The Prize: The Epic Quest for Oil, Money, and Power

by Daniel Yergin

Japan was somewhat slower in initiating the shift to oil. Coal was its traditional basic energy source. Before and during World War II, oil had primarily fueled the military, with a small consuming sector in civilian transportation and a continuing use of kerosene for lighting. Refineries and the rest of the oil infrastructure were devastated in the finale of World War II. Not until 1949 did the American Occupation even permit the reestablishment of oil refining in Japan, and then only under the tutelage of Western companies—Jersey, Socony-Vacuum, Shell, and Gulf. With the end of the Occupation, the regaining of political independence, and the Korean War, Japan embarked on its remarkable process of economic growth. So successful was the first phase, based on the rapid development of heavy industry and chemicals, that by 1956, the government was already able to make an epochal declaration: “We are no longer living in the days of postwar reconstruction.” Japan would not be poor forever, and coal, it was expected, would fuel the continuing growth. At the beginning of the 1950s, coal provided more than half of Japan’s total energy, and oil only 7 percent—less than firewood! But oil prices kept falling. By the beginning of the 1960s, there could be no question that the government and Japanese industry would bet on oil. As elsewhere, it would free the economy from the threat of labor unrest among coal miners, and once again, oil was much cheaper than coal.