Standard+Oil

= Background =

The Standard Oil Company was founded in 1870 by John D. Rockefeller. Rockefeller was already an experienced businessman before entering the oil industry. John and his brother, William, started out by buying two small oil refineries in Cleveland, Ohio. Rockefeller would borrow large amounts of money to give his company a head start. Instead of producing whale oil, an expensive fuel frequently used for lighting, they decided to refine kerosene, which at the time was nearly worthless. Standard Oil soon grew fast, outperforming its competition resulting in Rockefeller buying them out to add to the company's size. This was all part of horizontal integration. To increase its size even further, Rockefeller adopted the "trust" company organization. He would ask large oil companies across the U.S. to add their company to his in exchange for being on the board of trustees for the whole company. This made the former owners very wealthy, but would benefit Rockefeller the most as Standard Oil became a commercial monster. This is how Standard Oil became a monopoly in the oil industry and how John D. Rockefeller became the richest man in history.

=Business=

From a business aspect no one can deny Rockefeller's knowledge. He use a relatively new idea in the world of business called horizontal integration. It was unpublicized and unknown until Rockefeller exploited it to his fullest extent. Besides their less ethical means of doing business Standard Oil was a beautiful machine of efficiency. This was the main reason they had so much control over railroads and other means of transportation. While one company would produce 40 barrels one week, 70 the next and 30 the week after that standard oil always had a relatively stable number for their shipping. Another way that Standard Oil saved money was they put very little money into improving working conditions and payed their workers minuscule amounts for long hard days. Although many people would argue that this is a horrible way to cut costs, there was no minimum wage or job security at the time. If you decide that they should treat you better you can quit and within a few days they have you replaced, after paying the replacement even less than you were earning. = = =Tactics =

Rockefeller was infamous for his offer for other companies to join him. At a meeting with the chairmen of many large oil companies he said "Join me or else" and left it at that. For the smarter ones that joined was a lifetime of wealth and power. The rest weren't as lucky. Rockefeller purposely ruined their businesses in multiple ways. The most common were creating man made shortages. One week your refineries might be pumping out oil at a record rate but you run out of drums to put it in because Standard Oil bought all the drums. Another week you may have 100 barrels full but all the trains are full. Because his company he would ship out a steady amount of business for them every week he forced them to give him a discount for his oil and a kickback from the other company's oil shipping. As Standard Oil flourished, other companies were barely surviving. The smarter ones gave in and joined Standard Oil. Although they didn't become as rich as the companies that joined right off the bat the still made what in today’s money would be considered billions. Another tactic Standard Oil would use is making transportation deals with Oil suppliers so that they would lower their kerosene prices. This way, they could sell their oil for a lower price while making the same amount of profit per barrel. Standard Oil abused the oil pipe-lines and had control over the railroads. The company would get their shipments the fastest and slowed down other shipments by derailing trains and bribing train conductors and railroad companies. They would hire spies to find the deals and contracts that competing companies would make and then threaten the oil suppliers so that they would break the contract. . =Break-Up =

In 1904, Standard Oil controlled 91% of the United States' total oil production. The Standard Oil Company was sued by president Theodore Roosevelt to try to stop the oil industry monopoly the company had. This conflict was decided in the Supreme Court case "Standard Oil of New Jersey v. United States". The main laws referred to in the case were the Sherman Anti-Trust law and the Commerce Clause, which says that Congress has the power to regulate trade among states. This law allows Congress to control trade if monopolies were made and if they affected the economy in one of three ways: higher prices, lower input, or lower quality. Also, these laws wouldn't have been applied if Standard Oil had legal business practices, but the company did use bribery and many illegal and unethical business practices report mostly by Ida Tarbell in her book "The History of The Standard Oil Company".

Many of the companies that were formed from Standard Oil's breakup make up the majority of today's U.S. oil industry. These companies are: =Bibliography =
 * Standard Oil of New Jersey - renamed Exxon, now part of ExxonMobil.
 * Standard Oil of New York - renamed Mobil, now part of ExxonMobil.
 * Standard Oil of California - renamed Chevron
 * Standard Oil of Indiana - renamed Amoco (American Oil Co.) - now part of BP.
 * Continental Oil Company - now part of ConocoPhillips.
 * Standard Oil of Ohio - acquired by BP in 1987.
 * The Ohio Oil Company - renamed Marathon Oil Company.
 * South Penn Oil Co. - renamed Pennzoil, now part of Shell.
 * Chesebrough Manufacturing - now part of Unilever, this company took the by-products of the oil refining and reused them to make petroleum jelly a.k.a. vaseline.
 * [|Tarbell, Ida M. //The History of the Standard Oil Company//], 1904. The famous original expose in //McClure's Magazine// of Standard Oil.
 * Folsom, Jr., Burton W. [|//John D. Rockefeller and the Oil Industry//] from //The Myth of the Robber Barons//. New York: Young America, 2003.
 * Juhasz, Antonia. //The Tyranny of Oil: the World's Most Powerful Industry--and What We Must Do to Stop It//. New York, NY: William Morrow, 2008. Print.