Standard Oil

, shortly after founding Standard Oil Standard Oil's prehistory began in 1863, as an Ohio partnership formed by industrialist John D. Rockefeller, his brother William Rockefeller, Henry Flagler, chemist Samuel Andrews, silent partner Stephen V. Harkness, and Oliver Burr Jennings, who had married the sister of William Rockefeller's wife. In 1870, Rockefeller abolished the partnership and incorporated Standard Oil in Ohio. The company was established with $1 million in capital. Smaller companies decried such deals as unfair because they were not producing enough oil to qualify for discounts. Standard's actions and secret transport deals helped its kerosene price to drop from 58 to 26 cents from 1865 to 1870. But when this deal became known, competitors convinced the Pennsylvania Legislature to revoke South Improvement's charter. No oil was shipped under this arrangement. Merchants without ties to the oil industry had pressed for the hearings. Prior to the committee's investigation, few knew of the size of Standard Oil's control and influence on seemingly unaffiliated oil refineries and pipelines—Hawke (1980) cites that only a dozen or so within Standard Oil knew the extent of company operations. The committee then shifted its focus to Standard Oil's operations. Acme Oil Company president John Dustin Archbold denied that Acme was associated with Standard Oil; he then admitted to being a director of Standard Oil. Standard Oil's organizational concept proved so successful that other giant enterprises adopted this "trust" form. By 1882, Rockefeller's top aide was Archbold, whom he left in control after disengaging from business to concentrate on philanthropy after 1896. Other notable principals of the company include Flagler (developer of the Florida East Coast Railway and resort cities) and Henry H. Rogers, who built the Virginian Railway. In 1885, Standard Oil of Ohio moved its headquarters from Cleveland to its permanent headquarters at 26 Broadway in New York City. Concurrently, the trustees of Standard Oil Company of Ohio chartered the Standard Oil Co. of New Jersey to take advantage of New Jersey's more lenient corporate stock ownership laws. Sherman Antitrust Act of 1890 In 1890, Congress overwhelmingly passed the Sherman Antitrust Act (Senate 51–1; House 242–0), a source of American anti-monopoly laws. The law forbade every contract, scheme, deal, or conspiracy to restrain trade, though the phrase "restraint of trade" remained subjective. The Standard Oil group quickly attracted attention from antitrust authorities leading to a lawsuit filed by Ohio Attorney General David K. Watson. Earnings and dividends From 1882 to 1906, Standard paid out $548,436,000 () in dividends at a 65.4% payout ratio. The total net earnings from 1882 to 1906 amounted to $838,783,800 (), exceeding the dividends by $290,347,800, which was used for plant expansions. ==1895–1913==

in 1899: the Standard Oil Co. of New Jersey (SOCNJ). This company held stock in 41 others, which controlled other companies, which in turn controlled yet other companies. According to Daniel Yergin in his Pulitzer Prize-winning The Prize: The Epic Quest for Oil, Money, and Power (1990), this conglomerate was seen by the public as all-pervasive, controlled by a select group of directors, and completely unaccountable. depicted as the infant Hercules grappling with Standard Oil in a 1906 Puck magazine cartoon by Frank A. Nankivell In 1904, Standard controlled 91 percent of production and 85 percent of final sales. Most of its output was kerosene, of which 55 percent was exported around the world. After 1900 it did not try to force competitors out of business by selling at a loss. The federal Commissioner of Corporations studied Standard's operations from the period of 1904 to 1906 and concluded that "beyond question ... the dominant position of the Standard Oil Co. in the refining industry was due to unfair practices—to abuse of the control of pipe-lines, to railroad discriminations, and to unfair methods of competition in the sale of the refined petroleum products". Because of competition from other firms, their market share gradually eroded to 70 percent by 1906 which was the year when the antitrust case was filed against Standard. Standard's market share was 64 percent by 1911 when Standard was ordered broken up. At least 147 refining companies were competing with Standard including Gulf, Texaco, and Shell. , July 6, 1907 In 1909, the U.S. Justice Department sued Standard under federal antitrust law, the Sherman Antitrust Act of 1890, for sustaining a monopoly and restraining interstate commerce by: Rebates, preferences, and other discriminatory practices in favor of the combination by railroad companies; restraint and monopolization by control of pipe lines, and unfair practices against competing pipe lines; contracts with competitors in restraint of trade; unfair methods of competition, such as local price cutting at the points where necessary to suppress competition; [and] espionage of the business of competitors, the operation of bogus independent companies, and payment of rebates on oil, with the like intent. The lawsuit argued that Standard's monopolistic practices had taken place over the preceding four years: The general result of the investigation has been to disclose the existence of numerous and flagrant discriminations by the railroads on behalf of the Standard Oil Co. and its affiliated corporations. With comparatively few exceptions, mainly of other large concerns in California, the Standard has been the sole beneficiary of such discriminations. In almost every section of the country that company has been found to enjoy some unfair advantages over its competitors, and some of these discriminations affect enormous areas. Prosecutors identified four illegal patterns: (1) secret and semi-secret railroad rates; (2) discriminations in the open arrangement of rates; (3) discriminations in classification and rules of shipment; (4) discriminations in the treatment of private tank cars. The government alleged: Almost everywhere the rates from the shipping points used exclusively, or almost exclusively, by the Standard are relatively lower than the rates from the shipping points of its competitors. Rates have been made low to let the Standard into markets, or they have been made high to keep its competitors out of markets. Trifling differences in distances are made an excuse for large differences in rates favorable to the Standard Oil Co., while large differences in distances are ignored where they are against the Standard. Sometimes connecting roads prorate on oil—that is, make through rates which are lower than the combination of local rates; sometimes they refuse to prorate; but in either case the result of their policy is to favor the Standard Oil Co. Different methods are used in different places and under different conditions, but the net result is that from Maine to California the general arrangement of open rates on petroleum oil is such as to give the Standard an unreasonable advantage over its competitors. The government said that Standard raised prices to its monopolistic customers but lowered them to hurt competitors, often disguising its illegal actions by using bogus, supposedly independent companies it controlled. The evidence is, in fact, absolutely conclusive that the Standard Oil Co. charges altogether excessive prices where it meets no competition, and particularly where there is little likelihood of competitors entering the field, and that, on the other hand, where competition is active, it frequently cuts prices to a point which leaves even the Standard little or no profit, and which more often leaves no profit to the competitor, whose costs are ordinarily somewhat higher. On May 15, 1911, the US Supreme Court upheld the lower court judgment and declared the Standard Oil group to be an "unreasonable" monopoly under the Sherman Antitrust Act, Section II. It ordered Standard to break up into 39 independent companies with different boards of directors, the biggest two of the companies being Standard Oil of New Jersey (which became Exxon) and Standard Oil of New York (which became Mobil). Standard president John D. Rockefeller had long since retired from any management role. But as he owned a quarter of the shares of the resultant companies, and those share values mostly doubled, he emerged from the dissolution as the richest man in the world. The dissolution had actually propelled Rockefeller's personal wealth. ==Breakup==

Over the next few decades, Standard Oil of New Jersey and Standard Oil of New York grew significantly. Jersey Standard, led by Walter C. Teagle, became the largest oil producer in the world. It acquired a 50 percent share in Humble Oil & Refining Co., a Texas oil producer. Socony purchased a 45 percent interest in Magnolia Petroleum Co., a major refiner, marketer, and pipeline transporter. In 1931, Socony merged with Vacuum Oil Co., an industry pioneer dating back to 1866, and a growing Standard Oil spin-off in its own right. In the Asia-Pacific region, Jersey Standard had oil production and refineries in the Dutch East Indies but no marketing network. Socony-Vacuum had Asian marketing outlets supplied remotely from California. In 1933, Jersey Standard and Socony-Vacuum merged their interests in the region into a 50–50 joint venture. Standard-Vacuum Oil Co., or "Stanvac", operated in 50 countries, from East Africa to New Zealand, before it was dissolved in 1962. Rockefeller's original company, Standard Oil Company of Ohio (Sohio), effectively ceased to exist when it was purchased by BP in 1987. BP continued to sell gasoline under the Sohio brand until 1991. Other Standard oil entities include "Standard Oil of Indiana" which became Amoco after other mergers and a name change in the 1980s, and "Standard Oil of California" which became Chevron Corporation. ==Legacy and criticism of breakup==

Some have speculated that if not for that court ruling, Standard Oil could have possibly been worth more than $1 trillion by the 2000s. Numerous regional competitors (such as Pure Oil in the East, Texaco and Gulf Oil in the Gulf Coast, Cities Service and Sun in the Midcontinent, Union in California, and Shell overseas) had organized themselves into competitive vertically integrated oil companies, the industry structure pioneered years earlier by Standard itself. In addition, demand for petroleum products was increasing more rapidly than the ability of Standard to expand. The result was that although in 1911 Standard still controlled most production in the older regions of the Appalachian Basin (78 percent share, down from 92 percent in 1880), Lima-Indiana (90 percent, down from 95 percent in 1906), and the Illinois Basin (83 percent, down from 100 percent in 1906), its share was much lower in the rapidly expanding new regions that would dominate U.S. oil production in the 20th century. In 1911, Standard controlled only 44 percent of production in the midcontinent, 29 percent in California, and 10 percent on the Gulf Coast. Some analysts argue that the breakup was beneficial to consumers in the long run, and no one has proposed that Standard Oil be reassembled in pre-1911 form. ExxonMobil, however, does represent a substantial part of the original company. Since the breakup of Standard Oil, several companies, such as General Motors and Microsoft, have come under antitrust investigation for being inherently too large for market competition; however, most of them remained together. The only company since the breakup of Standard Oil that was divided into parts like Standard Oil was AT&T, which after decades as a regulated natural monopoly, was forced to divest itself of the Bell System in 1984. ==Successor companies==

Standard Oil's breakup split the company into 39 separate companies. Several of these companies were considered among the Seven Sisters who dominated the industry worldwide for much of the 20th century, and both Standard Oil's direct and indirect descendants make up Big Oil. Today, Standard Oil's influence is primarily concentrated in a few companies: • ExxonMobil, continuation of Standard Oil Company of New Jersey (later Exxon) which merged with Standard Oil Company of New York (later Mobil) • Chevron, continuation of Standard Oil of California which acquired Kentucky Standard • BP, continuation of the Anglo-Persian Oil Company which acquired Standard Oil of Ohio and Standard Oil of Indiana • Marathon Oil and Marathon Petroleum, continuations of The Ohio Oil Company • ConocoPhillips and Phillips 66, continuations of the Continental Oil Company Many of today's largest oil and gas companies are or have acquired a descendant of Standard Oil. Moreover, many other companies have acquired or been created from Standard Oil descendants over time, including Unilever (which acquired Standard descendant Vaseline in 1987), TransUnion (created originally as a holding company for Standard descendant Union Tank Car) and Berkshire Hathaway (which later acquired Union Tank Car). ==Rights to the name==

has full international rights and continues to use the Esso name overseas. States that are gray have a dot representing their owners, but are not actively being used; ExxonMobil operates in all these states and have de facto claimed the trademark. Of the 39 "Baby Standards", 11 were given rights to the Standard Oil name, based on the state they were in. Conoco and Atlantic elected to use their respective names instead of the Standard name, and their rights would be claimed by other companies. By the 1980s, most companies were using their brand names instead of the Standard name, with Amoco being the last one to have widespread use of the "Standard" name, as it gave Midwestern owners the option of using the Amoco name or Standard. Three supermajor companies now own the rights to the Standard name in the United States: ExxonMobil, Chevron, and BP. BP acquired its rights through acquiring Standard Oil of Ohio and merging with Amoco and has a small handful of stations in the Midwestern United States using the Standard name. Likewise, BP continues to sell marine fuel under the Sohio brand at various marinas throughout Ohio. ExxonMobil keeps the Esso trademark alive at stations that sell diesel fuel by selling "Esso Diesel" displayed on the pumps. ExxonMobil has full international rights to the Standard name, and continues to use the Esso name overseas and in Canada. To protect its trademark, Chevron has one station in each state it owns the rights to be branded as Standard. Some of its Standard-branded stations have a mix of some signs that say Standard and some signs that say Chevron. Over time, Chevron has changed which station in a given state is the Standard station. As of 2024 Chevron got a new federal trademark registered for the Standard name for its new electric charging fuel stations. In 2016, ExxonMobil successfully asked a U.S. federal court to lift the 1930s trademark injunction that banned it from using the Esso brand in some states. Neither BP nor Chevron objected to the decision. ExxonMobil asked for it to be lifted primarily so it could have universal marketing material for its stations globally and, likewise, the Esso name returned to some minor station signage at both Exxon and Mobil stations. As of 2021, six states that have the Standard Oil name rights are not being actively used by the companies that own them. Chevron withdrew from Kentucky (home of the Standard Oil of Kentucky, which Chevron acquired in 1961) in 2010, while BP gradually withdrew from five Great Plains and Rocky Mountain states (Colorado, Montana, North Dakota, Oklahoma, and Wyoming) since the initial conversion of Amoco sites to BP. As ExxonMobil has stations in all of these states, with the aforementioned minor signage ExxonMobil has de facto claimed the Standard trademark in these states, though they are still held by their respective rights holders. File:Standardgasstation.jpg|One of 15 Chevron stations branded as "Standard" to protect Chevron's trademark; this one is in Paradise, Nevada. File:Esso Diesel.jpg|A combination gasoline/diesel pump at an Exxon in Zelienople, Pennsylvania selling Exxon gasoline and "Esso Diesel". Image:bpstandarddurand.jpg|BP station with "torch and oval" Standard sign in Durand, Michigan. Image:Sohio anderson ferry marina.jpg|BP continues to sell marine fuel under the Sohio brand at various marinas on Ohio waterways and in Ohio state parks in order to protect its rights in the Sohio and Standard Oil names. File:EssoOhio.jpg|Station signage at an Exxon station in Columbus, Ohio featuring the Esso logo, while BP owns the rights to the Standard Oil name in Ohio. ==See also==