Dr. Takashi Itoh

Historical research of major international petroleum firms

Research on Exxon Mobil Corporation and a description of today’s major firms

Research on Exxon Mobil Corporation and a description of today’s major firms: Major global firms as implied by the history of Exxon

takashi itoh 1

Exxon Corporation (an American major petroleum firm; Exxon Mobil Corporation since 1999) became the largest petroleum firm in the United States and the world in a relatively short period of time after the petroleum industry was created in the middle of the nineteenth century. To this day, for far over a century, the firm has maintained that position. The firm has no parallel in other major industries. I have been following the firm’s history as a topic of my research in economics since the latter half of the 1970s.

Another characteristic of the firm is that it established its subsidiaries in the United Kingdom and other countries as early as the end of the nineteenth century. In the 1930s, Exxon reached a point where more business activities—including crude oil production and product sales—were conducted in foreign countries than in the firm’s home country, the United States. Therefore, Exxon can be considered a pioneer for today’s global firms.

My persistent interest in this firm stems from my curiosity to know major firms that are central players in today’s economic activities. Because many of the major firms today are global firms, I think that description of global firms is indeed one of the most important issues in current research on major firms. Research on the long history of Exxon provides important hints for providing an answer to the following question: What is today’s major firm?

Research Process

1. Purpose of research and methodology: Describing the contemporary capitalist economy with a focus on major firms

I studied classic works to find guiding principles: Finance Capital by Rudolf Hilferding (1910) and Imperialism, the Highest Stage of Capitalism by Vladimir Lenin (1917). I decided that the purpose of my research would be to describe the contemporary capitalist economy, and that my research would mainly focus on the activities of major firms.

2. Narrowing down the research focus: Examining the global firm as the typical form of today’s major firm

I acquired a historical overview of the overseas expansion of American firms by reading Mira Wilkins’ works, The Emergence of Multinational Enterprise (1970) and The Maturing of Multinational Enterprise (1974). At the same time, I studied the history of the formation of American capitalism and explored characteristics specific to American firms rather than European firms in terms of overseas expansion.

3. Research topic chosen: Conducting historical research on Exxon Corporation, an international petroleum firm

I examined, in historical order, the activities of Exxon Corporation (Standard Oil Company〔New Jersey〕until 1972) which was one of the largest firms in the world among all industries and represents today’s global firms. In 2004, after much work, I finally published a book, A History of Standard Oil CompanyNew Jersey〕:An Inquiry into its Worldwide Business Activity1920-1969.

4. New research: Describing the current state of Exxon Corporation

I described Exxon’s (Exxon Mobil’s) crude oil production conducted from the early 1990s to the early 2000s. This was a shift from historical research to contemporary research. I thought that it was necessary as a historical researcher to, at some point, study contemporary issues, and that doing so would make it possible to reconfirm the significance of historical research.

5. Return to historical research: Describing Exxon Corporation in the 1970s

The world’s petroleum industries went through historical changes in the 1970s. That decade showed discontinuity with the 1960s. Part of the structure and characteristics of today’s petroleum industry emerged in the 1970s. Currently, I am elucidating Exxon’s various activities in the 1970s, including crude oil production and product sales, and exploring how the prototype of the firm’s activities observed today was formed during that period.

Exxon’s corporate behavior: Steadiness and bold decisions

One of my research topics has been the sources of the strengths and advantages of Exxon, which has been a predominant presence as a capitalist firm. In my view, attributing the firm’s strengths and advantages to its prompt responses to changes at different points in time does not completely reflect the reality. I think that many of the firm’s actions have been quite cautious, and that the steady actions, which could sometimes be considered conservative, have continued since the 19th century to this day.

Marking a contrast with Exxon’s status as the largest petroleum firm in the United States, the firm did not produce crude oil at all until around the end of the 1880s. Discovery of an oil field quite often occurs by chance, and while a successful discovery leads to an enormous amount of wealth, a failure can result in a total loss. The founders of the firm, including John D. Rockefeller, initially thought that the crude oil production business was too risky to enter. Nevertheless, the firm devised a unique mechanism with which it put under its control almost all the production of crude oil in the United States. This point should attract much attention.

History of Exxon Corporation (from its establishment to the present) and some important circumstances surrounding the oil industry
  • [1859] An oil field was discovered in Titusville, Pennsylvania (in the Northeast of the United States), which led to the beginning of crude oil production using machinery. This was the birth of the modern petroleum industry.
  • [1863]  John D. Rockefeller, who was in the produce commission business, entered the petroleum business.
  • [1882] The Standard Oil Trust was established (a predecessor of Exxon Corporation). It owned 80% to 90% of the production capacity of petroleum products in the United Sates. It dominated overseas petroleum markets.
  • [1888] The firm established a subsidiary in the United Kingdom for product sales and subsequently located subsidiaries in various countries in Europe and elsewhere.
  • [1899] As a holding company, Standard Oil Company〔New Jersey〕 became the parent company of the firms that constituted the former Standard Oil Trust.
  • [1911] Standard Oil Company〔New Jersey〕 lost about a half (33 firms) of its subsidiaries, being found in violation of the Antitrust Act. However, the firm maintained its position as the largest firm in the industry.
  • [1930s] Venezuela became the largest producer of crude oil, surpassing the United States, for the firm. Overseas businesses surpassed those in the United States in product production (refining crude oil) and product sales.
  • [Mid-1940s to mid-1950s] The firm secured its interests in Saudi Arabian oil fields and established a system for supplying crude oil to Western Europe and Asia. It dramatically expanded its capacity to produce petroleum products in major petroleum-consuming countries. It also laid groundwork to lead an “energy revolution” in the postwar period.
  • [Latter half of 1960s] Petroleum surpassed coal and became the largest source of energy in the world. (In Japan, petroleum surpassed coal in 1962)
  • [Beginning of 1970s and thereafter] The governments of oil-producing countries in Latin America, the Middle East, and Northern Africa nationalized or rapidly increased control over oil fields. By the end of the 1970s, Standard Oil Company〔New Jersey〕 lost most of its control over major oil fields in these regions.
  • [1972] The firm’s name was changed to Exxon Corporation.
  • [1973] The first oil crisis occurred. The price of crude oil (Saudi Arabian light crude oil) in the international market jumped from $2.6 per barrel (approx. 159 L) at the beginning of the year to $11.6 per barrel at the end of the year. The relative reliance on petroleum as an energy source started to decline.
  • [Latter half of 1970s and thereafter] Production of crude oil began in the North Sea off the coast of Europe and in Alaska in the United States.
  • [1978 and thereafter] The second oil crisis occurred. The crude oil price soared again. The price of Saudi Arabian light crude oil was $28 per barrel in early 1980.
  • [1980s] Countries increasingly shifted away from petroleum and conserved energy. Petroleum consumption declined as a result. The crude oil price plunged in the mid-1980s.
  • [Early 1990s and thereafter] As the former Soviet Union collapsed and China started to move toward a socialist market economy, Exxon expanded its business to these regions. The firm’s operation literally covered the entire world. Deep-sea exploration for crude oil and natural gas was also conducted in the Gulf of Mexico off the United States and offshore areas of West Africa.
  • [1999] The firm acquired another international petroleum firm, Mobil, and changed its name to Exxon Mobil Corporation. Within a few years before and after this acquisition, large-scale mergers/acquisitions occurred between major international petroleum firms. Supermajor petroleum firms emerged as a result.
  • [2000 and thereafter] Petroleum consumption rapidly increased in China and other countries. The price of crude oil (West Texas Intermediate, WTI) reached $147 per barrel at one point in July 2008.

Another behavioral tradition that was inherited by Exxon Corporation was bold decisions and the ability to execute them in times of crisis. Exxon lost almost half of its subsidiaries in 1911 after being found in violation of the Antitrust Act and gradually lost ground in competition with other firms in the 1920s. However, during the difficult period following the Great Depression that started in 1929, the firm made significant investments domestically and overseas against the odds and succeeded in turning the negative situation around all at once. This is one example of bold actions taken by the firm when facing a crisis.

Karl Marx, the author of Das Kapital, characterized capital as self-expanding value. He also said that capital works without limit. Equipped with a mixture of steadiness and boldness, Exxon Corporation has expanded its operations over a long period of time and seems, to me, to typify the concept of capital as described by Marx. 

Takashi Itoh

Process leading to the birth of the supermajors

Oil field development today (source: Petroleum Development Technology Guidebook (in Japanese) by the Japan Petroleum Development Association)

Oil field development today (source: Petroleum Development Technology Guidebook (in Japanese) by the Japan Petroleum Development Association)


Takashi Itoh

Professor, Graduate School of Humanities and Social Sciences

  • 1982: Doctoral coursework completed, Graduate School of Economics and Business Administration, Hokkaido University
  • 1982: Joined the Faculty of Economics, Saitama University
  • 2000: Doctoral degree in Economics, Hokkaido University
  • Present: Professor, Graduate School of Humanities and Social Sciences, Saitama University
Publicationtakashi itoh 2

A History of Standard Oil Company〔New Jersey〕:An Inquiry into its Worldwide Business Activity,1920-1969(in Japanese). Sapporo: Hokkaido University Press, 2004.