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sincere but woefully ignorant questions such as, “Do they have a lot of
oil reserves?” I was assured that they did. I asked what the countryside
was like in Saudi Arabia, since he had visited there a couple of times. He
asked me “Have you ever driven through the Nevada desert?” I assured
him that I had. He said, “Compared to Arabia, Nevada is a jungle!”

To understand our Aramco situation it is necessary to understand
the history of oil operations in Saudi Arabia. In 1931, in the depths of
the Depression, the management of the Standard Oil Company of Cali-
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Davies, a geologist, recommended a site in Bahrain. In 1932, oil was
discovered there. This led to interest in Saudi Arabia. SoCal negotiated
for nearly four months before signing a concession agreement with the
King of Saudi Arabia in 1933. The King, Abdulaziz ibn Saud, had a
country the size of Texas under his control. The sole exterior income
was from Muslims who came each year to make the Haj (the Pilgrim-
age) from Medina to Mecca. The King was worried about his country
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wait and Bahrain. He therefore chose to negotiate his oil concession
with an American company.
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hills near what is now called Dhahran. The second well produced some
oil for a few days and then pooped out. They were drilling to locate stra-
ta that produced huge amounts of oil in Iran and Kuwait. Unfortunate-
ly that strata was not productive in Saudi Arabia or production was so
small as to be uneconomic. They went on drilling through seven wells
with similar, disappointing results. In the meantime a geologist named
Max Steineke had been assigned to Saudi Arabia and he concluded that
there should be oil-bearing strata at a deeper level, approximately 4,800
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sion and many members of SoCal’s management felt that it was foolish
with world oil prices being low to continue to pour money into oil ex-
ploration in Saudi Arabia. The head of the Arabian Standard Oil Com-
pany was Fred Davies. Fred Davies and Max Steineke went home to
San Francisco to plead the case for continuing investment. Steineke was
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