Holy Roman Empire Chapter 806 - Oil Fields

            



        Franz naturally had no idea what was happening in Egypt. Such a minor issue did not require the emperor’s personal attention.         Recently, aside from the less-than-optimistic outlook for agriculture, Austria’s overall economic situation had been very favorable.         If nothing unexpected happened, the economy was expected to return to its pre-crisis peak by the end of the year.         Looking at the latest economic report, Franz breathed a sigh of relief. The Near East Development Plan was essentially a money-burning endeavor, with no short-term returns in sight.         To raise funds, the Austrian government had already issued 500 million guilders worth of construction bonds in stages. Just the monthly interest payments amounted to as much as 1.86 million.         And this was only the beginning. As the Near East Development Plan continued to move forward, government debt would keep increasing in the coming days.         Adding in the old debts, Franz was surprised to discover that the total government debt would soon surpass that of the Russians.         “At what stage is the development of the oil fields in Iraq?”         There was no other way. In the short term, the only project in the Near East that promised any return was the oil field discovered in Iraq.         With so many oil fields in the Middle East, Franz could not tell which one it would be in future generations.         But that was a minor issue. Whatever was discovered first would be exploited first, and whatever came later would wait. Oil buried underground was not going to run away anyway.         Chancellor Karl replied, “The extraction equipment has already been installed, and the oil pipeline is currently being laid. It is expected to be completed by the end of the year.         Once production begins, the oil from the Iraq region should be enough to meet domestic demand within a year.         To reduce costs, the Austrian Oil Company is already considering shutting down some of the smaller domestic oil fields in order to lower crude oil extraction expenses.”         There was no doubt about it. Judging by the construction timeline, the pipeline was not being laid directly to Austria. Instead, it was being built to the Mesopotamian Basin, where small boats would transport the oil to the Persian Gulf, from where it would be transferred to tankers and shipped back to Austria.         Although the Austrian government allowed private individuals to extract oil, massive oil fields like the one discovered in Iraq, found through government exploration, were still under the domain of state-owned enterprises.         Since the Second Industrial Revolution, Austria’s demand for oil has been growing steadily. Even during the economic crisis, the growth rate remained in the double digits.         By 1884, Austria’s annual oil consumption had reached an unprecedented 15.8645 million barrels.         In future terms, this figure would be insignificant and was roughly equivalent to a single day’s consumption in some major countries. However, for this era, it was a record-breaking amount.         Driven by Austria’s surging oil demand, international oil prices had climbed to a historic high of 5.6 guilders per barrel.         At that price, crude oil by weight had even surpassed the price of grain. With such a high value, what was once an unremarkable resource had suddenly become “black gold.”         If that were all, then oil would still be considered a niche commodity. After all, Austria’s oil consumption had already surpassed the combined total of all other countries.         The entire crude oil market was worth just over 100 million guilders, and the total value of international crude oil trade was a mere 20 to 30 million guilders, half of which came from Russian exports.         What truly made oil promising was the rapid growth in demand.         From 1884 to 1885, Austria’s oil consumption increased by 23.3%, which in turn drove global oil demand up by 15.4%. Such a staggering growth rate spoke for itself.         The expansion of the market was driven by several factors, the most important of which was the advent of the diesel generator. Although its power generation cost was higher than that of coal, it had the advantages of being compact, portable, and easy to operate.         Humanity had only just entered the electric age. Even in Austria, the most advanced in electrical infrastructure, power outages were still a frequent occurrence.         Ordinary people could deal with it. After all, the recently phased-out gas lamps were still usable, and if those were gone, candles could always be lit.         But factories were a different matter. They couldn’t just stop production every time the power went out.         In this context, diesel generators that could produce power independently became essential equipment for many factories.         It wasn’t just factories. Nobles and capitalists also kept them at home. Franz was no exception. After all, even the Vienna Palace couldn’t guarantee uninterrupted electricity.         What seemed like an unremarkable little machine had actually become a major consumer of oil, and its growth rate was incredibly fast.         Next in line was the tractor. Since the world’s first internal combustion engine-powered tractor debuted in Vienna in 1880, its development had taken off rapidly.         In just five short years, this new type of tractor had already gone through two generations of upgrades, with significantly improved performance.         Thanks to its light weight and ease of operation, it quickly outcompeted steam-powered tractors and began spreading widely in both industrial and agricultural production.         As of now, there were already more than 150,000 tractors in Austria, with 67% of them powered by internal combustion engines.         And this was only the beginning. With the progress of the Near East Development Plan, demand for tractors was growing steadily.         If not for production capacity limitations, the number of tractors in Austria would have already surpassed the 200,000 mark.         Manufacturers were expanding their production lines, and within one to two more years, domestic numbers were expected to exceed that figure.         As for other types of engineering equipment, there was no need to mention them. They were all heavy oil consumers.         By comparison, household automobiles were insignificant. After all, they were still a luxury enjoyed only by a small number of wealthy individuals and had yet to see nationwide adoption.         Based on the current situation, Franz’s original prediction that oil consumption would double within five years now seemed a bit too conservative.         After all, the oil industry was just getting started. Before the Second Industrial Revolution, oil’s primary use was for lighting oil lamps.         The market had always been limited, and it faced competition from gas lamps and candles, which naturally kept demand low. With such a small base, rapid growth was inevitable.         As a result, a minor global oil exploration boom was underway.         But all of this would soon come to an end. Once oil from Iraq was developed, the global shortage of crude oil would be fundamentally resolved.         As for other regions, Franz had no intention of starting development for the time being. If the outside world were to realize that the Middle East was full of oil, it would not only provoke jealousy but also lead to falling oil prices.         From the very beginning of the Near East Development Plan, Franz had already decided to use the profits from oil extraction to offset the government’s financial investment.         “This is something the government must take seriously. Based on current trends, domestic crude oil consumption will double within the next four years.         The oil fields in Iraq will soon become a significant source of government revenue. With them, covering the interest payments on the Near East Development Plan won’t be a problem.”         No doubt about it as the key issue was interest. As for recovering the initial investment, that would not be possible in the short term.         No matter how profitable oil extraction might be, the market size was limited, which capped the potential earnings.         The growth rate looked impressive for now, but it couldn’t continue forever. As the total base grew, the growth rate would inevitably decline.         Austria’s oil consumption could double in four years, but doubling again in the next four years would be much harder.         Besides, Franz didn’t want a financial system that was overly dependent on natural resources.         From the beginning, he had planned to limit oil production. As long as domestic demand was met, only a small amount would be exported.         Of course, this was also a way to undermine the competition. By inflating global oil prices, Austria could slow down the development of the oil industries in Britain and France by forcing them to deal with higher costs. *** https://postimg.cc/gallery/PwXsBkC (Maps of the current territories of the countries in this novel made by ScH)

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