. There is nothing like the threat of an oil cut-off to bring the country together, albeit in separate cars idling in line at the local gas station.
Without a doubt, this is a very simple summary of a complex situation. But the point is clear: suddenly Americana and our cars were vulnerable. And while gasoline prices did eventually decline, America’s relationship with its cars was never quite the same. For the first time in its history, the number of cars in the U.S. grew not because people were increasing the number of cars they owned but rather because the overall population was growing and still needed cars. The baby boomers reached car-buying age, and they viewed the purchase as a necessity on the level of bread and hot water. Since 1985, the rate of increase in the number of cars per person has slowed to almost a standstill.
Detroit turned into an urban wasteland of abandoned factories and skyscrapers, empty shells of once-luxurious department stores, and mansions that had fallen to ruin. It turned into an icon of what is wrong with American business. We still buy cars by the millions because we still need them to access the entire infrastructure that grew as a result of having cars in the first place. Without cars, we couldn’t get to work to earn a living or to the store to buy food. But the thrill of the car is gone.
That thrill, the freedom and opportunity, luxury and modernity, the open road, the scenic route, the irresistible sense of adventure, that wasn’t necessarily a conclusion consumers reached entirely on their own. Oil companies once offered free road maps that promoted the joy of driving. They showed us how to get anywhere we wanted. These days, with road systems exponentially more complex, who even has any use for a roadmap? You need GPS. Years ago, driving was fun; families got into their long, boat-like cars for a Sunday drive. Who does that now? Driving is tedious, time-consuming and stressful. Our Toyotas and Hondas aren’t glamorous toys for adults; they’re just vehicles. Young men used to love cars — tinkering with their engines, installing new hubcaps, endlessly bathing them in suds and waxing them to a perfect shine. Now they define themselves not by their souped up roadsters but by iPods, X-Boxes, Droids, and World of Warcraft. To most young people, cars are about pollution, politics, and depleting the resources that lie underneath faraway countries that don’t like us very much. Have you driven a Ford lately?