Tempest in the Teapot (Summarized from Yergin (1991) by Wheeler (2000); additions by R.M. Flores)

Sinclair Oil Company discovered Teapot Dome (see Fig. 1) in 1922.  Curry (1976a) reported that hydrocarbons (oil and gas) occur in the Teapot Sandstone, which was deposited mainly in delta plain and delta front environments.  The Teapot Sandstone was first mapped around Salt Creek oilfield by C.H. Wegemann in 1911 and named Little Pine Ridge sandstone.  It was renamed by V.H. Barnett in 1913 as Teapot Sandstone from the “Teapot Rock,” which is a well known topographic feature carved from this sandstone about half a mile east of the Casper-Salt Creek road. 

Kerogen contained in marine shales above and below the Teapot Sandstone in the deeper part of the Powder River Basin has apparently reached temperatures sufficient to naturally retort the kerogen to oil and gas.  Updip migration of these hydrocarbons along fractures led to some accumulation in the Teapot Sandstone, which served as a stratigraphic trap.  It is postulated that this general source of hydrocarbons has supplied oil and gas to the Teapot Sandstone reservoirs at Flat Top, Well Draw, Kaye, and other similar undiscovered slope sandstone traps.  Although significant volumes of oil and gas have migrated from the deeper part of the basin, hydrocarbons have not yet been found in structural closures. 

Though the Teapot Dome is a rather modest field, with cumulative production of just over 30 million barrels of oil (MMBO), it was the focus of a major scandal in the Harding administration.  Just prior to World War I the United States and Great Britain both had realized the great advantages of switching from coal to oil to fuel their naval ships.  The U.S. made the conversion in 1911.  The next year the Taft administration began to establish Naval Petroleum Reserves in areas of potential production.  Teapot Dome was one of three field (the others are in California) that were set aside for unexpected emergencies.  There were great debates over the establishment of these reserves and whether private interests would be allowed to lease and partially exploit them.  These debates were part of a public policy battle at the time between those championing development and others advocating conservation.

Harding won the presidency in 1920 on a platform that celebrated a harmonious relationship between conservation and development.  However, his belief in development was revealed when he chose Senator Albert Fall from New Mexico as Secretary of the Interior.   Fall was a successful and politically powerful rancher, lawyer and miner.  Fall was able to wrestle control of the petroleum reserves away from the Naval Department.  In 1922 he leased Teapot Dome to Harry Sinclair with “sweet-heart” terms that assured a guaranteed market with the U.S. Government.  He also leased a larger reserve in California, Elk Hill, to Edward Doheny.  Both Doheny and Sinclair were well-known American oilmen.   The rumors of a shady deal soon began swirling. 

Sinclair had built up much of his fortune by investing heavily in the Glenn Pool in Oklahoma.  The Oklahoma fields were awash in oil from flush production and were not yet hooked up to pipelines.  Sinclair bought all the oil he could get for ten cents a barrel and constructed storage tanks to contain it.  When the pipelines were completed, he sold for $1.20 a barrel.  By WWI Sinclair was the largest oil company in the midcontinent.   He raised $50 million and in 1916 assembled one of the ten largest integrated oil companies in the nation.

Soon after the Teapot and Elk Hill leases were signed in 1922,  Senator La Follette of Wisconsin began to investigate.  He discovered that officers that had opposed the transfer of the petroleum reserves from the Navy to the Department of the Interior were transferred to distant and inaccessible stations.  His suspicions were thoroughly aroused when Fall resigned in 1923.  Harding suddenly died later that same year and was succeeded by Calvin Coolidge.

The Senate Public Lands Committee took up the matter when it was learned that Fall had begun extensive and expensive renovations on his New Mexico ranch at about the time the leases were signed.  Fall also purchased with cash an adjacent ranch.

In subsequent hearings, Sinclair’s secretary testified that Sinclair had told him he should give Fall twenty-five or thirty thousand dollars if he ever asked for it.  Fall did ask. 
The bombshell came on January 24, 1924 when Doheny told the Senate Committee that he had given one hundred thousand dollars in cash to Fall.  Doheny insisted it was not a bribe but rather a loan to an old friend with whom he had prospected for gold decades earlier.  There was even a hand written note with the signature torn off to substantiate his claim!  Doheny claimed that his wife held the signature portion so as not to embarrass Fall with an “inconvenient” claim should Doheny happen to die.

Despite the ongoing scandal, Coolidge managed to get re-elected as President in 1924 based on assurances and testimony that he had no knowledge of the Teapot Dome deal.  The scandal dragged on for the rest of the decade.  In 1928 it was learned that Sinclair had funneled several hundred thousand more dollars to Fall through the bogus Continental Trading Company, bringing Fall’s total gain to over $400,000 from his old friends.

In 1931 Fall finally went to jail as the first Cabinet officer ever convicted of a felony while in office.  Sinclair was sentenced to six and a half months for contempt and Doheny was judged innocent. 

Repercussions of the scandal continued when it was later learned that the Continental Trading Company was a mechanism for a group of prominent oil men to receive kickbacks in the form of government Liberty Bonds for purchases of oil made by their own companies.  Sinclair had even used some of his as part of his payments to Fall.  One of the greatest shocks came when it was revealed that the great and distinguished Colonel Robert Stewart, Chairman of Standard of Indiana (Amoco), had also received kickback bonds. These were the highlights of the Teapot Dome scandal, whose tentacles touched many oilmen and politicians at the time.  Unfortunately, it confirmed suspicions about the shady side of the American oil business.