The story of the Standard Oil Company is multifaceted and imperative, not only for the oil industry, but also for American history. Its history dates back to the late 19th century, when oil was first discovered in Pennsylvania. At the time, oil 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 resourceful 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 oil industry that was growing by leaps and bounds.
The company began as an 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 increased rapidly. Standard Oil’s profits soared and the refinery expanded its operations. By 1880, Standard Oil controlled 90% of the refining capacity in the US. Many believed it to be an illegal monopoly, but it really wasn’t. Standard Oil still had competition from companies like Shell, Citgo, Texaco, Gulf Oil, and a few 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 dissolved under the Sherman Antitrust Act. This forced the company to split into different smaller companies, all competing with each other.
In the 1930s, many geologists believed that the Middle East had enormous oil reserves. In 1933, Standard Oil of California (Socal) received the rights to drill in Saudi Arabia (after outbidding the Iraq Petroleum Company). Socal created a subsidiary called California-Arabian Standard Oil Co. (Casoc). In 1944, Casoc officially changed its name to the Arabian American Oil Company (Aramco). Finally, in 1948, Standard Oil of New Jersey (Esso) bought a share in the company. The Standard Oil companies operating in Saudi Arabia had many Americans working at their facilities. Later they decided to erect housing structures near the oil installations. These houses had white picket fences, green lawns, and mailboxes. You wouldn’t have known 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 became increasingly irritated with companies operating in Saudi Arabia. The Saudis felt they deserved the rights to all Saudi oil and that Aramco should be nationalized. Socal and Esso continued to disagree and felt that the oil fields were their property. During 1973, the US showed its support for Israel in the Yom Kippur war and the Saudi government decided to nationalize 25% of Aramco. Throughout the 1970s, Aramco slowly became the property of the Saudi government. By 1980, Aramco was fully controlled by the Saudis and was renamed Saudi Aramco.
So where is Standard Oil today? Do you still operate in Saudi Arabia? Today, remnants of this company are still in business. They are made up of companies like Exxon, Mobil, Amoco, Conoco, Chevron, Imperial Oil and Marathon Oil. Yes, some of these companies 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. Big Oil’s critics will claim that this only makes the industry fiercer and these companies more powerful. In reality, it is due to new foreign oil companies trying to gain market share.
One of the largest 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. In addition, China owns another company, PetroChina. Shouldn’t US oil companies have the right to be bigger, just like their competitors? The Middle East brings another variety of giant oil companies such as 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 around the world today. His legacy was created by a group of visionaries who believed that a profitable and necessary company could exist. Many did not like these “robber barons,” even though it must be admitted that they helped build America and shape the oil industry. These men were aggressive, diligent, and later very generous. There is no question that Standard Oil today will continue to employ thousands of people, donate millions to charity, and continue to safely explore and develop hydrocarbons to feed the world in which we live. Standard Oil today is not just exploring for oil and gas, but also investing in renewable energy sources. There is no other company on the planet that has had the success, prestige and dominance of Standard Oil.
