How Rockefeller’s Standard Oil Trust Became Chevron, ExxonMobil, BP, and Marathon

While big tech companies are now feeling the heat from regulators and Congress, more than a century ago trusts had their eyes on Big Oil.

Around the beginning of the twentieth century, Big Oil to be John D. Rockefeller’s Standard Oil Trust.

By 1904, the company monopolized control of 91% of the US oil market and 85% of final sales. But it was in the very first days of 1863 that Rockefeller first founded the company that would later become synonymous with “black gold”.

Through a network of acquisitions, Standard Oil will eventually run around 40 companies in total – with 14 wholly owned by the parent group. Standard Oil also stands out as the first billion-dollar company in history.

By 1913, Rockefeller’s Personal Property grew to $900 million – a staggering 3% of the entire GDP of the United States. In modern dollars, that’s almost $25 billion.

Although Standard Oil had become the largest company in the world, even at its peak it was never listed on the New York Stock Exchange. Instead, Standard stock is traded over the counter or off the NYSE on Broad Street in what is known as New York Street Market or just “canyon”.

Big farewell

The Sherman Antitrust Act was passed into law in 1890 and is still being tested in court as Teddy Roosevelt and the Trustbusters appreciate Standard Oil. It took a Supreme Court ruling in 1911 to finally order the massive fortune to be divided into 34 companies.

For example, Standard Oil of New Jersey, will eventually become Exxon, while Standard Oil of New York (Socony) will become Mobil. After the disaster Exxon Valdez oil spill in Alaska in 1989, the Exxon brand was damaged, and the company merged with Mobil a few years later.

Standard oil division

Standard oil separation (Source: Visual Capitalist)

An analogy series of mergers and acquisitions led to the emergence of the Big Four oil companies we know today: ExxonMobil (XOM), Chevron (CVX), BP (BP), and Marathon (MRO).

70’s to present day

After Arab oil embargo During the 1970s, energy stocks rallied as gas and oil prices skyrocketed. The energy of weight in the S&P 500 increased from 7% in 1972 to 28% by the end of 1980.

During the bull market of the 80s and 90s, the energy sector saw a relative decline in its position, falling to about 5% of the S&P 500 in 2000.

Oil prices rebounded during the Global Financial Crisis, touching near $150 a barrel in 2008 before crashing as the world entered a recession. At the beginning of 2013, ExxonMobil was the largest company by market capitalization in the world; The company will hand that title back to Apple later that year.

This year, energy has been the best performing sector in the market by an extra mile, with the S&P 500 Energy Sector (^ GSPE) is up 60% by 2022. ExxonMobil is up a similar percentage, while some smaller players like Occidental Petroleum (OXY) has more than doubled.

While Apple (AAPL) remains the largest US company by market capitalization, Saudi Aramco (2222.SR) – just reported a record profit of $40 billion last year quarter – is currently the largest publicly traded company in the world.

Today, energy stocks make up just 5.1% of the S&P 500 index – less than before the crash of the 1970s. Should Big Oil ever take the throne from Big Tech, the company still have 28% market share?

Only history will tell, but in the meantime, oil prices probably won’t drop until Powell and the Fed Inflation is under control.

Last Thursday, even OPEC+’s target production increase was 50% inevitable spike in crude oil prices. And this as consumers are pushed to the brink by record-high gas prices, with those who pay nearly $10 per gallon in California, where the state average is $6.34.

Jared Blikre is a market reporter on Yahoo Finance Live. Follow him @SPYJared. Devan Burris is the producer of Yahoo Finance Live.


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