What happened to Standard Oil?

What happened to Standard Oil
Robber baron Rockefeller
THAT August day, John D. Rockefeller did his habitual nine holes in his lowest score ever,
despite being interrupted with news of an antitrust judgment fining his company, Standard Oil,
about a third of its $100m market value. The penalty was later thrown out. But a little under four
years later, on May 15th 1911, Rockefeller, again out on the golf course, was told that the
Supreme Court had found the firm guilty of antitrust violations, and ordered it to be broken up.
“Buy Standard Oil,” he advised his playing partner. A good tip: its pieces proved to be worth far
more apart than together.
The break-up of Standard Oil into 34 companies, among them those that became Exxon, Amoco,
Mobil and Chevron, marked the birth of strong antitrust policy, in the United States and beyond.
The Sherman Antitrust Act dated from 1890, but had so far proved largely toothless against
America’s “robber barons” (Rockefeller, Andrew Carnegie, Cornelius Vanderbilt and the like).
In the 1890s the law had forced Standard Oil to alter some of its worst practices, and to move
many operations from Ohio to New Jersey; but this had little real impact on the oil giant. By
1900, it controlled over 90% of the refined oil in the United States. The Sherman act came of age
with that victory over Standard Oil in 1911. Notable wins followed: against American Tobacco
(also in 1911), Alcoa (1945) and AT&T (1982), before the challenge to Microsoft during the
1990s.
What gave the Sherman act the power to blow Standard Oil apart was an explosive mixture of
economics and politics that has accompanied antitrust policy ever since. The law sounds
decisive, making it illegal to “monopolise, or attempt to monopolise, any part of the trade or
commerce” among American states or with foreign countries. Yet on how to apply that in
practice, Sherman is vague, leaving it to the courts to decide. The same is true of antitrust law
elsewhere. European Union law bars “abuse of a dominant position”; Britain forbids acts
contrary to the “public interest”. In each case, it is left to courts and policymakers to decide what
action, if any, these words require.
Politics weighed more than economics in the Standard Oil case. The company might have
escaped, as others with more political savvy, like US Steel, did, had it played its cards better.
President Theodore Roosevelt had launched the antitrust suit; offering to support his re-election
if he dropped it was not smart. Later moguls—ask Bill Gates—have paid a price for
underestimating the politics of antitrust.
The economic case against Standard Oil was far from proven. Economists still argue whether its
aggressive buying of rivals and cut-throat pricing accelerated or retarded the growth of the
industry and the ready availability of cheap fuel. It was already being challenged by oil from
Texas and Persia. Economic issues are often even trickier today: it is usually easy, with the aid of
modern developments in economic theory, to make a plausible case both for and against any
alleged monopoly. Little wonder that antitrust has become a lucrative job-creation scheme for
economists, as each side hires an army of dismal scientists to prove its point.
Joseph Schumpeter’s theory of “creative destruction”, now back in vogue, suggests that, in some
circumstances, monopoly may stimulate innovation and thus boost economic growth. His notion
is that an innovative firm that wins a monopoly then becomes complacent, and is displaced by a
sharper rival, and so on. That, broadly, is what happened to IBM. Today Microsoft argues that its
dominance in PC operating systems could be wiped out fast by a rival with a better technology.
Another theory, of “contestable markets”, allows some, rather extreme, economists to claim that
even a firm with a 100% market share is not a nasty monopolist: if it is the least bit inefficient or
over-pricing, a more efficient rival will contest the market and may drive it out.
And then what is “the market” at issue? Is Coca-Cola, say, in the market for colas, for carbonated
soft drinks, or for all liquid refreshments? In Europe, Formula One has a 100% monopoly of its
kind of motor-racing; but viewers can always watch some other kind, or racehorses, or porn
videos. There can be no clear-cut answer to that sort of argument. One thing, though, is clear.
Many markets now stretch outside any one country. Increasingly, global antitrust regulation
would make sense. Yet that may be far away. Witness even the EU, in theory a single market: it
has an antitrust arm—but so do its member states. How many national politicians will readily
hand over to some international body the chance to cut the local Rockefeller down to size?
Standard Oil : 1911 or go to pre-1911 1941 1961 Today
Standard Oil was declared a monopoly and broken up. Among the company assets that
were divided up was the right to use the well-known 'Standard' brand name. Most of
these "Baby Standards" kept using the popular "Red Crown" and "White Crown"
gasoline brands, as well as "Polarine" Motor Oil. When the 'Ethyl' additive became
popular, most Standards adopted it. Vacuum's "Mobiloil" products were commonly
used by many Standards. Esso Motor Oil gained wide distribution. The former
Standards banded together in 1930 to form the Atlas Corporation, maker of tires,
batteries, and other automotive accessories (TBA) that were provided to Standard and
Standard-related stations of all stripes from the Atlantic to the Pacific.
Standard Oil Company of New York (a.k.a. Socony) was awarded Maine,
New Hampshire, Vermont, Massachusetts, Rhode Island, Connecticut, and New
York. The South African office of Socony started using a pegasus as its symbol
this year, which would later be adopted corporate wide. The company was very
expansion-minded and in 1918, Socony purchased a minority (45%) interest in
Corsicana, Texas based Magnolia Petroleum in and completed the purchase in 1925.
In 1926, California's General Petroleum was purchased. Socony purchased White
Eagle of Minnesota in 1930.
Atlantic Refining (Atlantic) was awarded Pennsylvania and Delaware
Standard Oil of New Jersey (Jersey Standard a.k.a. "Standard") was
awarded New Jersey, Maryland, D.C., Virginia, West. Virginia, North Carolina,
and South Carolina. and retained Stanocola, Carter Oil, Imperial Oil (Canada),
many overseas properties and Gilbert & Barker Manufacturing. Jersey purchased a
controlling interest in Houston, Texas's Humble Oil & Refining (est. 1917) in 1919.
Jersey expanded marketing to Delaware in 1927 and to Pennsylvania in 1928 with the
incorporation of Standard Oil Company of Pennsylvania.
Standard Oil of Ohio (The Standard Oil Company) was awarded Ohio. Its first
service station was opened in 1913. They expanded to neighboring states under the
Fleet-Wing name. In 1928, the Sohio brand was introduced.
Standard Oil of Kentucky (Kyso) was awarded Kentucky, Georgia, Florida,
Alabama, and Mississippi. It was supplied by Jersey Standard.
Standard Oil of Indiana (Stanolind) was awarded Indiana, Michigan, Illinois,
Wisconsin, Minnesota, North Dakota, South Dakota, Iowa, Kansas and northern
Missouri. To provide the company with a source of crude oil, it purchased Louisiana's
Dixie Oil Company in 1919 and and interest in Wyoming's Midwest Oil Company i
1920. In 1925, Indiana Standard purchased a large intrest in the large, new Pan-Am
with its crude reserves and transport network. Pan-Am itself had recently purchased an
interest in a small Baltimore refiner and marketer, American Oil (and its signature
product, high-quality Amoco Gas). Mexican Petroleum's northeastern and
interational operations were now open to Indiana Standard as well as Pan-Am's
southeastern marketing operation. With the completion of the Midwest Oil
purchase in 1928, Utah Oil Refining's Vico-Pep 88 stations in Utah and Idaho
came under the Indiana Standard umbrella.
Standard Oil Company of Louisiana (Stanocola) was awarded eastern Louisiana
(New Orleans and vicinity) and Tennessee - This company was completely under the
control of Jersey Standard before the 1911 breakup. The Stanocola name fell into
disuse in 1924 except for a hospital in Louisiana.
Waters-Pierce was awarded southern Missouri, western Louisiana, Arkansas,
Oklahoma, Texas, and Mexico, and used the name Pierce Petroleum before being
purchased by Sinclair in 1930.
Standard Oil of Nebraska was awarded Nebraska.
Continental Oil Company (Conoco) was awarded Idaho, Montana,
Wyoming, Utah, Colorado, and New Mexico. Marland Oil purchased Conoco
in 1929, keeping its own triangle logo, Conoco's name and the right to market Standard
products.
Standard Oil of California (Socal) was awarded Washington, Oregon,
Nevada, Arizona, California, British Columbia and the territories of Alaska
and Hawaii. It used Calol (California Oil ) as an early appendage to the
Standard products line. Socal expanded slower than other Standards, entering New
Mexico and Texas under the Pasotex name in 1926.
The Other 24 Companies that were broken off from the Standard Oil
Trust:
Anglo-American Oil Company (marketing in UK)(purchased in 1930 by Jersey
Standard - now Esso UK), Buckeye Pipe Line Company (transport), Borne-Scrymser
Company (petrochemicals)(later Borne Chemical Company), Chesebrough
Manufacturing Company (petroleum jelly - Vaseline), Colonial Oil Company
(production)(merged with Beacon Oil in 1928 to form Colonial Beacon Oil Company),
Crescent Pipe Line Company (transport)(liquidated 1925), Cumberland Pipe Line
Company (transport), Eureka Pipe Line Company (transport), Galena-Signal Oil
Company (lubricants), Indiana Pipe Line Company (transport), National Transit
Company (transport), New York Transit Company (transport), Northern Pipe
Line Company (transport), Ohio Oil Company (a.k.a. "The Ohio")
(production)(purchased Mid-Kansas Oil & Gas in the 1920's)(purchased Lincoln
Oil "Linco" in 1924)(purchased Red Fox Oil Co. in 1928)(purchased
Transcontinental Oil "Marathon" in 1930), Prairie Oil & Gas Company
(production), Solar Refining Company, Southern Pipe Line Company (transport),
South Penn Oil Company (production)(purchased a controlling interest in the recently
formed Pennzoil Company in 1925, acquiring a gasoline marketing operation in the
process), Southwest Pennsylvania Pipe Lines Company (transport), Standard Oil of
Kansas (refining), Swan & Finch Company (lubricants), Union Tank Lines
(transport), Vacuum Oil Company (lubricants); introduced Gargoyle Mobiloil in 1904;
opened a refinery in Paulsboro, NJ in 1918; marketed Mobilgas in the 1920's;
purchased Lubrite Refining Company in 1929 and purchased Wadhams Oil Company
(est. 1880) and White Star Refining Company in 1930; and Washington Oil Company
(production)
Other Notable Former Standard Affliates:
Corsicana Petroleum Refining Company (purchased by Magnolia Petroleum in
1925), Security Oil Company (became Magnolia Petroleum in 1911),
Standard Oil pre-1911 . Standard Oil in 1911 . Standard Oil in 1941 . Standard Oil in 1961 . Standard Oil
Today . Standard Oil Worldwide
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This page first posted March 6, 2002. Last Update:
"The Chevron ABOVE ALL means service." - Standard (California) Trademark
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