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Integration Into Crude Oil Transportation in the 1930's – A Case Study: The Standard Oil Co. (Ohio)*

Published online by Cambridge University Press:  24 July 2012

Catherine C. Ellsworth
Catherine C. Ellsworth
Affiliation:
Associate in Research atHarvard Graduate School of Business Administration
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Abstract

This searching probe goes beneath the common generalizations about integration to reveal in detail the causes, techniques, and results, not only as they relate to costs but also to problems of competitive strategy and over-all administration.

Type
Research Article
Information
Business History Review , Volume 35 , Issue 2 , Summer 1961 , pp. 180 - 210
Copyright
Copyright © The President and Fellows of Harvard College 1961

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References

1 Under the Hepburn Act of 1906, all interstate oil pipelines engaged in the business of transporting oil were placed under the jurisdiction of the Interstate Commerce Commission. Such pipelines were required to accept for transport the oil of other companies not owning pipelines. 34 Stat. 584. See also The Pipe Line Cases, 234 U. S. 548 (1914).

2 The storage of gasoline on a large scale is expensive and extremely hazardous.

3 Excerpts from a paper presented by Pogue before the Tulsa meeting of the American Institute of Mining and Metallurgical Engineers as reported in the Oil and Gas Journal, Oct. 10, 1929, p. 138.

4 Moody, John, The Truth About the Trusts (New York, 1904), p. 124Google Scholar.

5 Standard Oil Co. of New Jersey v. United States. 221 U. S. 1, 31 Supreme Court 502 (1911).

6 For a detailed description of the company's price policies during this and later periods see E. P. Learned and C. C. Ellsworth, Gasoline Pricing in Ohio, published by Division of Research, Harvard Business School, 1959.

7 The company both owned and operated a considerable number of retail gasoline service stations selling its products.

8 Standard Oil Co. (Ohio): Ajax Brief — Arguments for Reduction in Pipeline and Other Transportation Rates On Crude Oil, April 20, 1933.

9 Company Records: Memo Re 722 Claims by S. A. Swensrud.

10 Name later changed to Esso Standard Oil Company.

11 Company Records: Agreement — Standard Oil Co. (N.J.), The Pure Oil Co., Standard Oil Co. (Ohio), December 20, 1930.

12 Annual Report for 1930, p. 9.

13 The East Texas field, discovered in 1930, has been the largest and most productive oil field in the United States up to this time.

14 Annual Report for 1932, pp. 14 and 21.

15 The states involved tried forcible prorationing through quotas but even apart from the difficult legal questions involved, prorationing for some years proved impossible of satisfactory enforcement. The petroleum illegally produced outside the quotas was the so-called “hot oil” while gasoline manufactured from it was “hot gasoline.”

16 Company Records: Memo to W. T. Holliday Re Ajax Pipe Line Figures Over a 10-year Period, February 13, 1934.

17 Company records: Memo to W. T. Holliday, May 22, 1936.

18 Ibid.

19 Standard Oil Co. (Ohio): Amended Application for Special Relief Under Internal Revenue Code, Sec. 722, 1941.

20 Ibid.

21 Ibid.

22 McLean and Haigh, The Growth of Integrated Oil Companies, p. 663.

23 Ibid.

24 Ibid., see pp. 239–254.