Why did Synthetic OIL not solve the AXIS OIL Crisis? 

Synthetic refineries got nerfed with the 1941 update. And the developers forgot to put coal as a resource so they're completely broken. Worst Germany war ever! Will not replay scenario.

A pfennig was a German penny, worth 100 pf per mark, and during about '40-'45, they produced the Riechsmark and were also 100 pf per r.m. All replaced by the euro in about 2002, I think.

My grandfather was a chemist who developed this synthetic fuel in WW2. We never had an in depth conversation about it before he died but as I recall he said it was predominantly for V-2 rocket use.

Hi TIK, big fan for a while now. Just wanted to say these Q&A style videos are great, particularly in the format they're currently in. I listen to them while playing strategy games, or convert them to mp3 and use as podcasts while driving to work etc. These long historiography type discussion videos that don't require visual attention (as oppose to battlestorm videos with maps and other graphics) are perfect. Keep up the good work!

Contrary to most of the studies, the fuel supply was tight for most of the the war, but it was not critical until the US bombing campaign switched to the oil plants thanks to an spy ring run out of Sweden that fed detailed information to the Allies about what facilities were critical. Once the bombs found the right targets it started an oil collapse they never recovered from. The real problem with the synthetic fuels is the huge energy costs. And the fact that their process was incredibly dirty. The minerals and other contaminants in the low grade coal in German hands made the process wretchedly complex. I speak from some experience with working with synthetics and the newest processes have far higher yields.

Excellent post. I have wondered about the synthetic oil issue and you have cleared up most of my questions here. A few details that are not really huge but still might be useful to you: One German fighter pilot reported that he switched to night fighter duty in 1943. There was a training program for day fighter pilots to switch to night fighting. It was designed to take 90 days. Due to fuel shortages in 1943, it took nine months. Another detail: One major expense of coal gasification was steel. The methods at that time took a very large number of steel vessels--to the point that the entire supply of steel in the 3rd Reich simply could not supply enough. Finally, I recently read that while the jet engines could burn many fuels, the best fuel available was synthetic. The engines could burn diesel fuel but with less efficiency. In a pinch they could burn gasoline, but with significantly reduced efficiency.Thanks again,Jay Maupin

@TIK Putting my Chemist's hat on: the Germans went down the WRONG road WRT coal to liquids. They adopted HIGH PRESSURE conversion technology. This was an EPIC error. High Pressure tanks used exotic steels that Germany was short of. That was the hang-up. That's why coal-to-liquid was so expensive. It was the STEEL. This is the same steel that you needed for your tanks, submarines, surface fleet -- etc. The Correct solution was to use the LOW Pressure path. This is nothing more exotic than pure distillation to produce 'Coal Tars' -- BTW, a British technology that was more than a century old. The Americans perfected it by the 1920s -- and had patents issued. It, the American solution, was NOT a secret. It just didn't appeal to German chemists. They over designed their path to liquids. In the Low Pressure scheme, coal is distilled -- and the waste is not converted into liquids. It is merely shifted over to thermo-electric power plants and BURNED as is. This was an economic revolution -- if seized. In the 19th Century there was no-one to purchase the waste coal solids -- but the electric power industry changed that equation. Mere distillation produces one-barrel of liquids for each ton of coal. Germany was mining millions of tons of coal per year. The octane rating of distilled coal tar is virtually certain to be higher than the crap the Nazis were cranking out. The High Pressure route to liquids has never pencilled out for anybody.

Thankfully, Military history not visualized went into deeper depth of the messed up logistics that did not help the Reich in basic transport of well....literally anything to either civilians or its soldiers. Also interestingly like you he mentioned they had plenty of coal, but that they had neither the manpower or even modernized tools (or the ability to continuously modernize) to make up the lost production for their needs. Well at least we can learn from our enemy's mistakes.

Oooo I just finished Vampire Economy so I know this one :) (I won't spoil it)

Sometimes things are very simple. German soldier said: we knew we could not win, even before we got near Moscow. As my mother said: what are you going to do? Walk all the way to Siberia?"

Small hint: The aviation fuel especially for fast fighters was the biggest problem as this needed to be also the best quality and iirc could not be made from synthetic fuel.. the Japanese had it even worse btw

Hey @TIK, any plans on covering German on-soil oil production? I have lived in the city of Celle, which is basically THE German oil town. Now just recently while doing some digging on German oil production in WW2 for a HoI4 mod I came across the remains of the attempts of the Nazis to increase oil production from the fields here in the 1940s. Apparently these plans only died in 1945 and were continued for some time in the 1950s, but never took off. Some of the buildings remain in a forested area around 25km from here. Currently it isn't financially sound to try to extract said oil, but apparently the deposits are quite large (compared to what we have here in other areas, North Sea not included). BTW the whole area was the main German fuel production center during WW1 and up to WW2. It covered the largest part of the civilian requirements pre-WW2. If you need any help if you ever want to cover this feel free to drop me a mail, I have some contacts to the official district historians.

For people who don't understand the critical flaw of the synthetic oil argument, being forced to mine 4.5-22 times the amount of coal you need to produce a unit of oil also require that order of magnitude of logistical capacity and investment and construction of infrastructure and industry to support it. Not to mention that the country already was using a lot of the existing capacity to FIGHT A WAR. I just don't see this happening in any alternate reality.

A few years ago Germany banned nuclear power. Coal has made a comeback just proving how reliant it still is on it.

How to address Germany's war oil problem? "Dont start one. Let alone 3"

Yeah why? Synthetic oil’s supposed to last 10,000 miles - enough to Baku.

Germany made synthetic oil, gas and rubber, I believe they were also trying to use sugar beats as well

As we've seen in our own time, crude oil producers swing prices way high and way low because once a retail consumer has committed to using gasoline, bunker fuel, avgas [ when they purchase cars, ships and planes ] subsequent demand for liquid energy is highly inelastic. This dynamic has nothing to do with Central Bankers. Look at fracking. Just by slightly over producing light, sweet crude prices crashed from well over $120/bbl to less than $40/bbl. The reason for this is that unlike coal, once the drill pipe has found oil, the human labor required to keep energy flowing is trivial -- coal has opposed traits. It's easy to find, but entails tremendous on-going outlays to keep the coal coming. Until slurry technology came along decades after WWII, coal was not even all that cheap to transport. (trains versus pipelines) The ultra-low-ball crude oil price quoted early in your presentation was so low that the oil industry was going broke. The Texas Railroad Commission had to step in and stop oil drilling. This hiatus lasted for more than a year during the Great Depression. This commission regulated crude oil prices globally right up until the Arab Oil Crisis -- when it became obvious that AOPEC had the upper hand. Ironically, the founding members of OPEC did not participate in the cartel's embargo. (Venezuela and Iran founded OPEC -- not the Arab producers. They jumped on board rather immediately, however.) Back to the Great Depression: oil prices keep rising once the Texas Railroad Commission turned the American industry -- within that state -- into a cartel. Texas was so dominant that it pulled all other American production towards its pricing. BTW, General Thomas was entirely wrong. The Americans sent rotary oil rigs to the Soviets. These punched holes twenty-one times as fast as what the Soviets had been using. Typically, a hole started on Monday was ready to cap by Thursday. The field was simply not that deep, (1500 feet) the rock was pretty forgiving. The reason that the Nazis knew nothing of any of this because the field that the Soviets were punching had just been discovered. (!) The land was as flat as Texas. So rail lines could be laid lickety split. Stalin told Churchill that the Red Army reached its absolute nadir with Manstein's winter offensive. Uranus and Mars had entirely burned through Stalin's reserves. He needed the thaw to train a fresh batch of cucumbers.

US oil production in 1940 was 3.6M barrels per day, 138kg per barrel, so 0.5M tons per day, or 181M tons per year. You figure of Axis European demand of 20M tons for 40-41, two years? The press talked a lot about strategic bombing (to terrorize the population), without appreciating that only the US has enough oil to engage in this type of activity

I G Farben didn't 'decide' to develop a method of converting coal into oil. Henry Ford commissioned them to develop it because (before the Texas oil fields were discovered) there was concern about an oil shortage.

Hi TIK. As per your request. I found "The Prize" by Daniel Yergin a great source of information.

Even if the Axis had seized Murmansk, Astrakhan, seized Maikop, Grozny AND even Baku, Lend-Lease would have simply had to shift their supply points elsewhere, which of course would have interrupted supply and bought the Germans some time, but ultimately the Soviet Union would have requested more fuel stocks, and had the Germans been able to hold on to the Caucasus indefinitely, extracting the necessary fuel to make up and perhaps even have a surplus of oil stocks, it simply would have meant a different series of battles in the East, most likely either a delayed Soviet victory or a stalemate. Much depends also on whether the capture of fuel refineries in the Caucasus is able to benefit forces fighting elsewhere, of most importance being the DAK. It was no secret that by the Battle for El Alamein, the Axis forces were suffering critical supply shortages, partially from increased Allied airpower, and the burgeoning presence of the Royal Navy. Would it have been enough to supply Rommel to at least hold the line at El Alamein fighting a Schesselschlaft, or not? and on it goes...

Another great video 👍🏻

If Germany had smart economists they would have created a system of financial incentives for individuals and companies to innovate cheaper methods of manufactoring, to make it a profitable process so market forces would be able to expand the supply, it would also have raised demand for coal as an additional consequence which would in turn raise demand for transport and oh would you look at that the market is fixing the problem

9:32 given how they loved competition for projects it a wonder why they didn't set up a competition to figure out a cheaper way to produce synthetics.

All the while going backwards and forwards in North Africa thinking we (The imperial forces) were fouling the waterholes with... oil.

If the Germans had ignored Moscow, Leningrad and Belarus and Finland and then just cincentrated on Stalingrad and the Caucasus, could they have conquered the oil fields and supplied their war machine that way. Or tried to talk Stalin into building a pipeline from the Caucasus to Vienna in 1940 and simply secured it in the beginning in 1941.

I'm sure it was all a matter of making rich richer rather than actually solving energy problems. It's much easier to convert coal to 'natural' gas and that could have driven domestic materials transport. Private individuals converted cars to work off of wood sourced 'natural' gas and that could have easily fueled military supply transport to near front lines - there are issues w it chopping wood time to get gassification going every morning etc. that you wouldn't want to mess around with near the front. Coal of course was fine for trains. There had been huge coal fired steam engines on wheels that went around farm areas powering harvesting processing needs. These could easily have been used to tow multi unit supply trains on roads. Trolleys powered by elec gen by coal or gas converted from coal could again have provided both goods and personal transport in and AROUND urban areas In US prior to Detroit buying them closing them trolley lines powered from overhead covered large suburban areas. With all these options to IMPROVE military transport which was dominated by HORSES, and replace domestic use would have freed up maybe enough liquid fuels natural and man made for front line and aircraft use. Then there was stock piling, which Germany barely did, all you need was a concrete lined hole in the ground with a lid. However Germany was poor, little foreign exchange, and the only source of funds to buy fuel to stock pile would have been taking from the richest, at least until they started taking over other countries which could have been gutted of money, precious metals, art, jewels, sell resources extracted by hand, even food, real, real turn EVERYONE into slave & gut them. So Germany had paths to energize the war machine and keep basic industry farming etc going. They didn't do it as it would have involved Stalin level impoverishment of all but Hitler and a few hundred top brass.

I always thought the Soviets filling cisterns full of oil in Baku and shipping it by water was amazing. It meant the Axis had to get to Baku to have an impact. But there were oil fields further east, and then the USA was sending fuel. So blocking the Volga wouldn't have stopped the oil flow.

GREAT VIDEO!

What are counted in that 20 000 000 tons figure ? Is it just the military, or military + absolutely essential stuff like food production, or that includes also civilian use for other stuff ?

If coal cost to much to make synthetic oil, then use coal for what you know it can do. More steam power, first in electric, then in home heating, and finally military transport vehicles. Planes and tanks still need oil, so eliminate any other source you use it, in order to conserve it for the important equipment

So, why didn't they just buy real oil? Would no one sell to them?

Not only the price of the German synthetic oil, also the qualitiy was not sufficient to allied oil. German oil tended to be as thin as water, that's a direct problem for tank engines... wel most engines who work under load.

Hi Tik, Hey look, I'm a supporter on patreon, and I really like your military history. You've taught me a great deal. Your crusader series in particular was a triumph. But, (you knew there would be a but, right?) you need to be careful about getting into areas where you aren't an expert, based on one or two sources which might be kind of weird... I've seen you do this before on economics, but this is the first time I've commented. To paraphrase what I heard you say in this video: Governments printed too much money in the 1920s, which caused prices on things like oil to FALL. (Because more dollars chasing the same quantity of goods makes things cheaper?) That made working people worse off, because -- well -- cheap gasoline is really hard on working people. (Yeah, I know, most people didn't have cars -- but come on -- the 1920s were a boom time.) And then when the bubble popped, that made working people BETTER off than they had been in the 1920s, because prices fell even lower during the Depression. Okay.... The Depression that my grandparents talked about sounded different than that. There are better explanations for what happened in 1929. Here's the most plausible version: The big NY banks got involved in stock market margin lending, spurred on by low interest rates/easy money, and lax regulations. The margin lending created a stock market bubble, as people found they could borrow money and use their stock purchases as collateral. As more and more people -- and banks -- piled in, they drove stock prices higher and higher. (If this sounds like the subprime bubble in 2005-2008 -- well, yeah.) When the bubble popped, as bubbles always do, the banks found themselves with lots of bad loans, collateralized by stock which had collapsed in value. (Sound like subprime again?) The country banks hadn't participated in all this, but the NY banks had been major lenders to the country banks during the 1920s. When the NY banks got in trouble, they called in their loans to the country banks, which caused them to stop lending to farmers and other businesses, plunging the whole country into an economic free fall. The deepening recession caused prices to fall -- which meant that borrowers had to repay their loans in dollars which were now worth more than before. (Inflation is good for borrowers, deflation is bad.) This made even more borrowers default, which made even more banks insolvent. And there was no deposit insurance, so we had bank runs. Lots of bank runs. The Fed (which had been just newly re-created) said basically "Why should we bail out banks that made stupid loans?" So they let the banks fail -- something like 6,000 in the first year or so of the crisis, if memory serves. And the capitalist economy, which can't operate without credit and banking, just collapsed. The Depression spread from the United States to the rest of the world, so that countries like New Zealand, on the other side of the globe, had the worst 10 years of their history. And, after the second wave of bank failures in 1933, Hitler came to power as a direct result of German unemployment. Which was caused in large part by the withdrawal of US capital from German business investment. (Hitler got German unemployment down by using Keynesian economics, but nobody on either side of the Keynesian debate wants to talk about that...) So the banking panic in the US led to WWII and maybe 50 million deaths. Maybe the moral should be: Save the banks, but shoot a few of the bankers to "encourage the others." To be more careful. If you want to read about this stuff, you might start with Milton Friedman's "Monetary History of the United States." Also Ben Bernanke's Phd dissertation. But as far as I know, your explanation for why Germany couldn't rely on synthetic oil seems completely plausible, so I'm not arguing with your main point. Ken

it just seems, that they didn't put enough effort to built those plants, because they expected quick victory over soviets... and when it didn't happen... that was too late... so all this story about prices and costs is not needed, they managed to increase the production enormously, but blitzkrieg in russia failed

what % of oil did romania supply to germany? and how many barrels a day did they produce?

Why didn't Manstein simply turned water into oil?

I guess the oil shortage is partly why they used horses to tow a significant portion of their artillery instead of half tracks.

The really crazy thing is that the entire axis shortfall of ten million tonnes a year translates to ~182,000 barrels a day. Germany's oil consumption today is about 2.3 million barrels a day, in peacetime. Shows how oil dependant our modern socities have become.

Dude they should have just rolled the version back before Man the Guns so they wouldn't have to deal with the new fuel mechanic.

Also, too, the Germans were expending a huge percentage of the fuel driving that fuel to the hopelessly extended front lines.

Around 1943, the allies started bombing the huge synthetic complexes in their "Oil First" bombing campaign.

The production of synthetic oil requires massive inputs of other forms of energy, primarily electricity. Germany had two major sources of electricity: hydroelectric and steam turbine (basically, coal-burning). Hydroelectric is pretty cheap once the costs of the infrastructure (dams) are covered, but it's not available everywhere. Otherwise Germany was burning coal to convert other coal into a more mobile form of fuel. The massive inefficiency is obvious.

A Pfenning is one 100th of a Mark. It is the counterpart to the American penny.

Imagine if the oil in Libya had been discovered in the late 30s.

in his book "Achtung Panzer " written in 1937 , toward the end of the book , Guderian write than his doubts on the available supply of oil and rubber had been dispelled by learning of the ongoing progress in synthetic production of oil and buna rubber , it was in fact grossly optimistic

One of the driving factors in German jet aircraft development was they could be run on low grade kerosene. Easier and cheaper to make from synthetics.

This is why nuclear power is so cool- the waste heat from the reaction can power both the Fischer-Tropsch and Haber-Bosch processes.

Coal was probably the shortest reason of Germany's ability to continue to war.Germany had vast amounts of hard coal in Silesia and brown coal in Ruhr.Greater Germany including Austria,Czechoslovakia,Alsace Lorraine and some territories of Poland had an amounts of some 500 million tons of coal output per year which was almost on par with USA's volume of production and vastly more than other countries.

Amazing that despite the dirt cheap oil on international markets, Goering failed by more than a half his target stockpile of the crucial resource.

Any discussion of this subject without detailing the involvement of Standard Oil, General Motors, Ethyl Gasoline Corporation ( a joint Standard Oil / GM company) and Dupont, will leave a giant hole in the story. Without the help / involvement of the previously mentioned company's, German production of synthetic fuel, especially for aviation fuel, would have rendered that synthetic fuel practically unusable for military use.

Thanks. When I heard of synthetic oil I always thought of it going through a lab type process, you know, like in a clean scientific place with beakers, Bunsen burners and the like. Thanks for making the process known, because I had enough trouble reading my Dad's doctoral thesis let alone anyone else's.

South Africa sustained it's economy for fifty years with synthetic oil, from 1948-1994.

"The Prize" by Daniel Yergin has a good summation of the oil situation in WW2.

'Pfennig' = German for 'penny', 'hydrogenation' = adding hydrogen to carbon and hydrocarbon molecules to make them into useful alkanes etc. for use as fuel in this case, also used to make margarine. Rothbard is fine on economics, but a nut job on wider history.

Thank you tik for talking about the economics factors of ww2 most historians have no clue about Economics and your prospective adds a lot to the field of history.

It sounds like the EROEI for synthetic fuel was too low for the Germans to sustain a major war.

Re: droping price of oil, wasn't it they have found huge oil fields in Texas and elsewhere so price for oil went down as global supply was much bigger than demand?

Hmmm I wonder where they got the patents and know-how for synthetic oil? (Definitely don't read Antony Sutton to find out)

6,000,000 tons! never forget!

And yet the Afrika Korp was sitting on top of the Libya's oil fields !

The Germans did actually make a coal powered plane !

Saying "it went from 16 Pfenning per litre, whatever that is", just proves to me that you couldn't be bothered to even read the word "Pfennig" properly, let alone spend two seconds to google the term. It reduces the credibility of your videos.

Interesting video ! Also FWIW its pronounced hyd-ro-genation , which is just the process of adding hydrogen atoms to carbon-carbon bonds in an unsaturated compound. Keep up the good work !

This is one of the main reasons why I think now 1942 worse than 1941. Once, when i have seen statistics of the fuel balance of the USSR first time, I also began to realize the danger of the situation in the summer of 1942. Moreover, it’s not necessary for the Germans to take Baku, it’s enough to hold on and then assemble an air force to attack this oil fields - the Germans were very effectively durin air raids on GAZ plant in series of raids (1943), therefore, from attacks on for stationary, flammable and poorly covered by air defense targets similar effectiveness can be expected. I'm glad that such an idea will reach the English-speaking audience. Thanks.

TIK is not a well educated man and he definitely never studied "standard university" economics. What TIK has made me understand is the degree to which right wing manipulators have seized control of the popular (mis)understanding of economics by making "lite" versions of economics-inflected propaganda available to the masses. That material, such as general reader-level/magazine article summaries of the so-called "Austrian" school are TIK's sources. Economics isn't anything like reciting order-of-battle reports from an engagement in wartime. Economics is a theoretical exercise, nowadays carried out primarily using advanced math and statistical analysis. The serious study of economics teaches precise and rigerous thinking. No real economist would ever characterize the production of synthetic oil as "costly." They might discuss coal's production possibility frontier (PPF) or synthetic oil's input/output analysis in terms of linear programming models. "Costly" is simply not a meaningful word. TIK is not an economist and it shows in his economic gibberish. But the source of his gibberish is important. That source is deliberately planted paid propaganda whose purpose is to make people uncertain of the state and wary of all governmental action. Because government is the policeman who keeps business people more honest than they wish to be. Destabilize government and the schemers will gain a free hand to cheat the public at their leisure. That is the origin of the economic gibberish that naive TIK is parroting. It is this century's version of last century's hysterical anti-communism, whose purpose back then was to annihilate labor unions. And TIK demonstrates how well that propaganda in the form of bite-sized fake economics is penetrating and working. Very sad.

If you read the Oil book "The Prize" then you see that oil prices in the 1930's collapsed also because of the discovery of the Texas Permian basin, a huge reservoir of oil that was so prolific it meant the Texas Railroad Commission stepped in. This had a global impact even though VLCC tankers hadn't yet been built.

You're a synthetic oil

'Why didn't synthetic oil solve the axis oil crisis?' Me: Thermodynamics! Okay, I'll shut up and watch the video now. (Ed sp)

Hence the vast quantities of horses used. Cars being towed by horses LOL

Chris Rea did a song about this 'Fuel if you think it's over.'.

How much of a factor was the shale oil production in Austria, France and elsewhere. This form of oil production had been about for almost 100 years and was quite developed as a process by the 1930s/40s.

TIK is correct when he states standard of living decreases during booms and increases during depression. This is due to Central Banks' interventions in the markets. Prior to the crash on Wall Street, several things played a part in this. First, England was attempting to return to the gold standard which it ended at the beginning of World War I. Like previous wars, the government decided to return to the same rate as when it stopped. The problem was, the Bank of England had drastically increased the amount of paper Pounds (fiat currency) to pay for the war effort. This caused the purchasing power of the pound to fall significantly lower than it was under the gold standard. The massive increasing in the economy due to the increased printing of fiat money, resulted in inflation of prices. As a result, consumers could buy less for the same amount of Pounds than before the gold standard was ended. (This is how the consumers' standards of living decreases during a boom.) Because there were far too many undervalued paper Pounds in circulation, when the government returned to the gold standard massive amounts of gold began to flow out of the Bank of England. This is because holders of paper Pounds could buy more gold than the Pound notes were worth. As a result of the gold loss, the problem became far worse in England and began to shutter the economy. Second, Benjamin Strong, the head of the New York Branch of the US Federal Reserve, and at the time the de facto "Chairman" of the Fed decided to intervene. (At the time there was no chairman. However, the NY Branch was the largest and most powerful and effectively led Federal Reserve monetary policy.) Strong decided to use several tactics to stem the gold flow from the UK. His primary one was to lower the interest rates. This allows banks to borrow money from the Central Bank cheaper. As a result, paper dollars (fiat currency) flows into the banks and into the markets. The banks drastically increased the amount of loans they offered in an effort to maximize profits from interest on those loans. All the major banks started doing this. The money flowed into the markets without any real controls on what the loans could be used for. Much of this money flowed into Wall Street as borrowers tried to make a quick buck themselves. Third, the US Treasury added to the inflation by offering to purchased Liberty Bonds at a higher interest rate. This too increased the amount of paper dollars in circulation and decreasing the dollar's purchasing power. Four, with all this money flowing into the markets, the purchasing power of the paper dollar dropped. This did temporarily help stem the flow of gold from the UK. (Also, Strong purchased Pound notes with US gold causing gold to flow back into the UK.) At this time, the Bank of England lowered its interest rates in an effort to kick start its economy. Gold immediately began flowing out of the U.K. again, causing its economy to further slow and enter into a depression. Five, despite moderate inflation due to the increased amount of paper dollars, once gold began to flow out of England again, prices began to fall in America. This was due to much of the money which was created going into loans used on the stock market and land and machinery purchases in farms across America. (Let us assume you want to buy a house. You need $5000 to purchase it and need a loan. However, you cannot secure a loan until you put your money in a bank for a while and then qualify for the loan. So you decide to open an account with the $1000 you do have. Under a fractional reserve banking system we currently have and they did then, the banks create new money through loans. If the bank must hold 10% of investments in reserve, and you deposit $1000, the bank can loan out $900 dollars of your money. The original $1000 is now $1900 dollars due to the loan.) As a result of the lower Federal Reserve interest rates, the banks borrowed more money (took loans) from the Fed. This new money was loaned out and flowed into the economy. Much of it was again deposited into the banks and loans out again, increasing the monetary supply and eroding the purchasing power of the dollar. Despite the supposedly booming economy, consumers could purchase less with each dollar. Their standard of living began to decrease. Six, the Federal Reserve began to worry about the massive increases of the stock market, knowing many of the investments were made with money loaned from banks due to the Federal Reserves own policies. Add to this the collapsing purchasing power of the Pound, Strong began to reverse course and raised interest rate. He was attempting to pull the excess pap dollars from the economy and tighten the availability of credit. This made things worse in the UK and the world in general. As a result, banks needed to pay off their loans to the Fed. The banks started to call in their loans. (Remember that $1000 you put into the bank and the bank could loan out $900, effectively turning $1000 into $1900? Assume the bank did loan out that $900 to another who invested it into the stock market. And also assume that his loan is called. He cashes out his stock and can only pay $500 to the bank. Your original $1000 now is only $600 due to the bad loan.) Seventh, as more loans are called in, banks begin to pay off their Fed loans. Bankruptcies begin to ripple across the economy, especially in state banks and the farming industry. But money lost to bankruptcies mean less money is returned to bank accounts used to make the loans. To Strong's credit, he was able to remove nearly all the excess paper money he injected into the economy prior to the stock market crash. However, growing numbers of bankruptcies are spreading across the economy. At the same time, the credit markets begin to seize up as banks try to stem the losses due to bad loans. As a result, the number of people investing in the stock market quickly drops. Investors spook and begin selling off stock at the highest prices. The stock market crashes, billions of dollars lost. Companies begin to declare bankruptcies further depleting cash reserves of banks due to loans. Those in the know start to remove their saving from banks just in case the banks reserves are insolvent. Remember, on bank runs, first come, first served. As more people panic, more come to the bank to get their money. (Remember your $1000 deposit which is now only $600 due to a bad loan? You rush the bank. When you finally get to the teller window and pull out your money, the teller hands you the last $400 left in the vault. You have lost $600 and the bank is out of business.) Bank collapses ripple across the country and people lose savings. Markets collapse. Prices begin to collapse as bankruptcies increase and product supply increases. Eight, people find themselves evicted from houses and farms because the cannot pay off their loans. People lose their jobs as companies collapse. Sales of all products decline as their stocks increase, causing prices to collapse farther. (You are lucky. Though your wages fall, as they would have at the time, you are able to keep your job. And though you lost $600 due to the collapse of your bank, you still have $400. You notice the cheap prices of houses at sheriff's sales as banks are willing to take pennies on the dollars from the few people who still have money to recover whatever money they can to prevent their own collapses. You grab your $400 dollars and head to one on a house you like. Since you are one of the few people with money, you buy the house at auction for $350. The depression has increased your standard of living. This is even more secure because you still have a job.) This is what happened and still happens. When the US housing market collapsed, the prices of all house fell. Many people who were smart with their money were able to upgrade their houses due to the collapse. Prior to that, they were stuck unable to purchase better housing. Look at Venezuala. The collapsing price of oil and the massive increases in their monetary supply resulted in the hyperinflation they are suffering through now. Look at the stagnant purchasing power of wages despite moderately increasing wages we are currently seeing now, despite a booming economy. TIK is 100% spot on. I suggest everyone read America's Great Depression to understand the mechanisms he is talking about. It is completely laid out in the book and is germane to this discussion.

You'll want to take a look at Adam Tooze's "Wages of Destruction". He goes in depth about the food, energy and steel issues the 3rd Reich faced.

The US Lend Lease provided 25% of the food required by Soviet Union during the war. The Russian word for Spam is "Spam".

Hi Tik, I am a big fan of your videos! Albert Speer also mentions the synthetic oil situation in his book Inside The Third Reich.

Great take on the oil issue. But you missed the mark on the economic concepts in the 20's.

One could easily argue that the low margins in the stock market ($1 could buy $10 of stock) was to blame. EVERYONE was buying leveraged stocks and when the first bump happened everyone started calling in the margins and the free flow of capital suddenly stopped.

TIK even if Baku and Stalingrad fell Murmansk and Arkhangelsk are there and sending ALL the goods and maybe soldiers too is an obvious Anglo-American go to move EVEN if the USSR just decides that starving to death and being shot and hung by the fascists means they should surrender to that the USSR had NO surrenderr option and so EVEN if Hitler reached ALL the NS goals there would have been -- as he intended! -- a constant guerilla war which the Anglo-Americans would have been only too happy to fund and encourage. All the economic scarcity of the two dictatorships (NS Germany and USSR) was not the case of the Americans or even Canadians. Would Baku and Stalingrad have ended lend lease? No! Just the opposite! Would Baku and Stalingrad have changed the nuclear equations? No! The USA would still get the atomic bomb before NS Germany and would absolutely have used it as the firestorm bombings of Hamburg Dresden Stuttgart Bremen show. Nukes+Lend Lease = NO NS Victory even if Stalingrad falls even if Baku falls even if BOTH fell AND NEITHER DID.

Reminder that the Sudetenland is rightful Zimbabwean clay 🇿🇼

According to Greg’s Airplanes and Automobiles, synthetic oil also had fewer aromatic compounds, which are needed for production of the highest quality fuels.

See notification for new TIK video, grabs iPad and hides from wife and kids

German coal production in 1940 was 130 million tons, if it takes 22 tons to make a ton of oil that's about 6 million tons of oil, oil requirements for Axis controlled Europe, according to the video was 20 million tons, even if only 4.5 tons are needed to make a ton of oil the cost in coal to make the required oil is huge; coal is also required for steel production, electricity etc., other things essential to make the economy work and ensure the armies can be supplied. Oil is not easily substituted by coal.

TLDR: It's super inefficient to make synthetic oil. They did it, but it just ultimately wasn't viable as a solution in the quantities that they needed it.

They didn't have Depressions, recessions and speculation bubble collapses in before central banks. That's an interesting assertion TIK. Care to explain things like the Long Depression in the 19th century then?

Something to keep in mind is that Stalin agreed to sell oil, food and raw materials to Germany. But Stalin being no fool... he never sold Hitler *too much* oil... just enough so that Germany could invade France... but NOT enough so that Hitler could squirrel it away for a "Barbarrosa" day. Somewhere, there is the grave of some unknown and unsung russian economist/statistician. Someone that calculated in 1939~40 how much oil could be *safely* sold for Germany to consume....but not risk them stockpiling it. He nailed it.🎩

Funnily enough, the Italians were sitting on a sea of oil in Libya. The Axis could have used it.

If it would be that easy South Africa, Australia, Canada and most European countries incl. Britain would have been major oil exporters and China would be the King... they can produce over 3.5 billion tons of coal, I guess hard coal = "Steinkohle" (In Germany its only "stone coal" or "brown coal", the German Empire had a lot of both, but lost much of the better "Stone coal" to Poland/Kaliningrad and also former areas, like the city my grandpa/grandma were forced to move into (Zielona Gora, until 1945 = Grünberg i.S. (Green Hill/"Mountain" in Silesia because there must have been another Grünberg) the polish translation is exactly the German meaning...coal was mined there until 1944 but the town wasn't even defended with I think a bit over 50k population, I think even less when the Red Army came... However now the OPEC has a problem and Venezuela too, its really a strange world...however its interesting that US companies did business with Germany, for example delivering chemicals which the Germans could produce themself but it would have been a energy-intensive thing, I remember a documentation which said that 1 day before the attack on Poland started 500 tons of that chemical (helped to increase the octane rate? Not to 100 ofc but a bit, best synthethic fuel went to Submarines and Luftwaffe, I would say fighters here needed it the most. We see now 2 countries which are collapsing, millions "Go West" (or North from Venezuela, everything in South/Central America is better, of course they want to the US. I'm sure the US will soon show interest in these reserves which are among the largest in the world if not the largest right now...you think tanks will see larger battles or are they "dying" like Battleships did? I mean around 1900 and even during WW1 who thought that Battleships once would no longer exist? What makes problem for the OPEC, the electro-mobility...possible for tanks? I think a 50-ton tank would need a few hundred kWh for a range of 100km, even a revolutionary 50% weight/kWh reduction still would be a problem, not to talk about the needed electricity, and a hybrid or something like the prius is no real option or?! Aircraft with tons of accus? Nah... ships however could carry much weight, economic speed for short to mid-range and with generators on board the radius would be larger but some islands could become electric-"gasoline stations" for such ships?

*Sees TIK notification* *Gives resigned sigh and clicks* It's a reflex at this point. I have no voluntary control anymore...

A lot of the comments rightfully focus on the poor conversion efficiency of synthetic oil production, but it’s worth remembering that coal to liquids produces a synthetic crude that is mostly converted into final products without much further loss. Refining at the time was mostly topping refineries that converted perhaps 50-70% of the feedstock crude oil into light and medium refined products, with the rest being heavy heating oil, residue and refinery light gases used for internal power generation. Generally the major stumbling block is the sheer capital required to build the plants to produce synthetic fuel products. Much like EU is finding out with its green policies, even subsidised economics can only get you so far.

A defecit also build up over time for as long as the war go on. If you start with to little of a resource, this problem will get much worse for as long as you dont get a product to cover for the need. Reserves will be depleted, missions and operations gets canned - and all this serve to build up a strategic weakness that will accelerate until the war is over. This goes fpr any conflict - be it armed, a trade war etcetera. And it can be applied to anything of strategic value.

3:50 - Hy-droj-eh-nay-shun Also, pfennig is 1/100 of a mark. I'm guessing it's like the penny

Awesome to realize TIK has released another video.

just so you know, you pronounce “hydrogenation” like hy-drog-enation

In a nutshell - it is a difficult question, becaus ethe question (production vs. demand) is barely (if all) falsifiable. The point is still true - synthetic oil production is NOT the natural choice for expanding the oil industry - it involves a much bigger effort - and by the law of "least effort for the same effect" the Third Reich has to find an easier way of expanding their oil production, no matter how much synthetic oil they produce - it is only a stop gap. Proper question: can synthetic oil become, measurable, more cheap to produce, than crude oil? I think, that since then (1930s) the answer remains NO.

Here are a few interesting/fun things about oil, diesel, avgas, and gasoline you might not know: - Germany problem is thermodynamics. If it wants fuel from coal, it need coal to run electricity generators to run conversion plants. that's expensive, but do able. - They have a shelf life. The lighter the distillation fraction they came from, the shorter the shelf life. For example: gasoline is the lightest and most volatile and its shelf life is about 3 months. Avgas and diesel is more stable and most will last only a year or so. Wars are rare, only once or so per one or two generations. This makes stockpiling ready fuel incredibly difficult. So if you want a war with any kind of endurance at all, you will need big stockpile of crude oil and refineries ready to ramp up the fuel supplies. These facilities are also essentially state-owned/funded/subsidised and cut off from the market. - Viewing from this lens, the synthetic fuel from coal can be a strategic resource since coal last essentially forever and even longer shelf life than crude oil. If all you have is coal and oil need to be imported; imports can be cut but coal + coal conversion plants + coal fired electricity generation, you can get enough fuel for some limited operation. Germany's problem is really a case of biting off more than they could chew. That setup will be perfectly viable for advance through well railroaded regions where supplies strain can be alleviated somewhat with coal-fired rail transports. Once they are not on rail country and had to use trucks; that's it. - One proposal from Wesley Clark, US. General for a strategy to make America energy independent was to ... holy shit, turn coal into liquid fuel. Well, that needs electricity. If you already have electricity, why not run cars on batteries? the only thing that is cannot be run with batteries are jet-powered aircrafts. So use the fuel to do that. America is already the largest oil production country in the world right now.

Wait, did you say in booming economy, consumer's standard of living decreases and during depression increases (5:11)?

Thanks again for making such thorough use of my work. I’d be happy to send you samples of other things I’ve written.

Tooze covers the German economy in WW2, including synthetic fuel and rubber production, in "Wages of Destruction".