An Oil Dynasty: The Legacy And Dominance Of Standard Oil

The history of the Standard Oil Company is multifarious and imperative, not just to the oil industry, but to American history. Its history dates back to the late 1800s, when petroleum was first discovered in Pennsylvania. At the time, petroleum was not seen as a necessity or even an applicable substance.

As the industry gradually expanded, a young man named John D. Rockefeller took a job as a bookkeeper. Rockefeller was a meticulous and witty worker, who wanted to start a business. After working for a while, he eventually formed his own business. He chose the refining business, a sector of the petroleum industry that was growing hastily.

The company began as a Ohio Partnership with a few investors. These men included Henry Flagler, Jabez Bostwick, Henry H. Rogers, William Rockefeller and Stephen V. Harkness. As time passed, the demand for gasoline and kerosene rapidly increased. Standard Oil’s profits soared and the refiner expanded its operations. By 1880, Standard Oil controlled 90% of the refining capacity in the U.S. Many believed this was an illegal monopoly, in reality, it was not. Standard Oil still had competition from companies such as Shell, Citgo, Texaco, Gulf Oil and some others. Eventually, Standard Oil branched out into many other companies. These companies were Standard Oil of New Jersey, New York, California, Indiana, Ohio and the Continental Oil Company. In 1911, these companies were broken up under the Sherman Antitrust Act. This forced the company to become broken up into different smaller companies, all competing against each other.

In the 1930s, many geologists believed that the Middle East had mammoth oil reserves. In 1933, Standard Oil of California (Socal) received the rights to drill in Saudi Arabia (after outbidding Iraq Petroleum Company). Socal created a subsidiary called California-Arabian Standard Oil Co. (Casoc). In 1944, Casoc officially changed its name to Arabian American Oil Company (Aramco). Eventually in 1948, Standard Oil of New Jersey (Esso) purchased a stake in the company. The Standard Oil companies operating in Saudi Arabia had many Americans working in their facilities. They later decided to erect housing structures near the oil facilities. These homes had white picket fences, green lawns and mailboxes. You would not have known that they were in the middle of a colossal desert. American workers in Saudi Arabia were satisfied with their surroundings and felt at home.

As time passed, the Saudi government was increasingly aggravated with the companies operating in Saudi Arabia. The Saudis felt they deserved the rights to all of the Saudi oil and Aramco should be nationalized. Socal and Esso continued to disagree and felt that the oil fields were their property. During 1973, the U.S. showed support for Israel in the Yom Kippur War and the Saudi government decided to nationalize 25% of Aramco. All throughout the 1970s, Aramco slowly became owned by the Saudi government. In 1980, Aramco was fully controlled by the Saudis and renamed Saudi Aramco.

So where does Standard Oil stand today? Does it still operate in Saudi Arabia? Today the remnants of this company are still in business. They consist of companies like Exxon, Mobil, Amoco, Conoco, Chevron, Imperial Oil and Marathon Oil. Yes, some of these companies do have contracts in Saudi Arabia and other parts of the Middle East. In recent years, there has been a “Standard Oil Renaissance.” Exxon and Mobil merged, Chevron and Texaco merged, Conoco and Phillips Petroleum merged and BP and Amoco merged. Critics of Big Oil, will claim that this just makes the industry more cut-throat and these companies more powerful. In actuality, it is because of new overseas oil companies who are attempting to obtain market share.

One of the biggest oil and gas companies in the world is Gazprom, a Russian oil and gas monopoly. Then there is CNOOC (Chinese National Offshore Oil Company), which is owned and controlled by the Chinese government. Moreover, China owns yet another company, PetroChina. Shouldn’t American oil companies have a right to be larger, just like their competitors? The Middle East brings another assortment of behemoth oil companies like Saudi Aramco, Kuwait Oil Company, Bahrain Petroleum Company, National Iranian Oil Company, Qatar Petroleum and Iraqi National Oil Company. Middle Eastern oil companies have access to the easiest oil on the face of the earth.

In theory, Standard Oil still operates all over the world today. Its legacy was created by a group of visionaries who believed a company that was profitable and necessary could exist. These “robber barons” were disliked by many, although one has to admit they helped build America and shape the oil industry. These men were aggressive, diligent and later on very generous. There is no doubt, that the Standard Oil of today, will continue to employ thousands of people, donate millions to charity and continue to safely explore and develop hydrocarbons to fuel the world that we live in. The Standard Oil of today is not just exploring for oil and gas, but investing in renewable energy sources as well. There is no other company on the planet, that had the success, prestige and dominance of Standard Oil.



Source by Steven M Wizior

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