From the late 1800s to the early 1900s, Standard Oil dominated the oil industry and developed into one of the United States largest oil refiner. Beginning in 1870, as John D. Rockefeller became concerned about the volatility of the oil market, Rockefeller incorporated the Standard Oil Holding Company in Cleveland, Ohio. He desired to bring stability to the oil markets by creating partnerships and acquiring refineries. Within a few years, Rockefeller arranged “special” contracts that provided shipping rates unattainable by his competitors. By 1885, Standard Oil controlled approximately ninety-five percent of the refinery market.
He then brought his brother, who had also built a refinery, into the partnership. This made their firm the largest oil refinery in the world and marked the beginnings of Standard Oil. In June 1870, Rockefeller established Standard Oil Company. It was situated in Cleveland, which had become one of the five main refining centers in the U.S. It began to grow rapidly and soon became t... ... middle of paper ... ...kefeller as unethical and a “Robber Baron”, he was a devout Baptist and was one of first great philanthropists.
The Rockefellers feared the temptations of wealth, yet a visitor once described their estate as the kind of place God would have built if only he’d had the money. They amassed a fortune that outraged a Democratic nation, then gave it all away reshaping America. They were the closest thing the country had to a royal family, but the Rockefellers shunned the public eye. For decades, the Rockefeller name was despised in America, associated with John D. Rockefeller Sr.’s feared monopoly, Standard Oil. By the end of his life, Rockefeller had given away half of his fortune.
Little did the public know, the success of the company was a gigantic lie, and possibly the largest example of white-collar crime in the history of business. The roots of the lies start with former Enron CEO Kenneth Lay. This man helped bring together a number of smaller energy companies, namely InterNorth International and Houston Natural Gas Corporation, through horizontal mergers to form Enron Corporation. Lay fought for natural gas and electricity deregulation, which would open opportunities for huge profit in the industry. In 1994, states were given the choice of deregulation for these utilities, meaning customers could choose their utilities provider instead of being cornered by one company.
In 1870, Rockefeller, along with Samuel Andrews and Henry M. Flager incorporated the Standard Oil Company (The Editors of Encyclopædia Britannica). Rockefeller’s Standard Oil began prospering and soon began buying out competitors. In 1872, the company had almost complete control over all the refineries in Cleveland. With such power, the company could negotiate... ... middle of paper ... ...The U.S government took action against the company again in 1906 under the Sherman Anti-Trust Act.
Later in the fall of 1869 Gould and Fisk conspired with the brother-in-law of President Ulysses S. Grant to corner the gold market, causing the panic of "Black Friday," September 24, 1869, and a tremendous margin call for Gould. He was even reported as telling his partners to buy as he was selling tremendous volumes of gold. After the crash his partners were left with nothing as Gould went long the market at the lowest levels. Gould continued to loot the Erie until his departure in 1872. His role in the Erie War and the attempted gold corner gave him a reputation as the prime financial predator of the age.
"Oil companies have escaped more than 60 billion dollars in royalties because of a loophole to get access to more leases. The United States is the third largest producer of oil in the world, and 31 percent of that production comes from land owned by the federal government" (Offshore Drilling Will Enrich Big Oil Companies 2). America maintains this title even though "America's crude oil productivity has decreased since 1985" (Crude Oil Production 1). Currently, oil is becoming more expensive and damaging the economy while America is becoming more dependent on foreign oil; decreasing productivity and narrowing offshore drilling. The oil industry is making an immense profit.
In 1909 due to antitrust laws, the Federal courts ordered the break-up of Standard Oil Company by dividing it into Thirty-four separate companies. Standard Oil went on to dominate the first Twenty years of the oil and gas industry, and the U.S. accounted for more than half of the world 's production until around 1950. As the industry grew and became more global in nature, other world markets in Europe, Russia and Asia, began to play a much greater role. New industry giants arose such as the likes of, Shell, Royal Dutch, and Anglo-Persian, which is now today’s British Petroleum, also known as BP (The Library of Congress, 2011). As the oil and gas industry unfolded over some years, Standard Oil of New Jersey went on to become Esso, and later Exxon, Standard Oil of New York became Mobil, and Standard Oil of California is now Chevron.
Widespread media made the public aware of the growing monopolies that was the cause of their unemployment and the high prices of consumer products. By 1890 Rockefeller’s company owned 88% of America’s oil production and refineries (Selwyn-Holmes). However, his progress was halted when the government finally decided to take action and passed the Sherman Antitrust Act of 1890, triggering others to follow. The trust was dissolved, and in the early 20th century, Standard Oil was forced to divide, resulting in several independently owned oil companies. The Standard Oil Monopoly has finally reached its
Reason / Background The major downfall and/or reorganization of companies have cost: lost securities, downsized or vacancies in employment, lost or minimized retirements, and assisted in the economic recession. The following companies have been involved in varying experiences that led to financial improprieties and unethical decisions. Enron “Boosted profits and hid debts totaling over $1 billion by improperly using off-the-books partnerships; manipulated the Texas power market; bribed foreign governments to win contracts abroad; manipulated California energy market” (Brag, 2002, para. 9). The behavior exhibited by Enron’s former CEO Kenneth Lay showed that large and successful appearing companies are not exempt from human error.