52
Production is from a stratigraphic trap in the Woodbine Sandstone (Dokur and
Hentz 2012).
It turned out that the 70 year-old Dad Joiner was essentially a con man trying to
sell shares of a mineral lease syndicate to local rustics who fell for his low key,
smooth-talking approach. He had drilled the Bradford wells as a prop to impress
potential investors, but never actually expected to find anything. Joiner hurriedly
sold his well and leases to oil tycoon H.L. Hunt and left Rusk County soon afterward. Nevertheless, he became embroiled in numerous legal proceedings and by
1934 he claimed to have more than 150 lawsuits pending against him (White 1968).
Joiner moved to Dallas in 1940 to hide out from his creditors in relative obscurity,
but remained beset by financial problems until his death in 1947.
So-called “Big Oil” got started almost as early as the oil industry itself. In what
has become a pattern for most American industries from automobiles to electronics
to commercial airlines, the initial development of a product or service tends to
inspire numerous visionary entrepreneurs who create small companies that often
find niche markets for their goods. Once successful, they are then bought out by one
of the major players. For example, a man named Charles Pratt started out as a whale
oil distributor, but then became an early pioneer of the petroleum industry in the
United States. His company was located in Brooklyn, New York, and named Astral
Oil Works. Pratt sold kerosene using the exotic slogan, “The holy lamps of Tibet are
primed with Astral Oil.” Astral Oil Works was acquired by John D. Rockefeller in
1874 and became a component of the considerably less exotic Standard Oil empire
(Chernow 1998).
Rockefeller began his career in 1863 with a refinery in Cleveland, Ohio and
became the world’s first “oil baron” in 1865, when he formed the Standard Oil
Company with Henry M. Flagler. Flagler is probably better known for spending his
share of the Standard Oil fortune to build the “Overseas Railroad” in the early 1900s
through the Florida Keys to connect Key West with Miami. Much of this route is
now followed by the modern Overseas Highway, U.S. 1.
Business practices were largely unregulated in the late nineteenth century, and
Rockefeller reportedly grew his company by engaging in so-called “predatory pricing” practices (Tarbell and Chalmers 1966). These consisted of underpricing the
competition, sometimes at a loss, and then buying out competitors at fire sale prices
after their businesses failed. The tactics effectively eliminated competition and cornered the market. Standard Oil became the only game in town, charging whatever
price the market would bear. By 1880 it was a de-facto energy monopoly that had
control over the refining of 90–95% of all oil produced in the United States.
In 1882, Rockefeller and his partners re-organized the Standard Oil Company
into the Standard Oil Trust, which controlled subsidiary companies under a single,
large umbrella organization that included some 40 separate corporations. The idea
of a Trust has been attributed to Standard Oil attorney Samuel Dodd (General
Records of the United States Government 1890). The nine Trustees appointed the
directors and officers of all the subsidiary companies, effectively allowing the Trust
to function as a monopoly by exerting complete control over the component companies. All the profits were sent up to the Trustees, who determined the dividends to
3 The History of Oil & Gas Development in the U.S.
Production is from a stratigraphic trap in the Woodbine Sandstone (Dokur and
Hentz 2012).
It turned out that the 70 year-old Dad Joiner was essentially a con man trying to
sell shares of a mineral lease syndicate to local rustics who fell for his low key,
smooth-talking approach. He had drilled the Bradford wells as a prop to impress
potential investors, but never actually expected to find anything. Joiner hurriedly
sold his well and leases to oil tycoon H.L. Hunt and left Rusk County soon afterward. Nevertheless, he became embroiled in numerous legal proceedings and by
1934 he claimed to have more than 150 lawsuits pending against him (White 1968).
Joiner moved to Dallas in 1940 to hide out from his creditors in relative obscurity,
but remained beset by financial problems until his death in 1947.
So-called “Big Oil” got started almost as early as the oil industry itself. In what
has become a pattern for most American industries from automobiles to electronics
to commercial airlines, the initial development of a product or service tends to
inspire numerous visionary entrepreneurs who create small companies that often
find niche markets for their goods. Once successful, they are then bought out by one
of the major players. For example, a man named Charles Pratt started out as a whale
oil distributor, but then became an early pioneer of the petroleum industry in the
United States. His company was located in Brooklyn, New York, and named Astral
Oil Works. Pratt sold kerosene using the exotic slogan, “The holy lamps of Tibet are
primed with Astral Oil.” Astral Oil Works was acquired by John D. Rockefeller in
1874 and became a component of the considerably less exotic Standard Oil empire
(Chernow 1998).
Rockefeller began his career in 1863 with a refinery in Cleveland, Ohio and
became the world’s first “oil baron” in 1865, when he formed the Standard Oil
Company with Henry M. Flagler. Flagler is probably better known for spending his
share of the Standard Oil fortune to build the “Overseas Railroad” in the early 1900s
through the Florida Keys to connect Key West with Miami. Much of this route is
now followed by the modern Overseas Highway, U.S. 1.
Business practices were largely unregulated in the late nineteenth century, and
Rockefeller reportedly grew his company by engaging in so-called “predatory pricing” practices (Tarbell and Chalmers 1966). These consisted of underpricing the
competition, sometimes at a loss, and then buying out competitors at fire sale prices
after their businesses failed. The tactics effectively eliminated competition and cornered the market. Standard Oil became the only game in town, charging whatever
price the market would bear. By 1880 it was a de-facto energy monopoly that had
control over the refining of 90–95% of all oil produced in the United States.
In 1882, Rockefeller and his partners re-organized the Standard Oil Company
into the Standard Oil Trust, which controlled subsidiary companies under a single,
large umbrella organization that included some 40 separate corporations. The idea
of a Trust has been attributed to Standard Oil attorney Samuel Dodd (General
Records of the United States Government 1890). The nine Trustees appointed the
directors and officers of all the subsidiary companies, effectively allowing the Trust
to function as a monopoly by exerting complete control over the component companies. All the profits were sent up to the Trustees, who determined the dividends to
3 The History of Oil & Gas Development in the U.S.