It started as standard oil of indiana
In , John D. Rockefeller, a resident of Cleveland Ohio, joined with two partners to establish an oil-refining company. The men purchased oil wells in Titusville, Pennsylvania, and constructed a well near Cleveland. In this year alone, the business earned approximately , dollars.
Chart: The Evolution of Standard Oil
At the time of its founding 70 years ago as a result of the busting of Rockefeller's Standard Oil trust, it had no supply of crude oil of its own and has scrambled to remedy this inadequacy ever since. Once it served 85 percent of the lucrative Middle Western gasoline market, a share that has since slipped to 15 percent.
It is not one of the lucky four American companies - not coincidentally, the nation's largest - producing oil in Saudi Arabia. Today, such a judgment would be laughable, in part due to the leadership of Mr. Swearingen, who has been in charge at Standard for two decades and is often described as his industry's most brilliant executive.
In sales, Standard ranks as the ninth-biggest industrial concern in America, based on last year's results. In net income it is No. Over the last decade, revenues, earnings, dividends and capital spending have all risen about sixfold. Judged against other oil companies, Standard's position is even more enviable. Its ownership of drilling rights throughout the United States dwarfs those of other oil companies, encompassing fully 2 percent of the land area of the United States.
In domestic natural gas production, holdings of oil and gas reserves and capital outlays Standard - often identified by its Amoco trade name - ranks either third or fourth. Moreover, the company is involved in almost all of this country's most exciting oil and gas discoveries - including the Overthrust Belt in Wyoming and Utah and the Tuscaloosa Trend in Louisiana and Mississippi.
Internationally, the company has expanded from its insular Middle Western base to become a major player in the high-stakes game of world oil.
By deliberately avoiding highly competitive areas and applying exploration expertise first developed in the United States, the company has expanded its drilling and production operations to some 40 countries.
Its proved foreign oil reserves are now nearly two-thirds the size of its domestic reserves. Not surprisingly, Mr. Swearingen's tune has changed a bit. These days, though, Mr. Swearingen - a man who does not suffer fools gladly and has a reputation of becoming snappish with those he considers ill-prepared or incompetent - claims to be preoccupied by a rather unusual problem. The combination of stagnant oil prices over the past year, a price freeze by the Organization of Petroleum Exporting Countries for next year and sharp inflation in the prices of oilfield and other energy-related products are forcing Mr.
Swearingen and other planners at Standard to make painful choices in the budget they are now preparing. The most frustrating rub is the fact that Standard has a lot of promising projects in which it is eager to invest.
The decisions currently being made by Standard involve setting priorities among what appear to be money-making investments, an inherently superior business situation to having a lot of money and no idea how to spend it. Unlike some oil companies, Standard is not shopping for acquisitions. Petrie, a domestic oils analyst with the First Boston Corporation. He characterizes Indiana Standard as ''the pre-eminent domestic integrated company.
However cash-short Standard might be relative to its enormous ambitions, it remains more than a shade difficult to picture the company as a pauper. As a direct result of the fold rise in oil prices over the last decade, Standard and its sister oil companies now account for more than a third of the United States' total corporate profits.
What is happening now is that this rate of price increase, in the opinion of industry leaders and analysts, appears likely to abate. This means that plans made on the basis of ever-rising inflationadjusted prices must be re-evaluated, and then perhaps scaled back, made more efficient or postponed.
Sharper pencils are being used to evaluate synthetic fuels, extremely expensive frontier oil plays, and new ways to recover additional quantities of oil from an existing reservoir than seemed necessary a year or two ago. Swearingen said, adding that he expects volumes will be stable as well. I N Standard's case, this means setting priorities among a host of apparently profitable ventures.
The company must weigh the relative merits of a myriad of competing investments, trying to calculate the relative merits of oil shale versus refinery modernizations, development of coal versus drilling oil wells, domestic marketing improvements against overseas expansion, chemicals as opposed to minerals. And, always, it must walk a tight-rope between investors' desire to make a short-term profit and the long-term future.
Swearingen declared. Clearly, Mr. Swearingen views the investor skittishness that this share price decline seems to imply as short-sighted indeed. Swearingen said, estimating the savings that would accrue from dismissing the company's geologists and petroleum engineers, not drilling any more wells and the like.
The new pressure to choose among competing priorities is clear in the area of oil shale. Another example of cost-cutting was Standard's recent decision to stop operating service stations in 11 states by Oct.
It is in Standard's most successful and glamorous business in recent years - finding domestic oil and gas - that the new pressures arising from stable oil prices and rising costs are most sharply evident. Swearingen estimates that inflation in the ''oil patch'' - which depends on large quantities of steel, heavy equipment and other capital goods - is running nine to 12 percentage points above the inflation rate, or about 20 percent.
This is a direct consequence of the furious pace of drilling in the United States, which has sparked competition for oilfield goods.
As a result of this high inflation and the prospect of relatively stable oil prices, Mr. Swearingen said, the number of drilling rigs that his and other companies are able to operate next year will dwindle somewhat, although overall exploration spending will continue to increase.
Over the course of Mr. Swearingen's reign, Standard has striven to find oil where others were not looking. The company declined to follow the industry giants into high-cost offshore projects or the Alaskan North Slope.
And it did not try to edge into already crowded areas overseas. Instead, Standard's landmen - those experts at acquiring drilling acreage, of whom Standard's are considered the sharpest in the business - quietly sought out drilling leases in county courthouses, barnyards and government office buildings in every part of the United States. By the beginning of this year, Standard held This has paved the way for Standard to be involved in some of the most attractive domestic discoveries of recent years.
A case in point is the Western Overthrust Belt extending through Utah and Wyoming and perhaps further. Despite the fact that the area around Evanston, Wyo. Nonetheless, Standard made a deal with the Union Pacific Railroad in to take a lease on different options on all of its land-grant acreage - about 7. Due to much better technology, particularly seismic equipment, new geological interpretations, deeper drilling and good luck, Standard believes that the industry has now located potential reserves of about 9.
In varying percentages, Standard is involved in the great bulk of these new petroleum riches. Standard has had similar success in locating other promising acreage, often before it rises in cost due to a discovery by someone else. Not only at home. Standard has methodically extended its foreign involvement and recently made an oil and gas discovery in the United Arab Emirates' sheikdom of Sharja, which it termed ''one of the largest discoveries ever made by the company.
The result is that the company is narrowing the gap between its crude production and refining capacity, the principal problem that has always dogged Standard.
Admittedly, it still has a way to go. One of Standard's much-mentioned problems is the frequency with which other companies lure away its engineers, landmen and geologists. Top executives seem almost to be resigned to taking this as a compliment. But they do profess an inability to understand Wall Street's nervousness about the company's heavy involvement in Egypt, where it generates a shade less than 30 percent of its net income. In part, this nervousness reflects Standard's loss of , barrels of daily production from Iran when the Shah's Government fell.
Swearingen said, citing his company's cordial relationship with all of Egypt's leaders during the company's year presence in that country. Standard's other big problem is the industrywide dilemma of making money from refining operations at a time that petroleum demand has fallen and world crude prices have not dropped enough.
Swearingen, who is 63 years old, also shrugs off concerns about his retirement in two years. The company ''will do a lot better after I'm gone,'' he said matter-of-factly.
Morrow, 55, said to be a quiet man with a great mind for facts. Other contenders include James W. Kozad, 54, a white-haired executive vice president considered exceptionally creative in finances; Walter R. Peirson, 54, executive vice president and a lawyer, and H. Laurance Fuller, 42, executive vice president with a background in both law and engineering.
None of these men, however, has yet exhibited a style as distinctive or combative as Mr. The present chairman, among other things, has threatened to throw a protesting nun out of a Standard annual meeting, upbraided Phil Donahue, the talk show host, for being ill-prepared, and has become a familiar participant in Chicago high society.
His colorful wife, Bonnie, has occasionally brought more visibility than Mr. Swearingen might prefer: a recent issue of People magazine carried a picture of Mrs. Swearingen in a belly dancer's outfit, while Mr. Swearingen wore the costume of an Arab sheik with a whip.
Nonetheless, most analysts don't believe Mr. Swearingen's passage from the scene will change the company's basic direction. Petrie said. At a time that many oil companies are seeking to expand into other businesses, Mr.
Swearingen hints this in all likelihood means Standard will retain its year-old orientation to be principally an energy company. But he is careful not to rule anything out. Petroleum Ops. View on timesmachine. TimesMachine is an exclusive benefit for home delivery and digital subscribers.
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John D. Rockefeller. Amoco Building (now Aon Center) Chicago, Illinois, U.S.
Standard Oil Co. The name change, meanwhile, is a historic one for the company, which, while headquartered in Chicago, has been incorporated as Standard Oil Co. Shark-repellent provisions have become increasingly common in recent years, however, particularly among oil companies where a series of hostile takeover attempts have been launched by maverick Texas oilman T. Boone Pickens and others. Last week, for example, Unocal Corp.
Petroleum Products.
At the time of its founding 70 years ago as a result of the busting of Rockefeller's Standard Oil trust, it had no supply of crude oil of its own and has scrambled to remedy this inadequacy ever since. Once it served 85 percent of the lucrative Middle Western gasoline market, a share that has since slipped to 15 percent. It is not one of the lucky four American companies - not coincidentally, the nation's largest - producing oil in Saudi Arabia.
Standard Oil of Indiana to Amoco to BP: Three Companies, One Whiting Refinery
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THE SPECIAL STATE OF INDIANA STANDARD
Standard Oil Co. Established in , by John D. Rockefeller and Henry Flagler as a corporation in Ohio , it was the largest oil refiner in the world of its time. Supreme Court ruled, in a landmark case , that Standard Oil was an illegal monopoly. Standard Oil dominated the oil products market initially through horizontal integration in the refining sector, then, in later years vertical integration ; the company was an innovator in the development of the business trust. The Standard Oil trust streamlined production and logistics, lowered costs, and undercut competitors. Rockefeller ran the company as its chairman, until his retirement in He remained the major shareholder, and in , with the dissolution of the Standard Oil trust into 34 smaller companies, Rockefeller became the richest person in modern history , as the initial income of these individual enterprises proved to be much bigger than that of a single larger company. Its successors such as ExxonMobil , Marathon Petroleum , Amoco , and Chevron are still among the companies with the largest revenues in the world.
Besides creating the third-largest oil company in the world, Tuesday's combination of Amoco Corp. Rockefeller's mammoth Standard Oil Co.
Standard Oil of Indiana. Standard Oil of Indiana, as the company was officially known for many years, took shape in Initially it consisted of a single.
Standard Oil Whiting Refinery
Standard Oil Co. The most contentious business case at the time to reach the Supreme Court saw the United States government take on the countries largest corporation Standard Oil and John D. Rockefeller, the countries wealthiest businessman. The court ruled in favor of the United States and held that a business combination was illegal when it was engaged in unreasonable restraint to trade. This resulted in the breakup of Standard Oil into separate companies, all in competition with one another, effectively lowering prices. The argument was made that Rockefeller had obtained his monopoly through under the table deals, threats, and bribery with railroad companies in order to receive special rates that would give his companies and an unsurmountable advantage over his competitors in the regions. In response to the defense that the profits and success were a result of efficiency and superior businiess tactics, Kellogg would argue that the savings from the efficient processes were never reflected in the price of the oil and thus never handed down to the consumer. Consequently, Rockefeller and his partners continue to make extremely high profits. The respondent argued that Rockefeller sought out favorable business agreements that any other business had the ability to do and never did so with the intention of driving others out of the market. Milburn also showed that consumers were not hurt in the process and that prices remained the same for decades, creating a stable market which can not be said for many of the combinations and trusts being formed at the time. The case was made that Rockefeller and the Standard Oil Co. Majority Opinion White.
A REUNION OF STANDARD OIL?
A couple of weeks ago, we published an infographic showing how the list of the most valuable companies in the U. Near the top of that list in is The Standard Oil Company of New Jersey, which is just one of the 34 forced spin-offs from the original Standard Oil juggernaut that was split up in At the turn of the 20th century, John D. As a result, an antitrust case was filed against the company in under the Sherman Antitrust Act, arguing that the company used tactics such as raising prices in areas where it had a monopoly, while price gouging in areas where it still faced competition. Meanwhile, John D. Rockefeller had left the company, yet the value of his stock doubled as a result of the split.
