Rockefeller and the Oil Industry

Discovery of Oil

Titusville, PA -- A stream there is called Oil Creek, because of the black, sticky oil that came up to the surface. Most people thought the oil was not valuable Then, in 1855, a scientist discovered that it could be made into a product that could be burned in lamps.

What town was oil discovered?

• Greensburg, PA

• Titusville, PA

• Johnstown, PA

• Bradford, PA

Discovery of Oil

Edwin Drake, heard about it and travelled to Titusville. Tried to drill the oil out of the ground, but was unsuccessful. Then drilled a hole in the ground and used pipes to keep the sides from falling in. At 69ft into the earth, oil began running through the pipes – the first oil well and the beginning of America’s giant oil industry.

Who drilled the first successful oil well?

• Lawrence Fishburn

• Samuel L. Jackson

• Chris Evans

• Edwin Drake

People rushed to Titusville to look for “black gold”. Many oil wells were along Oil Creek and area of southwestern NY. Railroad tank cars and large pipes called pipelines were built to carry the oil to refineries. Refineries were places where the oil was cleaned and made into other products.

What are refineries used for?

• a place where oil is cleaned and made into other products

• a place where jewelry is made

• a large fishing village

• a place where cars are produced

John D. Rockefeller

Rockefeller traveled from Cleveland, Ohio to Titusville to learn about the oil business. He decided that he could make more money by refining oil, not drilling for it.

What was Rockefeller's big idea?

• dig for actual gold

• find the lost city of Gold

• to make money by refining oil, not drilling for it

• to find the Northwest Passage

Rockefeller started a new company called the Standard Oil Company in 1870. Within 10 years, it became the most powerful oil company. The company controlled the production and the price of oil all over the country. At first, oil was refined into kerosene to light lamps. In about 1900, electricity was invented so kerosene was not needed. However, the motor car was also invented and needed gasoline (refined from oil).

What was the name of Rockefeller's company?

• ARCO

• Standard Oil Company

• Sunoco

• Dinaco

Rockefeller started a new company called the Standard Oil Company in 1870. Within 10 years, it became the most powerful oil company. The company controlled the production and the price of oil all over the country. At first, oil was refined into kerosene to light lamps. Around the year 1900, electricity was invented so kerosene was not needed. However, the motor car was also invented and needed gasoline (refined from oil).

Why was there less need for kerosene after 1900?

• the new millenium started

• there were fewer kitchens

• horses did not like the smell of kerosene

• electricity was being used for light

Change in Businesses

Before the Civil war, most businesses were owned by one person or a few partners. They had a few workers and sold to local customers. This worked well for small business. Then Carnegie, Rockefeller and other businesses started large companies called corporations. People did not like corporations because they felt that the small businesses could not compete with the corporations.

Who were most businesses owned by before the Civil War?

• many people

• one person or a few partners

• only farmers

• only fur traders

Corporations like Carnegie Steel and Standard Oil Company made millions of dollars by selling stock. People would buy stock – give money to the company. *Money used for investment is called capital. If the business does well, the person earns money. If the business does not do well, the person loses their money. It is not a big risk, or liability, for the person investing.

What does "buy stock" mean?

• give money to a company

• go to the store

• make fun of a corporation

• file a lawsuit

Andrew Carnegie did not want to depend on other companies. He needed: mining companies and transportation companies. So he decided to buy the other companies too and become one large company. Then he controlled EACH step in making steel. This is called vertical combination.

What does vertical combination mean?

• owning all parts of an industry--like mining and transportation companies

• owning one small store

• selling one store

• going into partnership with a friend

John D. Rockefeller was also concerned with control. He decided to get rid of competition with other companies by buying all of the other oil refining companies.

This is called horizontal combination.

What does horizontal combination mean?

• moving in a straight line

• many building blocks

• buying all competing companies

• dividing the landscape