How Did John D. Rockefeller Beat Other Oil Refiners?

David Senra says John D. Rockefeller beat other oil refiners by shaving costs across the whole company until small savings piled into an advantage no rival could catch. Standard Oil was the only company set up to balance refinery output, transportation, and distribution and to squeeze a little more at every stage. Rockefeller expected to stay in the oil business for the rest of his life, so the edge would compound decade after decade.

Competing refineries used Standard's distribution and added to its cash. Rockefeller bought a fleet of wide gauge tank cars from the cash-strapped Erie Railroad. Standard got first use of the cars, paid a lower freight rate, and collected rent when the railroad hauled oil for other refineries. Each rival deal made him harder to compete with.

Senra thinks that in the Cleveland consolidation Rockefeller, still in his mid-20s, rolled up 25 or 26 refineries in a few weeks and came out the largest refiner in the world. Most of the businesses he bought were sold for scrap. In all, 24 refineries were consolidated into six large plants built to make the full range of oil byproducts. From then on, Senra says, Standard Oil was a money-printing machine.