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Crude Politics

Crude Politics: The California Oil Market, 1900-1940

Paul Sabin
Copyright Date: 2005
Edition: 1
Pages: 327
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  • Book Info
    Crude Politics
    Book Description:

    Energy shortages, climate change, and the debate over national security have thrust oil policy to the forefront of American politics. How did Americans grow so dependent on petroleum, and what can we learn from our history that will help us craft successful policies for the future? In this timely and absorbing book, Paul Sabin challenges us to see politics and law as crucial forces behind the dramatic growth of the U.S. oil market during the twentieth century. Using pre-World War II California as a case study of oil production and consumption, Sabin demonstrates how struggles in the legislature and courts over property rights, regulatory law, and public investment determined the shape of the state's petroleum landscape. Sabin provides a powerful corrective to the enduring myth of "free markets" by demonstrating how political decisions affected the institutions that underlie California's oil economy and how the oil market and price structure depend significantly on the ways in which policy questions were answered before World War II. His concise and probing analysis casts fresh light on the historical relationship between business and government and on the origins of contemporary problems such as climate change and urban sprawl. Incisive, engaging, and meticulously researched,Crude Politicsilluminates an important chapter in U.S. environmental, legal, business, and political history and the history of the American West.

    eISBN: 978-0-520-93114-5
    Subjects: History

Table of Contents

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  1. Front Matter
    (pp. i-viii)
  2. Table of Contents
    (pp. ix-x)
  3. List of Illustrations
    (pp. xi-xii)
  4. Preface
    (pp. xiii-xvi)
  5. Acknowledgments
    (pp. xvii-xx)
  6. [Maps]
    (pp. xxi-xxii)
  7. INTRODUCTION: Structuring the Oil Market
    (pp. 1-12)

    California’s landscape and culture today depend on petroleum. Millions of gasoline-powered cars and trucks daily roar along eight- to ten-lane highways. Gasoline-powered tractors plow agricultural lands, and petrochemical pesticides and fertilizers protect lucrative crops. Highways and automobiles link California’s cities with world-renowned park and recreation sites, ranging from lush, towering Yosemite National Park in the north to the roller coasters and fantasy attractions of Disneyland in the south.

    When Californians cruise the Pacific Coast Highway, pull on nylon stockings, or savor a strawberry, they reap the benefits of petroleum. Stuck in traffic, breathing polluted air, or struggling with pesticide contamination...

  8. PART ONE Federal Property

    • CHAPTER 1 The End of the Old Property Regime
      (pp. 15-30)

      Basic property rights provided the framework for oil production in the early-twentieth-century California petroleum market. In settled areas such as Los Angeles, Huntington Beach, and Ventura, private landowners competed with their neighbors to claim subsurface oil deposits. On federal and state lands in the San Joaquin Valley and along the Pacific Coast, oil companies maneuvered for access. Their struggle with each other and with the government determined how oil moved from the land onto the market. Who would reap the benefits of that which nature and time had bequeathed? How fast would Americans extract this oil, under what constraints, and...

    • CHAPTER 2 The Politics of the 1920 Mineral Leasing Act
      (pp. 31-50)

      California’s unsettled oil market increased the urgency for oil operators to establish a favorable new legal framework for oil development on public lands. While the Justice Department’s suits proceeded through the courts during the second decade of the twentieth century, the companies sought to influence the new mineral legislation being developed by Congress. Following President Taft’s withdrawal of public oil lands, congressional sentiment favored retaining national ownership of these lands and leasing them to private companies who would develop them. Oil prospectors and companies already had laid claim to the most valuable petroleum territory in the San Joaquin Valley. Now...

  9. PART TWO State Property

    • CHAPTER 3 Beaches versus Oil in Southern California
      (pp. 53-78)

      In the midst of the legislative conflict over federal oil lands in California, oil lobbyists frustrated by congressional inaction and hostility longed for the more hospitable climate of the California statehouse. “In any state the individuals or officials responsible . . . would be very expeditiously removed from power if they undertook to perpetrate such an injustice,” the oil lobbyist Frank Short complained privately to Republican senator John Weeks of Massachusetts in 1917.¹ The oil companies got a leasing bill they mostly liked from Congress in 1920 , but only after ten long years of intensive work. Frank Short, James...

    • CHAPTER 4 “The Same Unsavory Smell of Teapot Dome”
      (pp. 79-108)

      Governor James Rolph’s bid to resolve the Huntington Beach uproar through low-royalty settlements with trespassing oil operators ran aground as California state politics changed during the Great Depression. Liberal Democrats elected to the state legislature in 1934 used the tidelands oil controversy to attack the dominant Republican Party. To these Democratic politicians, the controversy symbolized the Republican administration’s eagerness to transfer millions of dollars of public natural resources to private economic interests, including the Standard Oil Company. Between 1934 and 1938 , state politicians battled repeatedly over tidelands oil legislation. State senator Culbert Olson, the California Democratic Party chairman, seized...

  10. PART THREE Regulation

    • CHAPTER 5 The Struggle to Control California Oil Production
      (pp. 111-133)

      California and national political leaders generally designed public land policies and property law to increase oil production and lower energy prices. In this sense, the market structure certainly accomplished its policy objectives. Even when opponents challenged that structure and thwarted oil development—for instance, when Taft withdrew federal oil lands or when California politicians blocked coastal oil drilling—judicial rulings, political maneuvering, corruption, and outright lawbreaking forced open California’s oil fields. By the mid-1920 s, California oil production had surged due to petroleum development in the San Joaquin Valley and in town-lot fields in the Los Angeles Basin, like those...

    • CHAPTER 6 Federalism and the Unruly California Oil Market
      (pp. 134-156)

      Oil prices remained ruinously low in early 1931, and the industry, according to the business leader Mark Requa, was “out of hand.”¹ Government and business leaders in California intensified their efforts to coordinate and control the oil market. California oil operators and state politicians grasping for ways to eliminate “destructive competition” experimented with state regulation, with a private cooperative sales agency for smaller California firms, and with federal regulation.

      The twists and turns in petroleum regulation in 1930s California demonstrated the historical role played by both federalism and direct democracy in twentieth-century United States politics.² Many politicians and lawyers in...

  11. PART FOUR Consumption

    • CHAPTER 7 “Transportation by Taxation”
      (pp. 159-181)

      By 1940, motor vehicles used 40 percent of each barrel of oil in the United States.¹ The rapid development of streets and highways in California and the nation thus helped establish and solidify the market for petroleum. What role did politics and public policy play in shaping the infrastructure of consumption? This chapter shifts attention to transportation finance. During the decades before World War II, California and the United States drove down oil and gasoline prices through generous public land policies and a fragmented, competitive property regime. Regulation moderated the price decline and stabilized the oil market to ensure industry...

    • CHAPTER 8 Defending the User-Financing System
      (pp. 182-201)

      The separate revenue stream for highways, established during the early 1920s, soon faced threats. In this flush period, California regularly posted general fund surpluses. After the onset of the Great Depression, however, revenue from motor vehicle users became an increasingly attractive source of money for alternative projects. The Republican governor James Rolph and some state legislators soon proposed using gasoline tax revenues for a variety of expenses, such as paying off state highway bonds and local special assessment bonds or funding unemployment relief.¹ Successful defense of highway funding protected the flow of money into road construction and maintenance.

      As pressure...

  12. CONCLUSION: The Politics of Petroleum Prices
    (pp. 202-210)

    Kenneth R. Kingsbury, president of Standard Oil of California, wrote a private letter in 1925 to Secretary of the Interior Hubert Work regarding federal oil policy. Kingsbury argued that the United States should not fear shortages of crude oil, and that the federal government should not regulate the oil market further. Kingsbury assured Secretary Work that petroleum companies would discover new oil reserves if oil supplies declined. Similarly, consumers would use oil more efficiently. Refiners like Standard Oil could recover more high-value products from each barrel of oil. Automobile manufacturers also could “double the supply of gasoline” by doubling automobile...

  13. Notes
    (pp. 211-274)
  14. Bibliography
    (pp. 275-296)
  15. Index
    (pp. 297-307)
  16. Back Matter
    (pp. 308-308)