The Valley's Forgotten Oil Boom

Local alternative energy sources and saving the whales, circa 1861

This article is the story of the Los Gatos oil boom and is another example of how high technology came to the Santa Clara Valley long ago. The article is condensed from my new book, The Last of the Prune Pickers: A Pre-Silicon Valley Story.

The California gold rush launched the rapid industrialization of the state. Within two years of the discovery of gold, most of the surface deposits had been gathered up and the “big guns” of American industry had moved in. These were corporations with big Eastern money behind them who were able to bring in the expensive heavy equipment necessary for working buried deposits of gold bearing ore.

San Francisco was the hub of the new California empire and the Santa Clara Valley was close to San Francisco and quickly became a major supplier of food and lumber for both the city and the gold country. Besides the need for food and lumber, the need for machinery and other manufactured goods in both of these areas was enormous. A gold rush does not wait and there was little time to get needed goods elsewhere, so as much as could be found, grown, or made locally, was. 

Fuel for driving the new industries was in short supply in the early decades of the American era in California. Wood and straw were used to heat homes and fire boilers, but they are inefficient fuels and cannot produce a hot enough fire for metal working. The largest local coal deposit was found at Mount Diablo, about thirty miles northeast of the Santa Clara Valley, but the demand far exceeded the local supply. Both San Francisco and Sacramento had many foundries, and most of the coal to fire them was shipped in from Australia. San Jose’s first natural gas, around 1860, was extracted from Australian coal. 

Due to the high cost of imported coal and the need for an alternative hot burning fuel, charcoal was being produced in large quantities from leftover wood in the local logging areas. But this too was expensive and a better energy solution had to be found.

To compound the problem, before the early 1860s, whale oil provided the fuel for lighting in a large part of the western world. By that time however, whale populations had been greatly diminished, and whale oil was very expensive. 

When distilling of petroleum oil into kerosene was perfected in the late 1850s, the modern petroleum industry was born. The US oil industry started in Pennsylvania in the late 1850s, and due to the shortage of whale oil, huge fortunes were made there.

It is little wonder then that in 1861, when oil was discovered in the Los Gatos hills near Lexington, it caused great excitement. Petroleum was a high tech industry of that time and in the mountain area from Alma to Wrights, oil fever took over. A good number of companies got involved, a lot of stock was sold, and many oil wells were dug. The wells averaged about a thousand feet deep and the best well produced about a hundred barrels a day. It was the most productive oil well in California at the time. The premiere oil area was in Moody Gulch, and a three mile pipeline brought the oil down from there to near the edge of the flats where it was stored in a large tank. Before the railroad came, the oil was put into barrels, loaded onto wagons, and carted into San Jose. 

After these and other oil finds in the surrounding area, it looked like the Santa Clara Valley area would be the oil producing region of the state. There was plenty of excitement about the discovery, but like most other discoveries, the find was exaggerated. It was eventually determined that there was not nearly the “inexhaustible supply” that was first reported. Then, oil was discovered in Southern California in quantities that dwarfed the finds in and around the Santa Clara Valley, and thus ended the Valley’s oil boom. But there was enough oil found, that when refined into kerosene, supplied lighting for the area. Asphalt for roofing materials, and lubricating oil for machinery were other early oil-based products produced locally.

Refining methods for making fuel for heating and running machinery were not perfected until the early 1880s. The canning industry boomed at that time largely due to this development.

No, technology is not new to the Valley. We just forget.

This post is contributed by a community member. The views expressed in this blog are those of the author and do not necessarily reflect those of Patch Media Corporation. Everyone is welcome to submit a post to Patch. If you'd like to post a blog, go here to get started.

Alina Squeak June 10, 2012 at 03:57 PM
Wow, very cool to read! I had no idea that there was an oil boom down in this area!


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