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From: fagin@ucbvax.ARPA (Barry Steven Fagin)
Newsgroups: net.politics
Subject: Supposed monopolies: Standard Oil (article 2 of 4)
Message-ID: <9561@ucbvax.ARPA>
Date: Thu, 1-Aug-85 18:36:22 EDT
Article-I.D.: ucbvax.9561
Posted: Thu Aug  1 18:36:22 1985
Date-Received: Sat, 3-Aug-85 02:44:56 EDT
References: <974@umcp-cs.UUCP> <7800361@inmet.UUCP> <1038@umcp-cs.UUCP>
Reply-To: fagin@ucbvax.UUCP (Barry Steven Fagin)
Organization: University of California at Berkeley
Lines: 42

Regarding Charley Wingate's conjecture that Standard Oil exercised
monopoly powers before the government intervened:

(Taken almost entirely from Kolko's book *The Triumph of Conservatism*)

Standard Oil never threatened to control oil production, producing 11% of
the nation's oil in 1906, but instead
focused on refining and sales.  The following table shows Standard's
difficulty at holding a monopoly on oil refining:

date	market share
1899		90%
1904-1907	84%
1911		80%	

The decree issued in 1911 ordering Standard Oil to dissolve contibuted
further to this decline, but it certainly did not start it.  Kolko also
notes that crude and refined oil prices for consumers declined during the
period Standard exercised greatest control of the industry, from
1875-1895, and then rose in step with consumer prices.  At the turn of 
the century it Standard Oil faced mounting competition
from Pure Oil, Associated Oil of California, the Texas Company, and Gulf
Oil.  

Aside from incompetent management, Standard's downfall was brought about
by the radical changes in the use for oil as a result of the automobile
and electricity.  Standard had been concentrating on illuminating oils and
kerosene, which accounted for 63% of industry production at the turn of
the century.  By 1919, however, electricity had made that obsolete,
and fuel oil was the coming thing.  Between 1910 and 1925 auto registration
increased by a factor of forty, and gasoline distribution became the
central core of the industry.  The independent oil companies seized this
opportunity, pioneering in  gas stations just like they had surpassed
Standard in developing improved tank cars, trucks, and most other
innovations in the petroleum industry.

In short, Standard Oil's attempt to control the oil industry was a
bust.  Things only got interesting when the feds got involved.

--Barry
-- 
Barry Fagin @ University of California, Berkeley