Change in Demand
From 1910 to 1930 technological developments in other industries changed demands for various fuel products. Use of electric lighting caused slower growth in the market for kerosene, and the change in shipping from sail to steam and diesel engines (in ships and trains), plus the need for fuel to generate electricity, developed a market for the heavier, higher boiling fuel oils. However, the change that had the greatest impact on the fuels industry was the development of the gasoline engine and its application in both automobiles and airplanes. The demand for gasoline, which was made from the naphtha fraction, was much greater than the markets for other higher boiling liquid petroleum fractions.

Producing More and Better Gasoline
Engine builders had found that gasolines varied in their performance depending on the type of crude oil used for distillation. Better gasolines allowed engines to run with more power at a higher speed without damaging the engine. The poorer gasolines, in comparison, caused an engine to make a "pinging" or "knocking" noise and to run less smoothly. The "antiknock" quality of gasoline was expressed as an "octane" number on a numerical scale of pure chemical compounds as proposed in 1926 by Graham Edgar of the Ethyl Corporation. We now know that higher octane gasoline burns in a way that pushes the piston down smoothly during the power stroke. The lower octane gasoline burns too rapidly, and the sudden pressure rise makes the knock or ping in the engine cylinder, which can harm the engine.

In 1919, Charles F. Kettering and Thomas Midgley, Jr., of General Motors' Dayton Engineering Laboratories Company, had begun work on controlling engine knock. In 1921 they reported that a mixture of tetraethyl lead and gasoline eliminated knocking and performed like a higher-octane gasoline. Upon development of efficient tetraethyl lead (TEL) synthesis methods a few years later, refiners could provide a constant octane gasoline product from a variety of naphthas. In the late 1960s, as gasoline consumption grew, careful analytical chemistry showed that the lead additives contributed to the spread of the heavy metal into the roadside environment. The Environmental Protection Agency of the U. S. government and the fuel manufacturers agreed to phase out the use of the lead additives. The technology used today to produce plentiful, high octane, unleaded gasoline started with technical innovations introduced in the 1920s and 30s.

Prior to 1925, the higher boiling heavy-oil molecules were chemically changed to smaller naphtha molecules by heating to decompose them using a process called thermal cracking. Between 1925 and 1935, Eugene Jules Houdry and his co-workers demonstrated that a catalytic cracking process provided a greater yield of gasoline. In addition, the cracked naphthas were higher in octane than only-distilled naphtha. The first full-scale commercial fixed-bed catalytic cracking unit began production in 1937. It changed the industry.

Installation of Conversion Reactors
The change to production of fuels by chemical conversion rather than distillation required that the refineries install expensive, large capacity chemical reactors. In addition, the Houdry Process Corporation was charging large licensing fees for the use of its technology. Oil companies not yet committed to install the Houdry process decided to explore other process methods that might overcome some of the known problems of the fixed bed reactors. This group of companies, called Catalytic Research Associates, included Standard Oil Company of New Jersey (now Exxon Corporation), M.W. Kellogg Company, Standard Oil Company of Indiana (now Amoco Corporation), Anglo-Iranian Oil Company (now British Petroleum, Ltd., p.l.c.), Royal Dutch/Shell, Texaco, and Universal Oil Products (now UOP). The companies shared the results of process and catalyst testing they had conducted since the late 1920s. The large scale developments of this group were carried out at the Baton Rouge laboratories of Standard Oil Company of New Jersey.