Actually, the first oil had been discovered by the Chinese in 600 B.C. and transported in pipelines made from bamboo.
However, Colonel Drake’s heralded discovery of oil in Pennsylvania in 1859 and the Spindletop discovery in Texas in 1901 set the stage for the new oil economy.
Petroleum was much more adaptable and flexible than coal. Additionally, the kerosene that was refined originally from crude provided a reliable and relatively inexpensive alternative to “coal oils” and whale oil for fueling lamps.
Most of the other products were discarded.
With the technological breakthroughs of the 20th century, oil emerged as the preferred energy source. The key drivers of that transformation were the electric light bulb and the automobile.
Automobile ownership and electricity demand grew exponentially and, with them, the oil demand.
By 1919, gasoline sales exceeded those of kerosene. Oil-powered ships, trucks and tanks, and military airplanes in World War I proved the role of oil as not only a strategic energy source, but also a critical military asset.
Prior to the 1920s, the natural gas that was produced along with oil was burned (or flared) as a waste by-product. Eventually, gas began to be used as fuel for industrial and residential heating and power.
As its value was realized, natural gas became a prized product in its own right.

History of the petroleum industry

While the local use of oil goes back many centuries, the modern petroleum industry along with its outputs and modern applications are of a recent origin. Petroleum’s status as a key component of politics, society, and technology has its roots in the coal and kerosene industry of the late 19th century. One of the earliest instances of this is the refining of paraffin from crude oil. Abraham Gesner, developed a process to refine a liquid fuel (which he would later call kerosene) from coal, bitumen, and oil shale, it burned more cleanly and was cheaper than whale oil. James Young in 1847 noticed a natural petroleum seepage when he distilled a light thin oil suitable for use as lamp oil, at the same time obtaining a thicker oil suitable for lubricating machinery. The world’s first refineries and modern oil wells were established in the mid-19th century. While petroleum industries developed in several countries during the nineteenth century, the two giants were the United States and the Russian Empire, specifically that part of it that today forms the territory of independent Azerbaijan. Together, these two countries produced 97% of the world’s oil over the course of the nineteenth century.
The use of the internal combustion engine for automobiles and trucks at the turn of the 20th century was a critical factor in the explosive growth of the industry in the United States, Europe, the Middle East, and later the rest of the world. When diesel fuel replaced steam engines in warships, control of oil supplies became a factor in military strategy—and played a key role in World War II. After the dominance of coal waned in the mid-1950s, oil received significant media coverage and its importance in modern economies increased greatly, being a major factor in several energy crises.
The concern of oil being run out has brought new developments to light such as commercial-scale fracking and the increasing usage of cleaner energy. In the 20th century issues of air pollution led to government regulation. In the early 21st century environmental issues regarding global warming from oil and gas (in addition to coal) makes the industry politically controversial.