Stories from PA History
Striking Oil
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Striking Oil
Chapter Three: Growth and Organization

During the 1860s, small producers and regional businessmen in "Petrolia", as the oil region became known, comprised the backbone of the search for oil. Various companies evolved to contend with the various processes and hardware necessary to the petroleum industry. These included the markerOil Well Supply Co., markerJos. Reid Gas Engine Co. and the markerTidewater Pipe Co. Individuals such as Franklin S. Tarbell, a barrel maker who moved to Titusville in 1870, established a wooden stock tank business in Venango County. Small oil producers united to form the markerTitusville Oil Exchange to protect themselves against larger, more powerful outside interests. And, John Archbold, owner of the successful Acme Refinery, later rose to prominence as head of Standard Oil of Ohio.
A group of several dozen formally dressed businessmen pose on a sidewalk in front of a clapboard building.
Parker Oil Exchange poses for a photograph in 1874.

In addition to the efforts of small entrepreneurs, John D. Rockefeller, owner of a wholesale commercial warehouse business, from Cleveland, Ohio, devised a large-scale strategy that sought to stabilize the industry's boom-to-bust cycle and resulted in monopolization of the oil fields and created one of the greatest fortunes in American history. Indeed, his plans and actions, implemented in Northwestern Pennsylvania, would substantially advance the power and influence of corporate America. In 1871 Rockefeller and business associates created the South Improvement Company. Although the company owned very little property in the Pennsylvania oil regions, it gained control over the purchase of crude and the railroads over which it was transported. As a result, Rockefeller held Pennsylvania's oil supply in a tight grip.

Without effective local control of their commodity, regional businessmen soon lost power and commercial stability. In a last effort to regain an upper hand, some producers banded together in the early 1870s and elected not to sell their crude oil to the South Improvement Company. It was a calculated risk, of course, because it meant that their market would be severely restricted. The national press referred to the standoff between small producers and Rockefeller as The Oil War. Refiners also supported local producers against the South Improvement Company, which had planned to make Cleveland and Pittsburgh the only refining points for Pennsylvania crude oil. In response, Oil Creek refiners shut down their operations and halted most oil production. After forty days, they had curtailed the power of the transportation monopoly and production began again. Those involved in the industry had learned the positive outcome of banding together.
A portrait of Ida Tarbell and an inset photograph of a cover of McClure's Magazine with John D. Rockefeller's portrait.
Ida Tarbell and McClure's Magazine cover featuring photograph of John D. Rockefeller.

However, the triumph over the South Improvement Company was temporary. Soon Rockefeller laid the groundwork for control of the entire industry while using companies such as markerGalena-Signal Oil, and later markerJacob J. Vandergrift's pipeline operation, to achieve his goal. Rockefeller formed the Standard Oil Company of Ohio and by 1879 it controlled 90 percent of the U.S. refining capacity, most of the rail lines between urban centers in the Northeast and many of the leasing companies at various sites of oil speculation. Throughout the 1870s and early 1880s, Standard Oil furthered its dominance over the refining industry. By 1882 the company formed the Standard Oil Trust, a new innovation in business integration that allowed companies to expand and monopolize control of their industries and markets. Within such a corporate framework, Rockefeller made his fortune and muffled the independence of the early oil boom.

Many individuals criticized his ruthlessness. Watching from the family home in Titusville, markerIda Tarbell saw her father lose his barrel and tank business because of Standard's dominance. By 1900, Ida Tarbell had become a well-known writer. In 1902, McClure's, a popular magazine of the period, published the first installment of what became her History of the Standard Oil Company. Her exposé of Standard Oil and Rockefeller's business ethics helped to inspire unprecedented federal anti-trust statutes and, in 1911, the break-up of Standard Oil into eleven individual companies.

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