PIPELINE development in the formative period of the American petroleum industry was complicated and its history is obscure, but therein lies the significance of a study of the evolution of this mode of oil transportation. Because they could transport crude oil more efficiently, cheaply, and safely than other land carriers, pipelines became vital arteries of petroleum transportation. Virtually unnoticed by the public, a vast network of pipes was developed between the oil wells and collecting points and then between producing areas and refining centers. In this process both private enterprise and public policy were involved.
In a free enterprise economy the fact that pipelines were important transportation facilities made them also important competitive weapons. Although the first pipelines were constructed by individual entrepreneurs to carry oil between the wells and railroad depots, the trunk railroads serving the Oil Regions of Pennsylvania soon developed their own feeder pipeline systems to protect their oil traffic from one another.
The initial rewards of pipeline innovation were high, but as the lines multiplied, profits dropped and combination of lines resulted. So it was in other parts of the petroleum industry.
By 1872 overproduction of crude and refined oil and strenuous railroad competition for oil freight had created a situation which