OPEC, the Petroleum Industry, and United States Energy Policy

By Arabinda Ghosh | Go to book overview

6
U.S. Oil Industry: Acquisition and Diversification

1.

There has been a continuous movement of integration and diversification in the U.S. petroleum industry. The seeds of acquisition were deeply rooted in the industry's past when, in the latter part of the nineteenth century, the merger had reached its peak under the leadership of John D. Rockefeller of Standard Oil Company. When the U.S. Supreme Court dissolved the trust in 1911 and forced Standard Oil Company to divest, the company had to distribute its shares pro rata among shareholders of thirty-three companies by 1912. It took only ten years for the principal company of the old Standard Oil trust, Jersey Standard, to start acquiring with the purchase of another company in 1922. Since then, the flow of merger and acquisition has never ceased in the U.S. petroleum industry, as chronicled by A. E. Kahn and M. G. de Chazeau1. Ralph Nelson noted that there were three principal merger movements in the U.S. economy during the last eighty-odd years: 1897-1903, 1921-1928, and 1961-1967. 2 And in each of these three phases, the U.S. petroleum industry was an important part of the movement and often became the bellwether for the economy.

Underlying this movement of integration was a constant search for diversification. By the nature of its technical production process, the petroleum industry is intertwined with the production of natural gas. Thus, companies engaged in the production of crude oil would expand in the direction of natural gas as well. Larger refining companies are engaged in the production of petrochemicals and other chemical products as a natural extension of their production process. Reluctant to be confined to one or two products, these companies, like their counterparts in other U.S. manufacturing industries, constantly searched for diversification, and conglomerate merger often became the shortest route. 3 As a part of the milieu of

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OPEC, the Petroleum Industry, and United States Energy Policy
Table of contents

Table of contents

  • Title Page iii
  • Contents vii
  • Figures ix
  • Tables xi
  • Preface xv
  • Abbreviations xvii
  • 1 - Introduction 3
  • Notes 16
  • 2 - The Emergence of Opec 17
  • Notes 35
  • 3 - The Pricing Mechanism of Opec 36
  • Notes 49
  • 4 - Opec and the Multinational Oil Companies 50
  • Notes 64
  • 5 - U.S. Oil Industry: Changing Structure and Performance 65
  • Notes 87
  • 6 - U.S. Oil Industry: Acquisition and Diversification 89
  • Notes 106
  • 7 - Petro-Dollars and Economic Change in OPEC Nations 107
  • Notes 132
  • 8 - Opec versus the Oil-Consuming World 133
  • Notes 148
  • 9 - Strategy against Opec: Henry Kissinger and the Energy Crisis 149
  • Notes 160
  • 10 - Facing the Energy Crisis: U.S. Policy under the Nixon-Ford Administration 161
  • Notes 174
  • 11 - Presidents Carter and Reagan and the National Energy Policy 176
  • Notes 187
  • 12 - The Future of Opec 188
  • Notes 197
  • Selected Bibliography 199
  • Index 203
  • About the Author 206
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