'Evil Empire' members to share history again Exxon's, Mobil's origins precede breakup of Standard Oil Trust

December 02, 1998|By Kristine Henry | Kristine Henry,SUN STAFF

When Exxon Corp. and Mobil Corp. seek regulatory approval for their planned merger, overlapping operations won't be the only obstacle they must overcome. Their shared history as former members of what was once referred to as the "Evil Empire" could cause just as much trouble.

Both came into being after the Supreme Court in 1911 ordered Standard Oil of New Jersey -- the operating arm of Standard Oil Trust, which had controlled 85 percent of the U.S. oil market -- split into 34 entities under the Sherman Antitrust Act.

"It was called the Evil Empire at the time, and since then that's the metaphor that's often used for it in academic discussions," said William Kovacic, a visiting antitrust professor at George Washington University.

"There's been suspicion in competition policy circles -- both enforcement agencies and on Capitol Hill -- that the remnants of Standard have been trying for 80 years to recombine," Kovacic said.

It's a stigma that remains, although both companies have roots that precede their inclusion in the Standard organization.

Mobil dates to 1866, when Matthew Ewing, a carpenter in Rochester, N.Y., found a way to make kerosene by using a vacuum to distill crude oil. This process ultimately proved unsuccessful as a revolutionary kerosene-production method. But Ewing noticed that the byproduct from his efforts made a good lubricant.

He and a partner, Hiram Bond Everest, patented the method and incorporated Vacuum Oil Co. in October of that year and concentrated on making lubricants for tanning leather. In 1879, John D. Rockefeller's Standard Oil purchased 75 percent of the company for $200,000. It was folded in to Standard Oil Trust in 1882.

Two of Standard's spinoffs after the 1911 breakup were Vacuum Oil Co. and Standard Oil Co. of New York -- also known as Socony. The two merged in 1931, forming Socony-Vacuum Corp. The name was changed to Socony-Vacuum Oil Co. Inc. two years later, then to Socony Mobil Oil Co. Inc. in 1955 and to Mobil Oil Corp. in 1966.

What is now known as Exxon was formed by several Standard Oil of New Jersey acquisitions, including that of Anglo-American Oil Co. Ltd. in 1888 and 50 percent of Houston's Humble Oil and Refinery in 1919.

In 1959, Standard Oil of New Jersey purchased the rest of Humble and folded it into one large company that operated in different parts of the country under various names -- Humble, Enco and, in the mid-Atlantic region, Esso.

In 1966 the company started looking for one all-encompassing name, finally settling on Exxon. The name was officially changed in 1972.

Exxon's Web site asks, "What do you think of when you think of Exxon USA? Most people probably think of gas for their cars." While that may be true, many people are also likely to recall the Exxon Valdez, the tanker that ran aground in Alaska in 1989, spilling 11 million gallons of oil.

The spill, which killed nearly 500,000 birds and tarred thousands of miles of coastline, led to stricter regulations on tanker hulls. The ship's captain, Joseph Hazelwood, was acquitted of charges that he was drunk at the time of the accident, but was found guilty of the lesser charge of "negligent discharge of oil."

Exxon agreed to settle a lawsuit filed by Alaska and the federal government by paying $900 million for environmental projects across the country, along with the $2 billion the company paid for direct cleanup costs for the tanker spill.

Exxon, which uses a tiger in its signs and advertising, is currently involved in a lawsuit filed by the Kellogg Co. The cereal maker accuses the oil company of infringing on its Tony the Tiger trademark.

Pub Date: 12/02/98

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