fagin@ucbvax.ARPA (Barry Steven Fagin) (08/02/85)
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
mangoe@umcp-cs.UUCP (Charley Wingate) (08/05/85)
In article <9561@ucbvax.ARPA> fagin@ucbvax.UUCP (Barry Steven Fagin) writes: >The following table shows Standard's >difficulty at holding a monopoly on oil refining: >date market share >1899 90% >1904-1907 84% >1911 80% I dunno, 80% seems pretty damn large to me. >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. Which goes to show another reason why monopolies are undesirable; they can do a lot of damage when they collapse. The current distress in the auto industry is a prime example. C Wingate