Chevron has a long history of monopolization and domination of the oil market from the late 1800s to the present. With many economical challenges throughout the 20th century, Chevron has coped in providing oil related products and services across many US facilities by modernization efforts and technological advances.
After the US gold rush in the 1850s, there was an increasing demand for production of oil such as kerosene for transportation, lighting, fuel, etc. In 1879, D.G. Scofield founded the Pacific Coast Oil Company, Chevron’s earliest predecessor, in San Francisco for a mission of drilling crude oil and producing oil related products. In 1890, Pacific Coast Oil Company built a large refinery in Alameda, California that would dominate against other competitors and would become the "largest producer and refiner of petroleum in California" (Corbett 7).
Another dominant producer and distributor of oil, throughout the late 1870s, was Standard Oil Corporation, founded by John D. Rockefeller in Pennsylvania. Standard Oil massively controlled the oil industry in the US through cartelization of the railroad system. From Granitz and Klein’s theory, Standard Oil was able to cartelize the railroad system through dynamically adjusting production and costs, in favor of monopolization (Priest 554). The advantage of the railroads allowed the expansion of Standard Oil’s market and vertically integrated facilities. Standard Oil persisted in controlling over oil supplies by dominating facilities dependent on fuel such as transportation, storage, distribution, etc.
In 1890, Pacific Coast Oil and Standard Oil made an agreement in uniformly selling their refined petroleum products and integrating progress in maximizing oil production (Standard Oil Bulletin).
In 1900, Standard Oil purchased Pacific Coast Oil and merged as Standard Oil Corporation of California. The following year, Standard Oil continued their expansion in the oil market by purchasing land in East Yards (Point Richmond), a tiny village in Contra Costa County, CA. J.C. Black, Ed Garrard, and William S. Rheem would be leaders in the construction of the Richmond oil refinery in Peters and Silva Farms, an Alameda facility originally used for farmers. The oil refinery was completed in 1902, and the shipping of crude oil began. During its first year, the refinery processed more than 3 million barrels of crude oil with 80 original employees (Chevron).
Throughout this period, more operations were built for refinery enhancements such as railroads, laboratories, pipelines, and other accessories. As Standard Oil expanded more land in Point Richmond in 1906, the location was considered to be one the largest refineries in the Pacific Coast and was the heart of the oil industry (Corbett 8). The landscape of Port Richmond has dramatically transformed from farmland into an industrial powerhouse. The population of Point Richmond consisted of Standard Oil’s workforce and grew exponentially over time.
During the 1900s, there was emerging growth in the automotive industry with the introduction of combustion cars, such as the Ford Model T in 1908. Because of automobiles, the demand for gasoline skyrocketed while demands for kerosene declined. As there were new usages for gasoline at the time, Standard Oil shifted more production in gasoline; however, there were new challenges in efficiently supplying gasoline. Standard Oil’s investments in new technologies were amplified to meet commercial demands of quick, adequate gasoline.
Richmond was a major supplier in fuel and resources for the automotive industry and the military during World War I and II. Standard Oil’s initiatives have shifted from economic growth to modernization of refinery products for federal agencies. In 1926, an essential Standard Oil product that emerged was Zerolene, an lubricating oil that has the ability to “flow freely at zero”, meaning the oil can withstand freezing conditions (The American Century). Because of this benefit, it was a revolutionary product throughout many industries.
Between the late 1920s and early 1930s, there were rising concerns from the California federal government about the stabilization of the oil market. As prices of gasoline and petroleum were declining, oil fields were depleting; thus, California's production might become unsustainable for the next few decades (Sabin 141). There were also concerns about smaller oil companies at risk of bankruptcy, due to lower gasoline prices from major companies. In 1931, the Sharkey bill was enacted that bars “future town-lot drilling and reduces competitive production by setting well-spacing requirements for new drilling” (Sabin 136). This oil control bill would help define overproduction of oil as “waste” where there was no valuable market for its surplus. Due to lower production and higher energy costs, prices of oil, gasoline, and other high quality products increased for balancing industries’ profits (Sabin 137).
Starting in the late 1950s, the California Research Corporation, a division of Standard Oil, has developed modern hydrocracking used in the Richmond oil refinery. This process uses catalysts to convert heavy crude oil into more lighter fuels such as gasoline and hydrogen. This technology assisted in producing larger quantities of fuel to meet market fluctuations and refinery revenue (Brossard). Investments in technology and flexibility in governmental regulations has been in part of Standard Oil’s progress for superiority in the oil market.
During the 1970s, oil crises and shortages appeared across the oil market, leading to increasing prices for maintaining finances. In order for Standard Oil to meet feudal and state politics, they managed efforts in reducing waste, air/water pollution, and preventing oil spills. (Chevron). However, this spiked up the prices of higher-volume fuels. In the 1980s, Standard Oil continued on the modernization and production of oil, petroleum, and gasoline through refinements in strong locations, such as the Richmond oil refinery (Chevron). In 1984, Standard Oil bought a new name for the company that is familiar today, Chevron. Overall, Chevron continues to grow and expand as the Richmond population increases; however, there has been many perturbations about Chevron’s reliability of the oil refinery among nearby communities, despite their efforts.
Sources
Brossard, David, et al. “Hydroprocessing to Maximise Refinery Profitability.” Digital Refining, Oct. 2012. www.digitalrefining.com/article/1000562/hydroprocessing-to-maximise-refinery-profitability.
“Chevron History.” Chevron.com, Chevron, 25 Aug. 2020. www.chevron.com/about/history. Accessed 10 Nov. 2020.
Corbett, Michael R. "CHEVRON REFINERY Historic Resource Evaluation Standard Oil Administration Building." Wiss, Janney, Elstner Associates, Inc., 4 Jan. 2012, www.ci.richmond.ca.us/DocumentCenter/View/8241/Standard-Oil-Administration-Building---Historic-Resource-Evaluation.
“The Early Years 1902 - 1914.” Chevron.com, Chevron, 2 Sept. 2009. https://web.archive.org/web/20090902110442/http://www.chevron.com/products/sitelets/richmond/about/history_early_years.aspx. Accessed Nov. 10, 2020.
“The First Fifty Years.” Standard Oil Bulletin, Sept. 1929: 3-7 https://scvhistory.com/scvhistory/standardoilbulletin0929.pdf.
Priest, George L. "Rethinking the Economic Basis of the Standard Oil Refining Monopoly: Dominance Against Competing Cartels" (2012), Faculty Scholarship Series. 4933. https://digitalcommons.law.yale.edu/fss_papers/4933.
“Richmond Chevron History.” Chevron.com, Chevron, 25 Aug. 2020, https://richmond.chevron.com/about/history.
Sabin, Paul. Crude Politics: The California Oil Market. 1900-1940. Germany, University of California Press, 2004.
Standard Oil Company of New York. "Lubricated By Zerolene." The American Century, Accessed 29 Nov. 2020. https://www.americancentury.omeka.wlu.edu/items/show/375.