usual, and in some instances unique, characteristics of its own. In many
respects these distinguishing features reflected the nature of the basic
raw material. Like most mineral deposits, petroleum has usually been dis-
covered far from existing markets and distributing centers. New fields
have almost invariably necessitated an extensive investment in transport
and storage facilities for their successful exploitation. But unlike most
minerals, petroleum is a liquid substance, usually found in conjunction
with natural gas under pressure. Its recovery required quite different
production methods than those employed in other types of mining opera-
tions. Because both crude and refined petroleum products (with few ex-
ceptions) retain their liquid form from well-heads to final consumers and
are highly inflammable, it was also necessary to develop special methods
of transport and storage for economical and effective handling.

Ever since the sinking of the Drake well in the remote section of west-
ern Pennsylvania in 1859, the discovery of new sources of petroleum has
typically followed an erratic and generally unpredictable pattern, both in
regard to their location and size. Once discoveries were made, however,
the fugacious character of underground petroleum deposits coupled with
a legal structure that gave owners full rights to mineral substances be-
neath the surface of their land, encouraged a rapid exploitation of new
fields. As a result, the industry has at times been faced with supplies of
petroleum above ground far in excess of the capacity of refiners to proc-
ess or of distributors to market. On other occasions its members have
been threatened with the possibility that a considerable portion of the
industry's elaborate superstructure of transport, refining, and distrib-
uting facilities might become obsolete because of inadequate supplies of
crude.

In contrast to most mineral based industrial operations during the latter
nineteenth century, which supplied materials for other processers or fab-
ricators, only a relatively small proportion of the output of petroleum
refineries--chiefly lubricants, solvents, waxes, and fuel oil--was sold to
industrial users. The bulk of their output in the form of illuminating oil
was distributed through marketing channels that terminated with a final
sale to household consumers. This characteristic of the petroleum indus-
try had important implications for the competitive strategy followed by
its members and the organization of the firms that attempted to expand
their operations in order to protect or extend their marketing shares. Ex-
perience by 1900 clearly foreshadowed the future structure of the indus-
try in the twentieth century when the major companies by definition were

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