As America’s first billionaire, few individuals in history can compare with John D. Rockefeller Sr. His wealth around the turn of the 20th century would be worth roughly twenty-two billion dollars in modern United States dollars. It is undeniable that Rockefeller changed the landscape of the American petroleum industry by defining the nature of oil production. By 1883, Rockefeller was laying the foundations for what we now know as the vertically integrated company and the modern multinational. The fruit of Rockefeller’s labor, the Standard Oil companies, controlled ninety five percent of petroleum refining and transport by 1880. It would not come as a surprise, given Rockefeller’s opulence, to find Standard Oil and its business
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In a monopolistic environment, a single firm dominates the industry by being the sole seller without close substitutes, setting the price for their products, and maintaining a high barrier to entry preventing competition. Given this definition, it becomes apparent that the monopoly undermines social and economic progress in an industry. In the case of Standard Oil, a constant demand for petroleum products allowed the trust to operate without need for innovation. Without competition offering alternatives to the output of Standard Oil, consumers had no choice but to accept whatever product Standard Oil distributed. Therefore, a company wanting to capitalize on profits has no desire to spend precious capital on innovations in its products or to provide a superior product. Not only does a monopoly operate without competition, it takes measures guaranteeing its sole dominance over the industry.
Standard Oil, the owner of most of the tank cars on the New York Central and Erie, dictated to the railroads which refinery competitors could use their cars. Secret ownership or control of pipelines gave Standard oil the ability to delay or refuse competitors’ deliveries and charge them premium rates. Barrel manufacturers were told not to supply Pittsburgh refiners if they wanted Standard Oil’s business.
As a result of Standard Oil’s high volume of business with the transporters of its products, Rockefeller was offered enormous influence over the business