While the fledgling industry was growing, a wealthy young man turned his few years of experience in the oil field into $1 million in cash and organized what was to be the first major oil company in the United States. No other name is as associated with those early years as John D. Rockefeller, who founded the Standard Oil Company of Ohio in 1870.
Rockefeller quickly realized the importance of petroleum and, as the industry spread to other oil producing states, so did his expansion into refineries and pipelines, as well as into overseas markets. However, public and government outcry over his monopoly of the petroleum industry led, in part, to the passage of the Sherman Antitrust Act in 1890. A lawsuit was filed against the company under the new antitrust laws, but it was not until May 1911 that the United States Supreme Court ruled that Standard Oil must totally divest itself of its thirty-eight subsidiaries.
In fact, three of the companies eventually became part of the seven largest oil companies that collectively became known as the Seven Sisters. Their names are recognizable to anyone who drives a car and stops at a service station for gasoline and other services.
The largest of the subsidiaries was Standard Oil Company of New Jersey, which Rockefeller had formed as a holding company to escape the tentacles of the antitrust laws. Today, this company is known as Exxon, the largest oil company in the world. A second Rockefeller company was the Standard Oil Company of New York, which bought a Texas producing company called Magnolia. It later merged with another firm called Vacuum. Today, that large oil concern is called Mobil Oil.
Eleven years before Rockefeller was ordered to dissolve his vast oil empire, he had purchased a company and called it Standard Oil of California, the forerunner of today's Chevron, USA. This was the third Rockefeller company that played a major role in the U.S. petroleum industry. Another member of the early oil family was Gulf Oil Corporation, which was incorporated in New Jersey through the acquisition of the J. M. Guffey Petroleum Company and the Gulf Refining Company of Texas. These two companies were instrumental in the development of the Texas Spindletop field.
The fifth "sister" also had her roots in the Texas oil patch. Founded by a Pennsylvanian merchant, the Texas Company later became Texaco. The last two in the family were Shell Oil and British Petroleum, both companies founded in England.
These seven companies, which had the ability and finances to both get the petroleum out of the ground and get it to market, were to dominate the petroleum industry for decades to come. They, including other companies like Phillips Petroleum Company, Amoco, Conoco, Oryx Oil, Arco Oil and Gas, as well as many other smaller independent companies, are still active in the day-to-day search for petroleum.
By the mid-1970s, it was clear that the destinies of the large oil concerns were beginning to be inevitably shaped by a series of uncontrollable occurrences throughout the world, particularly in Middle Eastern countries.
DEVELOPMENT OF THE MODERN-DAY INDUSTRY
Since that first oil well was spotted, or when drilling began, in Pennsylvania, thousands of oil field workers have dedicated their energies to improving the methods of getting the petroleum out of the ground. And out of the development of these new techniques grew a number of companies that provided services to the major oil companies. Thus, these firms that provided assistance to those drilling for oil came to be known as service companies.
Some of these same companies that broke new ground in the oil fields during the middle of this century have grown from small, family-owned firms, to corporate giants with offices around the world. Names like Halliburton, Schlumberger, Baker-Hughes, and many others are heard each day during the course of drilling an oil well. Majors and independents work hand in hand with service companies to find the petroleum that is so crucial to maintaining our standards of living.
While the first wells were drilled on land, there was a growing belief that oil reservoirs could be found in the vast waters off the shores of the continental United States. The first oil well to be drilled in water was in 1896 from a pier in Summerland, California. The first well to be drilled in open waters, however, occurred in 1937. The well, drilled by a joint agreement between the Superior Oil Company and Pure Oil Company, was off the coast of Louisiana in Gulf of Mexico waters.
Since that time, the coasts of Texas, Louisiana, Mississippi, Alabama, and Florida have become some of the world's most active areas for the exploration and production of oil and natural gas. And drilling operations are a common sight from the icy waters of the North Sea to the warm waters of the Mediterranean. Even today, drilling rigs are moving further and further away from the shores, as new technology is enabling drillers to search even deeper for the petroleum.
Back on land, improved methods of getting the oil out of the ground are playing a substantial role in the energy future of the United States. These new techniques and equipment are showcased at oil exhibitions held periodically throughout the world.
The search for petroleum is an exciting industry, providing unlimited, daily challenges in a business whose technology is constantly developing and changing.
THE SLOWING OF TAKEOVERS AND MERGERS
While the Seven Sisters provided a base for the burgeoning oil industry in the United States, a number of occurrences in the last decade changed the face of that business even more. Falling oil prices on the world market, the ongoing Iran-Iraq war, and an oversupply, coupled with a lessened demand for petroleum, led the industry to reevaluate the way it did business.
In the 1980s, a number of major oil companies were bought out, or merged, with larger ones, setting a precedent for corporate takeovers in the industrial United States. Merger activity has slowed and the current industry players have learned how to operate more efficiently.
Oil company acquisitions still rank at the top of the list of the largest mergers in the history of the United States. To date, the largest corporate buyout-both oil and nonoil-was the 1984 purchase of Gulf Oil by Standard Oil of California (now Chevron USA) for $13.4 billion. Later that year, Texaco purchased Getty Oil for $10.1 billion. The company ended up in an historic courtroom battle with Pennzoil, which claimed it had made an earlier bid for the company. The case was eventually settled for billions of dollars. Earlier buyouts included Conoco by Dupont, Marathon Oil by U.S. Steel, (now called USX), and Superior Oil by Mobil.
Some companies, however, were forced into takeovers at a time when drilling activity was low. This meant a change in personnel that included early retirements, layoffs, and an exodus by some workers into more stable industries.
Naturally this affected the way companies conducted business. Much of corporate America had to simultaneously become lean and mean to operate more profitably. Currently, however, at a time when drilling activity is actually increasing, both major oil and service companies are scrambling to find enough experienced personnel to continue the search for petroleum. Americans are beginning to realize the importance of a strong domestic energy industry. And, while activity may be below the levels of the boom years of the late 1970s and early 1980s, there always will be a need for experienced oil workers. Therefore, for a person undecided on a career, the energy industry is expected to provide a multitude of jobs into the next century.
