27 August 1859: The birth of America’s oil industry

On this day in 1859, Edwin Drake struck oil in Titusville, Pennsylvania, proving that his pioneering drilling techniques were economically feasible.

Oil rigs in western Pennsylvania © Bettmann Archive/Getty Images
Drake's discovery sparked an oil boom in Pennsylvania
(Image credit: © Bettmann Archive/Getty Images)

Until about 150 years ago, one of the main sources of oil for purposes such as lighting, was whales. People had been collecting “rock oil” from seeps, where it oozes to the surface, for centuries. Unfortunately for the whales, however, scooping it up from the ground wasn't commercially viable.

In efforts to get at the stuff in more commercial quantities, oil wells had been sunk in Poland and Canada. But these were hand-dug affairs. In 1848, a well was drilled in Azerbaijan by Russian engineer FN Semyenov, considered by many to be the first modern-drilled oil well. But it would be Edwin Drake that would have the biggest and most immediate effect on the industry in the USA.

With the backing of the Seneca Oil Company, Drake used new techniques (which he neglected to patent) using an iron pipe to drill a comparatively deep well through the bedrock in Titusville, Pennsylvania. And on this day in 1859, at a depth of 69 feet, he struck oil. His pioneering well produced 25 barrels of oil a day.

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It wasn't all plain sailing for Drake, however. He had spent five months perfecting his drilling method. And soon after production began, his chief driller sparked disaster when he went to inspect the well one dim day, using an oil lamp to light his way. The oil inevitably ignited, and burned down the well buildings and Drake's house.

But Drake's well proved that it was economically feasible to extract oil from the ground, and his success sparked a boom. Imitators sprung up all around the immediate area. And within 13 years, they were producing some 16,000 barrels a day.

Many people got humongously rich. But not Drake; he ended up broke. He only drilled three wells in total, and lost an awful lot of money speculating in oil. But the grateful people of Titusville granted him a stipend, and in 1876, the state of Pennsylvania awarded him a pension.

Ben Judge

Ben studied modern languages at London University's Queen Mary College. After dabbling unhappily in local government finance for a while, he went to work for The Scotsman newspaper in Edinburgh. The launch of the paper's website, scotsman.com, in the early years of the dotcom craze, saw Ben move online to manage the Business and Motors channels before becoming deputy editor with responsibility for all aspects of online production for The Scotsman, Scotland on Sunday and the Edinburgh Evening News websites, along with the papers' Edinburgh Festivals website.

Ben joined MoneyWeek as website editor in 2008, just as the Great Financial Crisis was brewing. He has written extensively for the website and magazine, with a particular emphasis on alternative finance and fintech, including blockchain and bitcoin. As an early adopter of bitcoin, Ben bought when the price was under $200, but went on to spend it all on foolish fripperies.