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Most people have probably heard this story. That Standard Oil obtained a monopoly on crude oil through dirty tactics (and being a pioneer of the emerging oil market). Upon obtaining a monopoly on the crude oil market, Rockefeller price gouged his consumers until the rough rider Teddy Roosevelt came to the rescue and made the company break apart. Thus, Rockefeller was cemented as one of the robber barons, people at the top who got rich at the expense of everyone else and was hurting the little guy. This story is often used to support
But is there anything missing from this story?
Well, it is true that Standard Oil was able to obtain a very large share of the crude oil market (largely because it was an emerging market). Some economic historians have observed that Standard Oil was gradually losing its share of the oil market by the turn of the 20th century. In 1880, Standard Oil held around 90% of the oil market. By 1911, this percentage had declined to 60-65% (still a majority but clearly a decline) due to the rise of competitors. This was especially true in the west where the company only held 44% in the midcontinent, 29% in California, and 10% in the Gulf coast. Standard Oil was more dominant in the eastern US which had more established infrastructure but even there, Standard Oil's share of the market was declining (78% in 1911 from 92% in 1880). At no point did Standard Oil get 100% of the market, except in the Illinois basin in 1906 (and even there, it had fallen to 83% by 1911).
Another thing that most people don't know is that the breakup made Rockefeller richer than he was before. You see, Standard Oil was broken up into 32 companies. The individual pieces of the former company soon proved to be worth more than the whole as they grew quickly. Through his shares in each of those companies, Rockefeller became America's first billionaire. Even though the breakup of Standard Oil happened in 1911, Rockefeller was at his richest in 1913 when he held 1.5-2% of America's wealth which is $409 billion in 2018 dollars. By comparison, Jeff Bezos held $112 billion in March of 2018, Bill Gates had $90 billion, the Waltons had $89.5 billion, and the Koch brothers had $120 billion. In today's wealth, Rockefeller almost had more wealth than all of those figures combined in 1913.
But is there anything missing from this story?
Well, it is true that Standard Oil was able to obtain a very large share of the crude oil market (largely because it was an emerging market). Some economic historians have observed that Standard Oil was gradually losing its share of the oil market by the turn of the 20th century. In 1880, Standard Oil held around 90% of the oil market. By 1911, this percentage had declined to 60-65% (still a majority but clearly a decline) due to the rise of competitors. This was especially true in the west where the company only held 44% in the midcontinent, 29% in California, and 10% in the Gulf coast. Standard Oil was more dominant in the eastern US which had more established infrastructure but even there, Standard Oil's share of the market was declining (78% in 1911 from 92% in 1880). At no point did Standard Oil get 100% of the market, except in the Illinois basin in 1906 (and even there, it had fallen to 83% by 1911).
Another thing that most people don't know is that the breakup made Rockefeller richer than he was before. You see, Standard Oil was broken up into 32 companies. The individual pieces of the former company soon proved to be worth more than the whole as they grew quickly. Through his shares in each of those companies, Rockefeller became America's first billionaire. Even though the breakup of Standard Oil happened in 1911, Rockefeller was at his richest in 1913 when he held 1.5-2% of America's wealth which is $409 billion in 2018 dollars. By comparison, Jeff Bezos held $112 billion in March of 2018, Bill Gates had $90 billion, the Waltons had $89.5 billion, and the Koch brothers had $120 billion. In today's wealth, Rockefeller almost had more wealth than all of those figures combined in 1913.