In the twentieth century, no industry created more giant American companies than the petroleum industry. In 1917, big oil represented six of the fifty largest American companies. By 1955, eleven oil companies made the top fifty industrial firms in Fortune magazine’s annual list; seven were in the top twenty. And in 2019, with a list expanded to include financial services, transportation, retailing, and many other industries, oil companies made up five of the top fifty and nine of the one hundred biggest American companies. (2020 was an aberration because of Covid, which caused the big oil companies to lose money and drop in revenue.)
No other industry has gone to the ends of the earth and to the bottoms of the oceans that the oil industry has, ever searching for more petroleum. From its outset, the industry has been a global business, as reflected in the story that follows.
The oil industry is built around four critical parts:
- Exploration and Production (finding and drilling crude oil wells)
- Transportation and storage (tanker ships, pipelines, trucks, storage terminals)
- Refining (“cracking” the crude oil into components including gasoline, kerosene, aviation fuel, lubricants, and petrochemicals)
- Marketing (filling stations, convenience stores with gasoline)
Marketing is the part that touches the lives of most Americans. Our use of gasoline skyrocketed in the early 1920s as we bought Ford Model T’s and began to explore our own country, for work and for pleasure, without depending on railroad schedules and stops.
Over time, each big oil company has focused on different parts of the system. At any given time, some oil companies had more crude oil than they could refine and sell, while other companies did not have enough to meet the needs of their refineries and gas stations. Yet the industry giants always battled for the attention and patronage of American motorists at their branded gas stations. This is the story of those wars.
The Standard Oil Trust
Clevelander John D. Rockefeller saw great opportunity when petroleum was discovered in Pennsylvania in 1859. Kerosene derived from oil was used to fuel lamps, replacing whale oil. The railroads, America’s first giant industry, also used lubricants to keep their trains rolling. In 1863, Rockefeller and his partners invested in their first refinery, in Cleveland. Over the next forty-eight years, this small group of men created company after company to exploit the opportunities in oil. Savvy, ambitious, and sometimes ruthless, Rockefeller made every effort to control the refining and transportation of petroleum. By 1870, the partners incorporated the Standard Oil Company of Ohio.
Incorporation laws at the time varied greatly from state to state. Many states required that the company be incorporated in that state in order to operate there. In New York, a corporation was not allowed to own another corporation. But New Jersey allowed it. This led to the creation of separate companies with names like Standard Oil (Ohio), Standard Oil (New York), and Standard Oil (New Jersey).
In 1882, he and his partners secretly pooled all their shares in their multitude of companies into the Standard Oil Trust, to some degree evading the state limitations. Outsiders may have thought that the companies were competitors, when in fact they were all part of the giant trust, which refined as much as 85% of the nation’s petroleum. In the 1890s, many other industries copied Rockefeller’s ideas, creating trusts to attempt to monopolize industries (many of those efforts failed in their efforts to monopolize).
Standard Oil used its market position in refining and pipelines to control the flow and pricing of oil. At the same time, Standard lowered it prices by operating more efficiently and making continuous improvements in the system.
But people still did not trust the Trust, especially as they discovered the secret linkages between the many component companies. Ida Tarbell’s expose of the Standard Oil Trust, despite its many flaws, became a bestselling book. The Standard Oil Trust was an easy target: the railroads blamed it for low prices to carry the oil and hated the competition from Rockefeller’s pipelines. Those who produced oil at the well, selling to Standard, and those who sold kerosene in the cities, buying from Standard, thought the Trust had too much control over their lives and businesses. Everyone thought the kerosene produced by the Trust should be even cheaper.
Americans had always been wary of monopoly. By the start of the twentieth century, populist politicians and leaders like Teddy Roosevelt were ready to “bust the trusts.” And the most famous, largest, and most hated trust of all was Rockefeller’s Standard Oil. After plentiful investigations by Congress, in 1911 the U.S. Supreme Court found Standard guilty of monopoly and ordered the trust to be broken up into thirty-four separate companies. Those companies set the stage for the emergence of the oil industry in the twentieth century.
The thirty-four companies created out of the Trust varied in size and focused on different aspects of the industry. There were pipeline companies, a few crude oil producers, and even Chesebrough, the makers of Vaseline. But the biggest parts of the empire were the refining entities. And the largest of them, representing over forty percent of the Trust’s assets, was the Standard Oil Company of New Jersey, commonly called “Jersey Standard.” This company was the nation’s largest refiner of oil.
Another large child of the Trust was Standard Oil of Indiana, called “Stanolind,” which owned the largest single refinery in the nation, in Whiting, Indiana, across the state line from Chicago. A third refiner was Standard Oil of California, or “SoCal,” but this was a smaller company: California had not yet risen to the prominence it would gain later in the twentieth century.
The Standard Oil Company of New York, or “Socony,” was primarily an exporter of kerosene, sending the Trust’s products all over the world. There were also Standard Oil Companies of Ohio, Kentucky, Nebraska, and Louisiana. The Ohio Oil Company was one of the more rare producing companies in the Trust, controlling wells in Western Ohio. The Atlantic Oil Company served Pennsylvania and Delaware. The Continental Oil Company served the great plains east of the Rocky Mountains. The Magnolia Oil Company primarily served Texas.
Despite the tarnished reputation of the Trust, the Standard Oil name was still known across America, and had great brand value. So when the Trust was broken up in 1911, each of these companies was assigned a geographical region in which they had the rights to market petroleum products under the Standard Oil name, sometimes just using the letters “SO.” This map shows how the nation was divided up:
Note that the map is titled, “Gasoline Marketing Territories.” The map was printed in 1919, eight years after the breakup. In the early years of the oil business, gasoline was considered a useless by-product of kerosene production, and often thrown away. With the rise of the automobile, especially after the breakup, the refiners had to invest in new technologies in order to get more gasoline out of the crude oil. By 1919, gasoline had become an important product to all of the Standard companies. Standard of Indiana not only owned the big Whiting refinery, but also had the largest marketing territory of any of Rockefeller’s offspring.
Over the next one hundred years, these children of Rockefeller would battle each other, enter each other’s trade areas under different brand names, buy and sell oil companies, venture more heavily into crude oil production, focus and defocus on gas stations, and sometimes even partner with each other. Yet, as time passed, they were not the only major players in the oil industry.
Three Big Thorns in the Side of the Standard Companies
The largest and certainly longest-lasting of Standard’s competitors was (and is) the Royal Dutch Shell Company. Shell was created in 1907 through the merger of two older companies, the British Shell Transport and Trading Company and the Royal Dutch Petroleum Company. The Dutch had oil in what would become Indonesia and found more oil elsewhere. British Shell had the facilities to trade and move that oil around the globe. Shell’s first foray into the United States came when they supplied their Asian oil to California Standard. When “SoCal” found its own oil in California, Shell lost that contract, and began producing, refining, and marketing oil in the golden state.
(British giant British Petroleum – “BP” – did not become a factor in the United States until late in the twentieth century.)
Rockefeller and his partners were slow to recognize the potential of Texas oil after the big gusher was hit at Spindletop in East Texas in 1901. Others were not so slow. Two future big competitors arose from the Texas oil strikes.
Gulf Oil was the successor to companies created in 1901 at Spindletop. In the next few years, the wealthy Mellon banking family of Pittsburgh, who also backed Alcoa Aluminum and other companies, got control of this competitor.
In 1902, wildcatter Joe Cullinan founded the Texas Company to exploit new finds in Texas. This company, too, was soon controlled by eastern capitalists. The company branded its gasoline and stations “Texaco.”
Gulf, like other companies in this story, went on to find oil around the globe, including in the Middle East. The Texas Company, “Texaco,” had a greater emphasis on marketing and retailing oil.
The foreign invader Shell and the two Texas upstarts Gulf and Texas soon provided serious competition to the various Standard Oil companies.
More and More Competitors
These future giants were not the only foes for the Standards. Harry Sinclair built a major oil company from his start in the middle of the continent. The company went on to make Dino the dinosaur famous across America. Cities Service company and the Ohio Cities Gas company both provided natural gas to city utilities. In their search for more natural gas, they discovered oil and soon were selling gasoline, under the Cities Service and Pure Oil names, respectively.
Richfield and Union Oil were California upstarts. The Pew family of Philadelphia founded Sun Oil. Their fortune led to the creation of the Pew Research Center, known today for its polls and surveys. Highly successful wildcatter Frank Phillips and his brothers created Phillips Petroleum, later using the Phillips 66 brand. Tide Water Oil used the Tydol brand in the east and later merged with Associated Oil’s west coast operations, known for their “Flying A” logo.
In the automobile age, all of these names became familiar to the motoring public, though each focused on particular regions of the nation. At first, there were no truly national oil marketing companies; no company had gas stations covering the whole country.
The Gas Station: 1920s and 1930s
The first products of the industry, lubricating oils and kerosene, were initially sold in cans by grocery stores, country general stores, and other retailers. Before the automobile, there were no gas stations. As Henry Ford’s Model T, introduced in 1908, began to take off (and drop in price), those same stores provided gasoline in cans.
Auto sales and usage boomed, and soon those retailers began to put curbside pumps along city streets. These were tall and thin, and often sat right on the curb, where we might find a parking meter today. This system only added to the traffic congestion of the big cities, where horses and carriages still competed with the new automobiles.
Independent gasoline dealers and local and regional oil distributors, called “jobbers” in the industry, began to open dedicated filling stations in the 1910s. Many of these stations were “unbranded” as the big oil companies had not yet focused on the power of branding. Customers did not know the quality or purity of the gasoline they bought.
One of the most innovative local gasoline retailers was the American Oil Company and Lord Baltimore filling stations of Baltimore, both owned by the Blaustein family. They and other retailers developed stations with their own driveways, moving their customers off the streets and out of the way of traffic. Over time, service bays were added and the stations began to sell tires, batteries, motor oil, and other auto accessories. Gasoline pump makers also kept innovating, eventually leading to the self-service pumps we know today (which were initially banned by fire marshals for being too dangerous).
The big oil producers and refiners began to understand that the public would trust branded products. To keep their refineries busy, they needed to promote their brands and sign up more independent gasoline dealers, both jobbers and gas station owners. With its big refinery and large marketing region, Indiana Standard led the way, later acquiring the Blaustein’s American Oil, branded as “Amoco.” Each company tried to architecturally differentiate its stations, a practice that continued after World War II.
New York Standard, “Socony,” formerly a petroleum exporter, began to exploit its assigned trade area, New York State and New England. Socony also bought marketer Vacuum Oil Company, General Petroleum to enter the California market, and Magnolia in Texas. In the process of its acquisitions, Socony acquired the Mobil brand and Pegasus, the flying red horse.
Giant Jersey Standard, with its large refining capacity but lack of crude oil supplies, bought the very big Texas producing and marketing company Humble Oil. That acquisition also led Jersey Standard to enter the gas station market in Texas. Prevented from using the Standard name outside its limited geographical area, the company experimented with many different names, including Humble, Esso, and Enco, before settling on Exxon in the 1970s.
In 1926, these were the largest American sellers of gasoline to consumers via service stations:
In the 1930s, auto use continued to rise, and more companies developed more “branded gasoline” stations. These gas stations were organized in many different ways. Rarely were they owned and operated by the big oil companies. Some were operated by jobbers who resold the branded gas. Others were owned by independent businesspeople, who either owned the station or leased it from the big oil companies. Sometimes the station operator owned his own building and simply bought the gasoline from the big oil companies and used their signs and marketing.
The oil companies provided subsidies, cheap rents, signs and marketing materials, and sometimes even the pumps and other equipment. By the late 1920s, Texaco was sponsoring national radio programs, further enhancing their brand and its appeal to the station owners. Eventually, each oil company also offered its own credit card, in order to induce customer loyalty.
Since the old Standard Oil companies could not use the Standard name outside the areas shown in the map, they all adopted new names for at least those stations outside their assigned territories. This table shows the evolving brand names and the number of stations operated under the major brands during this era:
Note that most of the companies had fewer stations in 1938 than they had in 1932. Some of this was because of the Great Depression, but much of the drop came from replacing low-volume, low-profit stations with bigger, more efficient ones. Shell in particular has a long history of building bigger stations, and even today has a far greater share of the U.S. gasoline market than you might think based on how many stations the company has.
The Gas Station in the Second Half of the Twentieth Century
America’s post-World-War-II economic boom was accompanied by increased travel, further boosted by the Eisenhower Interstate Highway System begun in the 1950s. The oil companies intensified their battles for market share at the pump. Television ads for Texaco promoted “The Man Who Wears the Star.” Shell proclaimed premium fuels and gave drivers advice on driving safety and auto maintenance. Gulf tried selling lower-grade fuel at a lower price, Gulftane. Sun Oil (Sunoco) offered a higher grade of fuel, and eventually had pumps on which the customer could select from multiple grades of gasoline. Individual oil companies handed out as many as thirty million free road maps a year. Customers were wooed with trading stamps, free glassware, contests, and premiums of every sort.
In the course of this boom, the oil companies continued their history of merges and acquisitions. SoCal bought Standard Oil (Kentucky) with its valuable southeastern territory in 1961. Union of California bought Pure in 1965. Atlantic and Richfield merged to form Atlantic-Richfield (ARCO) in 1966. ARCO in turn bought Sinclair in 1969. In 1968, British Petroleum entered the US by buying Ohio Standard (and later buying ARCO and Indiana Standard, which had been renamed Amoco after its primary brand). With each merger, after selling off some stations and territories as required by the monopoly-wary Federal Trade Commission, new names appeared in new geographical areas.
Many companies tried to enter the lucrative California market, but were often rebuffed by the strength of SoCal, now branded Chevron, and the two smaller west coast companies, Union 76 (Unocal) and Richfield.
Texaco, Shell, Gulf, and even Phillips 66 made efforts to serve all forty-eight states, but sometimes had to back off from their efforts. Discoveries of new oil, depletion of old wells, and construction of new refineries all played a role in each company’s strategy. And all along, fewer, bigger stations replaced smaller, older ones. Rockefeller’s small Ohio Oil company evolved into Marathon, which bought and developed the Speedway brand with its very large stations with many pumps. Others followed its lead. Self-service pumps came on the scene in a big way. Convenience stores chains led by 7-11 entered the business. The convenience stores could add gasoline without adding employees, drawing more frequent traffic to buy their other merchandise.
Here are the top sellers of gasoline in America during this period:
The oil crisis and Arab Oil Embargo of the 1970s, accompanied by much higher gasoline prices, brought much of this post-war expansion to an end. The fates of individual companies varied, as some were better managed (Exxon, Chevron, Shell) than others (Mobil, Gulf, Texaco).
The Last Forty Years
Since 1980, the industry has witnessed continuous change. Many stations changed hands. In 1985, Socal, now renamed Chevron, bought Gulf and converted their stations to the Chevron brand. (Some stations lived on as Gulf in the northeastern U.S.) Shell and Texaco merged their U.S. refining and marketing operations. Texaco the producer and refiner was bought by Chevron in 2000 but many of their stations were taken over by Shell, retaining their Texaco signs for a few years. In 1998, Exxon took control of Mobil, creating an even larger behemoth. (The Federal Trade Commission had many times stopped the mergers of much smaller companies, but perhaps now it was becoming apparent that the big companies had challenges of their own, and threats of monopoly power were no longer a concern.)
Full-service gasoline stations disappeared except in Oregon and New Jersey, where self-service is still illegal. Service bays also went away as Jiffy Lube and similar companies rose up. The “Man who wears a star” and takes care of your car – and washes your windshield and checks your oil – is long gone. AutoZone, O’Reilly, NAPA, and Advance took over the auto parts and accessories business while new tire store chains stole that lucrative part of the business.
The biggest change in recent decades has been the rise of the big chains operating combined gas stations and convenience stores. Convenience store giants 7-11 and Circle K were joined by regional operators like Maverik in the middle of the country and Pennsylvania’s Wawa and Sheetz. Speedway’s big, multi-pump locations were followed by upstarts including QuickTrip (QT) and Racetrac. Truckstop operators Flying J, Pilot, and Love’s built large new facilities. In 2020, the parent company of 7-11 paid $21 billion to buy the Speedway outlets from Marathon Oil. Now approaching 70,000 locations worldwide (not all sell gas), 7-11 is the world’s largest retail chain by store count.
Yet, through all these turbulent changes, one brand name reigns supreme at America’s gas pumps, and it is not even an American brand. As of 2019, Shell held an estimated 12.5% share of “motor fuel” sales in the United States, double the 6-6.2% shares of ExxonMobil and Chevron. Shell may not have the most stations, but their sales per station is high. Globally, Shell is sold through 46,000 branded locations, more places than either McDonald’s or Starbucks, or any other oil company (BP is second with 30,000+ locations).
Possible Marketing Lessons
A side story has relevance here.
In about 1970, your writer was browsing the stacks in the big University of Chicago library, a block from his dormitory. He stumbled across a dissertation or paper on oil company marketing. While the details are lost in his memory, he recalls that the main conclusion of the study was that the strongest brand in America, the most trusted and respected at the time, was the one reflected in this powerful logo:
As indicated in the preceding paragraphs, Indiana Standard did not stick with this logo, eventually changing to Amoco and now BP. Socony changed to Mobil, Jersey Standard to Exxon. Once prominent brands Texaco, Gulf, and Sinclair declined and sometimes disappeared in mergers. It is hard to believe that all these changes did not affect customers and their loyalty. (An even greater case can be made for the branding destruction done by all the mergers in the banking industry.)
So who “won” these battles at the pump? Shell won. Shell is the one company that has had the same logo, the same brand identity, from the outset. The company’s success in the United States has been through internal growth rather than a lot of big acquisitions. Though Shell has been as ambitious as the other companies in finding new oil and controlling tankers and refineries, the company seems to have kept its eye on marketing more than any competitor. In recent years, it passed up ExxonMobil to become the world’s biggest oil company in revenue. (In 2020, BP took the lead, followed by Shell and then ExxonMobil.) Perhaps John D. Rockefeller has finally met his match, in these two “foreign intruders” that have had such a big impact on American business history.
American Business History Center