Nevertheless, despite such anti-Russian actions carried out by the US, in 1904 Russia was able to export 13.5 million barrels of kerosene, which accounted for 30.7% of total world exports. Meanwhile, the US accounted for 55.9%, the Netherlands 8.4%, Romania 2.7%, and Galicia 2.3%.
Russian kerosene exports in 1904 broke down as follows: Europe received 6.2 million barrels and Eastern markets received 7.3 million barrels, with China alone receiving 880,845 barrels of kerosene, or 57.6% of American deliveries.
However, these impressive gains would not last long as the tragic events of August 1905 plunged the Russian oil industry into a deep crisis. As a result, Russia lost the European and Far East markets, and the volume of its exports of petroleum products was set back by several decades, putting an end to the high figures that had earlier impressed contemporaries.
The Tragedy of August 1905
The development of the Russian oil industry in the late 19th and early 20th centuries was clearly on an upward track; the industry exhibited rapid rates of growth in oil production and refining, becoming essentially a world leader. Volumes of Russian petroleum products exports to the world market grew steadily, despite crises in several countries in Europe, Asia, and the Far East.
As noted above, the world market for petroleum products in the late 19th and early 20th centuries was characterized by increased competition between the leading Russian oil companies and the American transnational corporation Standard Oil Company. At the same time, there was a clear tendency toward substantial consolidation of Russia’s competitive position on the petroleum products market, both in Europe and elsewhere in the world. For instance, whereas Russian kerosene supplied to Great Britain in 1897 amounted to only 14.2% of American kerosene exports to that country, by 1903 it had already reached 42.4%.
The Russian industry’s great potential was clearly shown by statistical indicators, especially from 1900–1904, compared to the performance of the American oil industry. The commissioning of powerful high-flowing wells by American oil industrialists in Texas in 1902 altered the rankings somewhat, but the potential of the Russian industry remained fairly high, and a return to a leading position on the “oil Olympus” was thought to be entirely possible.
Table 5. Russian and US Oil Production, 1898–1904 (in millions of tons)
Source: Dyakonova, I. A. Oil and Coal in the Power Industry of Tsarist Russia in International Comparisons [Neft i ugol v energetike tsarskoy Rossii v mezhdunarodnykh sopostavleniyakh]. Moscow, 1999, p. 166.
However, the events of only a few tragic days in August 1905, at the Absheron Peninsula fields, completely dashed any hopes for Russia’s restoration as leader of the world oil industry. To fully understand these events, it should be noted that an important aspect of Russia’s oil industry development was its highly multinational working class. In 1904, of the 147 oil production companies on the Absheron Peninsula, eight produced about 50% of all the oil. The peninsula’s major fields and refineries employed 50% of the entire work force in 1903, and by 1907 that figure was 55.2%. At the same time, the Russia-wide figure was 54%. The proportions of workers of various nationalities in 1903 were as follows: Azerbaijanis 41.2%, Armenians 20.5%, Russians 20.3%, Dagestanis 12.5%, and others 6.5%.
At the same time, it should be noted that a social component also began to manifest itself more and more distinctly in the operations of Russian oil companies during those years. On December 30, 1904, at Sabunchu, on the Absheron Peninsula, in a building housing the executive board of the Electric Power [Elektricheskaya sila] Joint-Stock Company, negotiations were concluded between authorized labor collectives and oil industrialists, resulting in the signing of the first collective-bargaining agreement in the history of the Russian oil industry.
This event ended a major oil field strike that had lasted more than two weeks and had involved over 40,000 workers from various occupations. The first collective-bargaining agreement, which the trade-unionists began to call the “residual oil constitution,” was a major achievement for the working class in the battle to improve working and living conditions. Under the terms of the agreement, the work day in the field was reduced to nine hours; regular night work, overtime and detachment work was abolished; days of three eight-hour shifts were introduced for drillers, bailers, stokers, and oilers; and a day off finally appeared in the work week. In case of illness, workers had to be paid half their wages for three months and treatment had to be provided at the business owner’s expense. The collective-bargaining agreement also reflected various demands of the workers, such as polite treatment by the administration, abolition of unauthorized searches, provision of quality drinking water, and common access to bathhouses.
The 1904 collective-bargaining agreement was a major victory for Russian oil workers. It seemed to everyone that this progress in the social sector had considerably lessened the level of tension in the working class environment, and nothing portended the complications that would soon arise in the oil fields. However, the events of the first Russian revolution of August 1905 burst forth on the Absheron Peninsula, writing the most tragic pages in the history of the domestic oil industry. The devastation that occurred over several August days on the Absheron Peninsula, when oil workers set industrial sites on fire in acts of deliberate sabotage, plunged the Russian oil industry into a deep, long-term crisis.
What was the main cause of the tragedy of August 22–25, 1905? Unfortunately, even a hundred years later, we still do not have an exhaustive answer to this question. In their study, “On the Question of the Causes and Nature of the Tragic Events of August 1905 at the Absheron Peninsula Oil Fields,” which appeared in the anthology, The Eve of the Petroleum Era [Predvestiye ery nefti], the Russian historians Sergey Khizhnyakov and Valery Osinov made one of the first attempts at an unbiased scientific analysis of the events.
In the absence of a definitive explanation, let us try to at least reconstruct a logical sequence of events from the available facts. At the Absheron Peninsula fields alone, there were over 5,000 Persian citizens (20%), and they formed the bulk of the unskilled laborers: bailers, who pulled the oil out of the ground and poured it into tanks; blotters, who gathered oil from the ground and water surface with rags; and carters, who hauled oil day and night from the fields to the Black City outside Baku. A step higher in the working hierarchy were the drillers, brakers, and carriers. And to these we should add a large number of Persians who, while not on permanent staff at the oil companies, were employed in all types of temporary jobs (collecting ditch oil, cleaning oil pits, etc.) for up to 8–15 days a month. By some estimates, this unskilled labor force comprised another several thousand workers.
Written sources from that distant time offer further information about the situation at the fields. In an article titled “Explanatory Note of Elected Representatives of Baku Workers” from Neftyanoye delo no. 20–21 for 1905, we find very remarkable eyewitness testimony of the tragic August events: “For the workers, this carnage was completely unexpected. In the first days, especially, it seemed so absurdly wild; we simply didn’t believe that all this was not a dream, but real life. It’s true, though, that since the December strike, leaflets were being distributed to workers containing warnings to Armenians, supposedly from Muslims, to leave the Muslims alone, otherwise they, the Muslims, would beat up all the Armenians.”