How a Big Cat Started Europe’s Addiction to Oil
By Marin Katusa, Chief Energy Investment Strategist
The dawn of the 20th century marked a pivotal moment in Europe’s history, driven by the unexpected advent of oil as a dominant force in naval warfare. On July 1, 1911, a German gunboat named Panther entered Morocco’s port of Agadir, setting in motion a chain of events that would forever change the dynamics of energy and military power in Europe.
For two decades prior, a faction within the British Admiralty had advocated for a transition from coal-fired naval vessels to those powered by oil. Admiral John Fisher, the First Sea Lord, was a leading voice in this movement, emphasizing the numerous benefits of oil: its nearly doubled thermal content compared to coal, reduced manpower requirements, the ability for at-sea refueling, and its cleaner combustion with less visible smoke.
However, prevailing naval customs resisted this change, arguing that Britain had ample coal reserves while lacking sufficient oil supplies. Adopting oil would place the formidable British navy at the mercy of emerging oil-rich nations and their controlling trusts. Additionally, the navy’s first experience with oil fuel in 1903 resulted in a ship being enveloped in black smoke, further discouraging efforts to switch fuel sources.
Unbeknownst to many, Germany had overtaken Britain in manufacturing dominance by the late 19th century, particularly in steel production. During this time, Britain’s industrial base had largely relocated abroad, leading to a significant loss of investment. In contrast, Germany was focused on enhancing both the quality and quantity of its products, which extended to its military capabilities, notably its naval strength. This backdrop offers a familiar narrative to our understanding of historical power dynamics.
The arrival of the Panther in Agadir was reportedly justified as a protective measure for German businessmen in a politically unstable Morocco—though the truth was that there were essentially no German entrepreneurs in the region. For Britain, this was perceived as a direct challenge to its imperial dominance, an expansionist maneuver, and a risk to vital trade routes leading out of the Mediterranean.
In light of this, Britain’s ambitious young home secretary began to consider how to outpace Germany’s burgeoning navy. The war college’s simple directive? A necessary speed of 25 knots.
Coal was inadequate—it was too heavy, required extensive boiler systems, took too long to generate steam, and lacked the range necessary for naval operations. Oil, on the other hand, offered the solution.
Following the Panther’s arrival, Admiral Fisher’s camp gained significant support for transitioning the British Navy to oil. Winston Churchill, at the time the Home Secretary, would soon become the First Lord of the Admiralty, establishing himself as a key architect in the British Empire’s energy strategy centered around oil.
Germany’s Great Game
If Britain were to make the monumental shift to oil, securing a reliable supply was imperative. Churchill recognized that the struggling Anglo-Persian Oil Company possessed the necessary resources but lacked financial backing.
With Germany eyeing control over Middle Eastern oil resources—culminating in plans for a railway from Berlin to Baghdad—Churchill effectively convinced Parliament that an alliance with Anglo-Persian Oil Company was crucial. This agreement granted the British government 51 percent control of the company, alongside a confidential contract ensuring a favorable oil supply deal for the Royal Navy over the next two decades.
These strategic moves occurred just before the outbreak of the Great War, now known as World War I. Thanks to Churchill’s foresight, including the introduction of a new class of oil-fueled vessels, Allied forces effectively restricted Germany’s access to critical supplies during the conflict.
By the end of the war, nations recognized the strategic necessity of securing oil supplies. This marked the beginning of a prolonged geopolitical contest over energy resources.
Fast-Forward 100 Years—the Rise of Mother Russia
While fortunes of various players may ebb and flow, the energy struggle remains unchanged. Oil fuels vehicles, powers industries, and provides essential materials for everything from medicine to plastics.
The Soviet Union, a significant oil producer until its dissolution in 1991, faced economic hardships post-collapse, relying on international loans to survive. Today, however, Russia’s abundant oil and gas reserves have allowed President Vladimir Putin to reestablish his country as a formidable global player, with the European Union as its largest energy customer.
Currently, Europe finds itself in a precarious position, reliant on Russia for energy while navigating complex geopolitical tensions. Putin skillfully maneuvers negotiations, often leveraging energy supplies as a bargaining chip, underscoring the delicate balance of power. The EU-28 imports over 50 percent of its energy, with Russia supplying one-third of its oil and natural gas, particularly to Germany, the largest importer in the region.
While European nations may express solidarity with certain political movements, they are also acutely aware of the underlying influence of Russian energy. As demands continue to rise in Asia and instability looms in the Middle East, the European Union confronts significant energy challenges.
Gradually, Europe is recognizing the gravity of its situation. The ambition for alternative energies is commendable, yet the reality remains: current technology cannot yet fully replace hydrocarbon fuels. For energy security, EU member states have little choice but to support their domestic oil and gas industries.
“We must pursue our resource exploration to grasp our potential,” asserted Britain’s energy minister this past July. Similar initiatives are being embraced by countries like Germany. Many anticipate that governments and oil corporations across Europe will follow suit, adapting to the evolving energy landscape.
Sincerely,
Marin Katusa
for Economic Prism
[Editor’s Note: This article is derived from the Casey Daily Dispatch, a free daily newsletter crafted by distinguished investment experts specializing in precious metals, energy, technology, and crisis investing. Click here to subscribe and receive it daily. The article How a Big Cat Started Europe’s Addiction to Oil was originally published at caseyresearch.com.]
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