Financial History Issue 133 (Spring 2020) | Page 33

but stiff Soviet resistance and the onset
of another winter (as well as a shortage of
fuel that hampered the operation aimed at
capturing oil) made it impossible for the
Germans to break through the mountain
passes to the other oil fields in the region.
Germany’s fuel situation actually
improved during the period of relatively
light combat that existed throughout most
of 1943. The Allied bombing campaigns
against the heavily defended refineries at
Ploesti were not very successful. Italy’s
mid-year decision to cease fighting on the
side of the Axis meant it would no longer
be using German supplies. The synthetic
oil industry contributed to steady increases
in the country’s stocks of gasoline and
diesel fuel. And German civilians were
consuming fewer gallons/tons of oil-based
products and converting to fuel derived
from wood and peat. By early 1944, thanks
to all these factors, annualized oil produc-
tion was down from the record levels of
1941, but it was still adequate for most pur-
poses at eight million metric tons.
During the six months after the inva-
sion at Normandy in June 1944, American
bombers damaged most of Germany’s
crude oil and synthetic oil production
facilities. They also destroyed much of the
railroad network necessary for transport-
ing whatever oil was produced to Weh-
rmacht troops on the front lines. British
bombers interrupted that transportation
system even further by dropping mines
into the Danube River and obstructing
the shipment of oil products throughout
the Reich. Germany came up with what
officials believed was a sufficient supply of
fuel to support the December 1944 offen-
sive known as the Battle of the Bulge.
After only six weeks, however, many
of the army’s tanks and trucks simply ran
out of fuel while trying to capture two
Belgian objectives—the depot at Stavelot
and the port of Antwerp. By March 1945,
Germany’s total oil production fell to
only 51,000 metric tons, the lowest level
in more than a decade, and one not able
to sustain even the weakened defenses the
Wehrmacht mounted up until the formal
surrender date of May 7.
The United States Faces
a Different Challenge
In May 1941, President Franklin D. Roo-
sevelt created the Petroleum Administra-
tion for War (PAW) to help ensure the
continuous flow of oil and related products
to both military and civilian users. At that
time, the United States accounted for 63%
of the world’s crude oil production; it had
39% of the world’s proven reserves. Yet,
the surge in demand from the expanding
military establishment presented PAW
Administrator Harold l. Ickes with a con-
tinuous set of challenges. Throughout the
war years, the country never lacked for
crude oil or the vast majority of its distil-
lates. But it did encounter some difficulties
in ensuring that American and Allied oil
consumers scattered around the world
received adequate supplies of the required
products on a timely basis.
The United States faced its first serious
oil distribution crisis just months after the
attack on Pearl Harbor. In February 1942,
German Admiral Karl Donitz sent his fleet
of U-boats after the oil tankers moving
along the Atlantic seaboard as they trans-
ported crude oil from Texas to the North-
east. That oil was designated for both
domestic use and transshipment to Great
Britain and Russia. U-boats seriously dis-
rupted those delivery schedules. Prowling
the coastal waters from Newfoundland to
the Caribbean, they sank 50 oil tankers in
only four months.
The monthly delivery totals to the East
Coast fell from more than 1.2 million bar-
rels of petroleum per day in January to
only 100,000 barrels per day in October.
PAW officials were able to call on the
heretofore unimportant fleet of railroad
tank cars to pick up much of the slack. In
January, railroads transported only 98,000
barrels of oil per day to important East
Coast destinations; they increased their
volume to almost 800,000 barrels per day
by October. This example of substituting
one transportation method for another
characterized most of the PAW’s work
throughout the war.
Administrator Ickes had anticipated the
threat to the fleet of ocean tankers. As
Secretary of the Interior in March 1940, he
had been rebuffed in an attempt to build a
pipeline from the Gulf Coast to the refin-
eries in New Jersey. In September 1941, he
received congressional approval to design
and build more than three dozen pipelines
to transport crude oil and refined prod-
ucts across the country. The most ambi-
tious projects involved the construction
of the 1,250-mile “Big Inch” pipeline to
bring crude oil from Texas to New Jersey
and the 1,475-mile “Little Inch” pipeline
to carry refined products over a similar
route. After only 13 months of construc-
tion and testing, they began delivering
products to their target locations.
By the end of 1944, they were safely and
efficiently carrying 44% of the country’s
oil to its most heavily consuming North-
east locations. Meanwhile, PAW officials
were coordinating the activities of rail-
road tankers, inland barges and tankers,
other pipelines and even ocean tankers to
meet the shifting demands of military and
civilian users on the East and West Coasts
and in geographic areas that experienced
a surge in population and activity due to
the establishment of military facilities.
The military’s organic fuel distribution
organizations faced their own challenges
involving weather, troop movements and
the exigencies of combat on the world’s
many battlefields. But most of their prob-
lems involved temporary delays in making
deliveries rather than a critical long-term
shortage of the required products.
In November 1945, the Army-Navy
Petroleum Board of the Joint Chiefs of
Staff praised the PAW by noting that “…
at no time did the Services lack for oil in
the proper quantities, in the proper kinds
and at the proper places…” and “…not a
single operation was delayed or impeded
because of a lack of petroleum products.”
If military officials in Japan or Germany
had been able to make those statements,
it’s easy to believe that the outcome of the
global conflict we call World War II would
have been quite different. 
Michael A. Martorelli is a Director
Emeritus at Fairmount Partners and a
frequent contributor to Financial His-
tory. He earned his MA in History from
American Military University.
Sources
Fry, John H. and H. Chandler Ide, eds. A His-
tory of the Petroleum Administration for
War 1941–1945. United States Government
Printing Office. 1946.
Goralski, Robert and Russell W. Freeburg. Oil
and War: How the Deadly Struggle for Fuel
in WWII Meant Victory or Defeat. William
Morrow and Company. 1987.
Yergin, Daniel. The Prize: The Epic Quest for
Oil, Money & Power. Free Press. 2009.
www.MoAF.org  |  Spring 2020  |  FINANCIAL HISTORY  31