Standard Oil

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Lore & Background

In the 1911 breakup, the Supreme Court found that Standard Oil conspired to restrain the trade and commerce in petroleum, and monopolized the commerce in petroleum, in violation of the Sherman Antitrust Act. Standard Oil's largest direct descendants which today are still their own independent companies are ExxonMobil, a merger of the Standard Oil Companies of New Jersey and New York, and Chevron, a rebranding of the Standard Oil Company of California since its own acquisition of Gulf Oil. ExxonMobil is mostly composed of the Standard Oil Company of New Jersey (Jersey Standard) and the Standard Oil Company of New York (Socony). The two companies partnered on a semi-frequent basis during their infancy before pursuing mergers and acquisitions, with Jersey Standard buying Texas-based Humble Oil and Socony merging with Standard descendant Vacuum Oil to form Socony-Vacuum. In retail, Jersey Standard used three brand names: Esso, Enco, and Humble. Jersey Standard announced it would rebrand all of its stations as Exxon in 1973, and changed its corporate name to Exxon Corporation simultaneously. Socony-Vacuum gradually began to use Mobiloil and Mobilgas as trade names, and the company eventually changed its name to Mobil Corporation in 1955. In the late 1990s, the two companies began merger talks and the deal was closed with American regulatory approval in November 1999.

Reader's Guide

Chevron originated as the Pacific Coast Oil Company, which Standard Oil acquired in 1900, renaming it the Standard Oil Company of California. From the 1930s onward, CalSo invested primarily in California and the Arabian Peninsula, with its operations there eventually being fully bought out by Saudi Arabia's government in 1980 and merged into what is today known as Saudi Aramco. In 1961, CalSo acquired Standard Oil of Kentucky. In 1985, CalSo purchased Gulf Oil, creating the third largest oil company in the United States and becoming the largest merger in US history up to that point. Simultaneously, CalSo rebranded as Chevron Corporation. Chevron made another acquisition in 2001, acquiring Texaco, and temporarily renamed itself to ChevronTexaco Corp. between 2001 and 2005. After the 1911 breakup, Standard Oil of California signed an agreement with the Kingdom of Saudi Arabia to create a joint venture. Originally named the Californian-Arabian Standard Oil Company and later the Arab American Oil Company, Saudi Arabia fully bought out Standard Oil of California's stake in 1980, with the company abbreviating its name to Saudi Aramco. In 2022, after Russia's invasion of Ukraine caused increased oil demand, Saudi Aramco recorded $161 billion in profit for the year.

Did You Know?

• Standard Oil was broken up into 39 different entities following the 1911 Supreme Court ruling.
• ExxonMobil was formed from the merger of Standard Oil of New Jersey and Standard Oil of New York in November 1999.
• Saudi Aramco traces its origins to a partnership between Standard Oil of California and the Kingdom of Saudi Arabia.
• In 1985, Chevron's purchase of Gulf Oil was the largest merger in US history up to that point.
• Saudi Aramco recorded $161 billion in profit in 2022 after Russia's invasion of Ukraine caused increased oil demand.

The Cartel That Shaped a Century

The story of the world's dominant oil corporations stretches back to a tightly coordinated cartel that, from the mid-1940s through the 1970s, effectively controlled the global petroleum trade. Even when the discovery of enormous Saudi reserves threatened to unravel the arrangement, four of the seven managed to share control of those fields, preserving the cartel's internal discipline. The system was less a free market than a carefully managed club in which production speed, pricing, and territorial expansion were all negotiated in advance.

Naming the Giants

The labels we use to describe these corporations carry their own history. In the United States especially, the term underscores the industry's economic clout and its influence over political outcomes, often linking it directly to the fossil-fuel lobbying apparatus. Today, the most commonly cited supermajors include ExxonMobil, Shell, TotalEnergies, BP, Chevron, and—before ConocoPhillips spun off its downstream arm into Phillips 66—Eni and ConocoPhillips as well.

Squeezing the Host States

Behind the scenes of the cartel's dominance lay a relentless campaign to keep host governments weak and compliant. The seven companies worked to minimize the taxes and royalties owed to the nations whose soil held the oil. When one government raised its levy, the sisters would throttle production there while ramping output in lower-tax territories, effectively punishing the defiant state and pressuring it to back down. They also leaned on the diplomatic muscle of British and American governments to coerce reluctant leaders. Nationalization was no easy path for producing nations: many were still under imperial control, others had compliant heads of state installed by great powers, and still others lacked the capital, technical know-how, and market access needed to operate independently. The 1951 Iranian nationalization, followed by an international embargo, illustrated the stakes.

Beyond the Supermajors

Despite their historical dominance, the supermajors no longer sit at the very top of the global oil revenue table. Yet the popular label 'Big Oil' still tends to exclude these national producers and OPEC members, even though they wield far greater influence over global price-setting than the Western supermajors. The term, in common usage, points specifically to the handful of publicly traded, investor-owned firms rather than the full spectrum of the industry. In the maritime world, a related but distinct grouping called the 'Oil Majors' refers to the six or seven large companies that collectively decide the majority of crude oil tanker chartering business.