Spurred by WWII, U.S. oil production rose from 3.7 million barrels a day in 1940 to 4.7 million bbl/d in 1945. According to historian Arthur Herman, this rapid expansion resulted from a U.S. energy policy that set unifying goals and worked with industry experts to achieve them.

Herman, a senior fellow at The Hudson Institute who has authored several books on WWII, says the energy policy that helped the Allies achieve “the greatest victory in history” is worth studying 80 years later. He boils the lessons it teaches into two key takeaways. First, “energy independence—and having access to cheap, abundant energy—is an essential prerequisite for American national and economic security.” Second, “a national energy strategy that relies on the expertise of leading energy executives and engineers in the private sector will tend to be successful; one that ignores their advice and assistance will tend to fail.”

According to Herman, WWII’s leaders understood how much oil mattered. That is reflected in the actions they took.

“Historians of World War II have long recognized that access to oil and energy supplies largely determined the course of that conflict,” Herman writes. “For example, America’s oil embargo against Japan helped trigger not only the attack on Pearl Harbor but also Japan’s expansion of its Asian empire into oil-rich Burma and Indonesia.

“Hitler’s invasion of the Soviet Union took a decisive and final turn when he diverted his panzer forces away from Moscow toward the oil-rich Caucuses and the approaches to Stalingrad,” Herman continues. “Lack of adequate fuel ground Hitler’s 1944 Ardennes offensive to a halt, and the Allied bombing campaign against Germany’s synthetic fuel facilities in 1944-45 likewise helped trigger the collapse of the entire Nazi war machine.”

To ensure it had access to oil, the United States established the Petroleum Administration for War (PAW), which worked with private companies to accelerate production. “By any measure of wartime production efforts, the national energy strategy embodied in PAW was a major success,” Herman argues. “That roughly 85% of the total Allied consumption of oil and gasoline was supplied from U.S. domestic sources demonstrates the scale of that achievement.”

Getting oil to the front lines required a massive effort, Herman observes. “The major sources of American domestic production and refining of oil were in the middle of the country or on the West Coast in California. But the oil needed to be shipped to ports on the East Coast in order to move it into the war zone (i.e., Europe),” he illustrates.

Before the war, 95% of all oil and gasoline supplied to the East Coast came by tanker. “From the moment the first German U-boats entered the Atlantic and made their way westward to cut off British supplies from America, it was understood that relying on seaborne routes to maintain America’s domestic as well as foreign oil supplies was conceding a major strategic vulnerability,” Herman says.

“The other traditional means of moving supply (i.e., on rail cars) posed two difficulties,” he shares. “First, increasing the stock of tanker cars would place heavy demands on America’s existing transportation network. Second, oil shipments would have to share the rail network with other war materiel.”

For dedicated transport, PAW’s supply division turned to pipelines. “The building of two major pipelines—covering more than 2,400 miles with dozens of pumping stations—to bring supplies eastward where they could fill tankers for overseas shipment, became one of the primary achievements of the PAW and of the entire wartime energy strategy,” Herman assesses. “Nicknamed Big Inch and Little Big Inch, the two lines were the biggest construction project in the history of the petroleum industry—and one of the most prodigious of the entire Second World War.”

Inspiring Infrastructure

Big Inch alone crossed about 33 rivers, 200 creeks and lakes, 289 sets of railroad tracks, and 626 highway intersections, Herman tallies. “At its height, the pipeline was moving 300,000 barrels of crude oil every day across the continental United States,” he reports.

And it was only part of the wartime pipeline expansion. Through 35 distinct projects, Herman says PAW worked with industry partners to build 11,000 miles of new trunk and gathering lines and reverse or divert another 6,000 miles of pipelines at a “staggering cost” of $330 million. While the government financed $154 million, the oil industry paid for the majority.

Producing and moving oil was far from the industry’s only accomplishment. “The use of petroleum for synthetic rubber plants, especially butadiene, gave rise to a major wartime industry,” Herman writes. “At first, the government proposed that each plant have a 10,000 ton per year capacity. The enthusiastic oil companies geared up instead to build plants with a 50,000–100,000 ton capacity. By the war’s end, American butadiene plants were producing a 75-pound bale of synthetic rubber every nine seconds—the equivalent of a year’s worth of collection from a rubber tree.”

Leveraging the United States’ growing pipeline networks, Herman observes, “required cooperation with drillers, refiners and oil transportation and production companies to make sure suppliers were able to reach the strategic points within the pipeline system safely and reliably.”

A Cooperative Approach

Citing PAW’s official history, Herman says it operated under three principles:

• Centralize all government activities and responsibilities relating to oil for war under one agency.
• Organize that agency along functional lines paralleling the functions of the petroleum industry and staff it with people who have practical experience with oil.
• Enlist the industry’s full resources on a cooperative basis by establishing industry committees to advise and assist the government.

The third principle includes a provision that “orders and regulations (be) kept at a minimum, and the greatest possible reliance placed upon voluntary compliance and support,” Herman quotes.

“In short, the government decided that the best way to achieve its national energy strategy was not only to enlist the support of the private energy industry and recruit its most experienced leaders and executives, but also to mimic as much as possible the structure and functions of the industry itself,” he summarizes.

To ensure the industry had the necessary materials to build pipelines and other essential infrastructure, PAW could issue conservation orders “aimed at controlling the use of materials deemed to be in short supply, including materials for the construction of new plants, or later, pipelines,” Herman notes.

“The World War II energy strategy forged by the Roosevelt administration was a clear demonstration of the same principles that enabled the mobilization of industry for war materiel:

the combination of technological innovation and public-private sector coordination, guided by a clear sense of what had to be achieved and when,” he praises. “The success of that strategy offers powerful lessons for energy policy today.”

Changing Times

PAW’s success during WWII showed “an effective national energy policy aimed at preserving and even extending global (energy) dominance could also be the cornerstone of an effective national security policy,” Herman states.

“Unfortunately, the United States forgot that principle in the quarter century after the war,” he laments. “Part of the problem was complacency about where America really stood in the global oil market and the natural gas market, which grew in importance in the post-war world. Having always been the dominant player, politicians and the public—and even the industry—could easily assume that American dominance would continue indefinitely.”

This complacency meant that the Middle East’s growing hydrocarbon production took policymakers by surprise, Herman argues. He adds that shifting attitudes toward oil and gas hobbled development and policymaking.

“New environmental concerns made expanding America’s energy industry seem undesirable or dangerous,” Herman clarifies. “Then as now, an industry founded on the development of hydrocarbon resources came to be seen as a threat to the environment. Meanwhile, the development of those same resources in other parts of the world, particularly the Middle East, was seen as only fair and just—or ignored altogether.”

Herman says that attitude, as well as the low cost of imports relative to domestic production, helped make the United States increasingly dependent on imports. “In 1960, America imported 10% of its oil consumption,” he relates. “By 1968, the peak year of the country’s industrial output, the number had grown to 28%. By 1973, on the eve of the (Arab oil embargo), total oil imports reached 34%.”

When Arab oil producers decided to cut production (in part to retaliate for U.S. support of Israel), the long lines and shortages at gas stations showed the link between access to cheap, abundant energy and national security, Herman argues. Unfortunately, the government could no longer enlist the industry’s aid as freely as it had during WWII.

“One of the baleful consequences of America’s failed energy strategy in the 1970s was that people had come to blame the rise in oil prices, and the gas lines, on Big Oil. Large firms like Exxon Mobil became the favorite targets of conspiracy theorists; they came to be seen as corrupt enemies of the environment, and their every word or action was viewed with suspicion and loathing,” he relates. “The idea of a national energy strategy devised by executives and engineers from the biggest oil companies was now anathema to the American public.”

Even so, “Americans did learn one valuable lesson from the traumas of the 1973 oil crisis and Arab oil embargo: energy independence cannot be taken for granted. It requires constant effort and political will, particularly in the face of those who oppose energy independence for a variety of ideological and self-interested reasons.”

In the half century since the embargo, the United States has regained its role as a hydrocarbon powerhouse. “The United States is poised to shape the future of the world once again, with its ability to produce and export natural gas as well as oil at record levels—and to restart the world’s use of nuclear energy on a new, safety and more innovative basis,” Herman says.

Herman’s report, which provides more details on the topics covered above and highlights the industry’s efforts to improve aviation fuel during WWII, is From Fueling Victory to Running on Empty: Lessons from American Energy Policy in War and Peace.