Rockefeller and His Partners Built Standard Oil
19 hours ago
- #John D. Rockefeller
- #Industrial History
- #Standard Oil
- Standard Oil's success was driven by returns to scale and capital efficiency, not just railroad deals as often portrayed.
- John D. Rockefeller started in the oil industry in 1863 after a successful career in trading, leveraging his reputation and connections.
- Early refining was highly inefficient, with a barrel of crude oil nearly equaling the price of a gallon of refined kerosene.
- Rockefeller's refinery, Excelsior Works, became the best in Cleveland due to continuous improvements and cost reductions.
- Refining benefits enormously from scale, with costs decreasing significantly as capacity increases.
- Standard Oil consolidated the refining industry in the 1870s, buying out competitors and integrating their assets and expertise.
- Transportation advantages, like railroad discounts, were minor compared to the cost savings from scale and technology.
- Standard Oil expanded globally, using innovative legal structures like the trust to manage multi-state operations.
- The company heavily invested in intellectual property, acquiring patents and technologies to maintain its competitive edge.
- Rockefeller's strategy mirrored modern tech titans, focusing on talent, technology, and efficient distribution.