The Oil Buisness

By: Adrian

John D. Rockefeller

At the age of 26 John and four partners set up in oil refinery to process oil in Cleveland, Ohio. In 1870 he acquired most of the oil refineries in Cleveland and other cities.

Horizontal Integration

One method Rockefeller used to build his empire was horizontal integration, which is combining competing firms into one corporation. The corporation used its own tank cars, pipelines, and even its own wooden barrels got from forests that Standard Oil owned.


Rockefeller lowered his prices to drive his competitors out of business. In 1882 he formed a trust, a group of companies managed by the same board of directors. First he acquired stock in many different oil companies. Then the shareholders of these companies traded their stock for Standard Oil stock which paid higher dividends. This gave Standard Oil's board of directors ownership of the other companies' stock and the right to manage those companies. Rockefeller had created a monopoly, almost total control by a single producer of the oil industry.