An oil man in the pre-Rockefeller-era nineteenth-century petroleum industry described it as “resembling a chicken coop: a lot of pecking, clucking and flying feathers.” Another observer offered a different analogy, comparing oilmen to cats since “you can't tell from their screaming whether they are fighting or making love.” Cutthroat competition and predatory price slashing prevailed in the new industry. Excess production and overcapacity soon emerged as a constant problem. This was especially true for the capital-intensive refineries that required a high-volume, low-cost production flow that inevitably resulted in periodic gluts, especially severe during business downturns.
Starting with his horizontal consolidation of refineries in the 1870s, John D. Rockefeller had by 1890 imposed order on all facets of the American petroleum industry—upstream from wellheads and downstream to retail consumers—through vertical combination. How he accomplished this by hook and crook, which is of course well known to business historians, is treated only briefly in this work. Much less familiar is the tripartite contest on the international scene between the Rockefeller forces and two international companies—one British (Shell Oil) and the other Dutch (Royal Dutch Petroleum Company)—that eventually merged.
Relying almost exclusively on secondary resources, Peter B. Doran, an international security and energy analyst, has told in a clear and engaging style the fascinating story of battling tycoons that well rewards reading. A final chapter as an addendum briefly traces the ongoing profound changes in the energy industry as a result of technological innovations in exploration and drilling and, most importantly, the increasing availability and importance of natural gas.
This book presents no new historical material or insights. The author emphasizes the overwhelming importance of entrepreneurs and competition in shaping the industry and its changes. Unfortunately, he does not adequately develop or support his assertion that the Royal Dutch Shell group “toppled” Rockefeller's dominance of the industry. More plausible is the view that the discovery of vast oil fields in Texas after 1901, which encouraged vigorous domestic competition combined with state and federal antitrust actions by legislatures and the courts, changed the American oil industry from near monopoly to near oligopoly by World War I. No matter; Doran has certainly selected intriguing personalities to examine and a spellbinding story to tell.
Marcus Samuel Jr. (1853–1927) was a Jewish merchant trader from London's East End who inherited his father's Victorian import-export business in painted seashells (hence the initial official name of his oil company, the Shell Transport and Trading Company), which he transformed into a major force in the international petroleum industry. He did this by pioneering the development of dedicated large tankers capable of traversing the Suez Canal to bring oil supplied by the middlemen Rothschilds from the Baku field to Asia. In Asia, Samuel competed primarily with Henri Deterding's (1866–1939) Royal Dutch Petroleum Company, which had been founded in 1890 to develop oil fields in Sumatra. To compete effectively on a global scale with Rockefeller's Standard Oil, Samuel and Deterding created an amalgamation of their two companies in 1907 as the Royal Dutch Shell Group. This creation, however, was a dual-listed company in part because neither party was prepared to forsake their national identity or loyalties. True to their primary roles, the Dutch were responsible for production and refining and the Brits for transportation and storage of product. To this day, the British Dutch multinational oil and gas company, although greatly altered in structure and strategy, is headquartered in Amsterdam and incorporated in the United Kingdom.
For his patriotism and service to the crown, Marcus Samuel was created Viscount Bearstead in 1925. Deterding, until his resignation from Royal Dutch Shell in 1936, sought vainly to create a single-selling cartel for all major oil producers.
Peter Doran has written an informative, reliable, and readable book, but Daniel Yergin's The Prize: The Epic Quest for Oil, Money, and Power (1993) and The Quest: Energy, Security, and the Remaking of the Modern World (2011) remain the gold standard for the history of the oil industry.
