The Gulf Oil Corporation was
an expansion of the J. M. Guffey Petroleum Company, which was
organized in May 1901, and which acquired the interests of
Anthony F. Lucasqv
and John A. Galey in the Spindletop Oilfield.qv
In this company, organized to exploit the new oil discovery,
Guffey had a seven-fifteenths interest, while A. W. and R. B.
Mellon and some of their associates including James H. Reed,
William Flinn, J. D. Callery, T. H. Given, and Joshua Rhodes
owned the balance. Later in the same year the same men organized
the Gulf Refining Company of Texas for the purpose of refining
and marketing the crude oil produced by the Guffey company, and
a refinery was built at Port Arthur. By the fall of 1902
approximately $6 million had been invested in the two companies,
and the dwindling production at Spindletop made necessary a
reorganization. W. L. Mellon was placed in active charge of the
Guffey and Gulf operations, although J. M. Guffey remained the
nominal head for five years more. Only the most efficient
management kept the two companies from going bankrupt during the
period 1902 to 1907, when Texas crude production continued to
decline. In January 1907 the Gulf Oil Corporation was formed
with A. W. Mellon as president, and Guffey's interest was
purchased for about $3 million. The Gulf Oil Corporation then
built a 400-mile pipe line from Port Arthur to the Glenn Pool
field in Oklahoma, which had been discovered in 1906, and began
refining Oklahoma crude in September 1907. A subsidiary, the
Gypsy Oil Company, was organized under Frank A. Leovy to handle
production operations in Oklahoma. Altogether the reorganization
and expansion program required an additional investment of $7
million, but by the end of 1908 Gulf's position had become
relatively strong. In less than two years following the opening
of the Glenn Pool pipeline Gulf's production had more than
doubled and had exceeded the refinery throughput of 11,000
barrels daily. During the next twenty years Gulf's growth was
steady, the company expanding its production operations into
nearly all of the major oilfields in the United States and into
Mexico and Venezuela. In West Texas Gulf became the leading
producer. A network of pipelines connected Gulf's production
with refineries at Port Arthur, Fort Worth (built in 1911),
Bayonne, New Jersey (1925), Philadelphia, Pennsylvania (1926),
and Sweetwater, Texas (1928). By 1928 the company's assets had
grown to an estimated $232 million, while crude production rose
to 78 million barrels annually.
Gulf's organization was
characterized by integration from production of crude to
retailing of refinery products. In 1929 it was decided to expand
the retail business, which had been concentrated in the south
and east, into Ohio, Illinois, and Michigan. At the beginning of
the Great Depressionqv
a $90 million expansion program was undertaken, which included
the building of refineries in Cincinnati, Toledo, and
Pittsburgh, the construction of an 800-mile pipeline from
Oklahoma to Ohio, and the acquisition of more than 400 marketing
facilities. Partially because of the expansion program the
depression severely affected Gulf; for the first time in its
history the company operated at a loss in 1931. The depression
period brought about retrenchment and some internal
reorganization of the company. In general the policy of
maintaining and operating service stations was abandoned in
favor of leasing them to independent operators, and each of the
four major departments (production, transportation, refining,
and marketing) was placed on a separate accounting basis. By the
mid-1930s the company began to prosper again, and the dramatic
increase in demand for oil during World War IIqv
further fueled the company's expansion. In 1950, with a capital
investment of $1,075,000,000 and owned by more than 32,000
persons, the Gulf Oil Corporation had 43,000 employees, carried
on extensive production in the United States, Venezuela, Kuwait,
and Canada, operated 10,000 miles of pipelines and a large fleet
of tankers, and sold the products of its refineries through more
than 36,000 service stations in the United States and nearly as
many others in foreign countries. In 1951 Gulf Oil Corporation
completed one of the world's largest (at the time) catalytic
cracking units in Port Arthur, Texas, and in the same year began
construction of plants in Port Arthur for the manufacture of
ethylene and isooctyl alcohol, a major move in developing its
petrochemicals capacity. While the Fort Worth, Sweetwater, and
Pittsburgh (Pennsylvania) refineries were dismantled in the
1950s after the facilities had become obsolete, the Port Arthur
and Philadelphia refineries continued to expand and the Toledo
and Cincinnati refineries were modernized. New refineries were
built or acquired in the United States, with additions at
Purvis, Mississippi, Santa Fe Springs, California, and Venice,
Louisiana.
Increasing its capital
expenditures in the 1950s, Gulf joined with B. F. Goodrich
Company to form a new company, Gulf-Goodrich Chemicals,
Incorporated, through which Gulf maintained an important
position in the manufacture of synthetic rubber from
petroleum-derived feedstocks. It also acquired Warren Petroleum
Corporation in 1956 and that same year increased its interest in
British American Oil Company by trading Gulf's Canadian
properties for 8,335,648 common shares of British American
stock, bringing Gulf's interest in that company to 58 percent.
Gulf also extended its exploration and production operations in
the 1950s, including an extensive program for exploration of
underwater leases in the Gulf of Mexico off Louisiana, which
became one of the company's leading domestic producing areas.
With the conclusion of World War II, Gulf, as a 55-percent
participant in Kuwait Oil Company, resumed operations in Kuwait
to put into production petroleum discovered there about the time
of the war's outbreak. Production from these vast reserves
climbed steadily and yielded for Gulf's interest an average of
more than 1.3 million barrels per day in 1967. Gulf owned or had
an interest in twenty-two refineries in addition to those in the
United States. Adding to its European refining capacity,
refineries at Milford Haven, Wales, and Huelva, Spain, went on
stream in 1968 and a permit was obtained for construction of a
refinery at Milan, Italy, to further strengthen Gulf's capacity
to supply products for its growing European markets. Discoveries
in Bolivia and Nigeria were developed in the 1960s and added
significantly to Gulf's foreign oil production. Production from
discoveries in Colombia and Cabinda was expected to begin before
the end of 1968, and substantial discoveries were made in
Ecuador. Gulf was producing oil and gas from eleven nations as
its explorations continued in thirty countries. A milestone in
Gulf's marketing operations was reached in 1966. With the
acquisition in 1960 of Wilshire Oil Company of California and in
1966 of mid-continental retail outlets and storage and
distribution facilities of Cities Service Oil Company, Gulf for
the first time had service station representation in all
forty-eight adjoining states of the continental United States.
Gulf's transportation facilities moved more than a million
barrels of crude oil daily from oilfields to refineries
throughout the world by pipelines and tankers. In 1968 the
world's largest ship, the 312,000-deadweight-ton tanker,
Universe Ireland, was placed in
service for Gulf. It was the first of six such tankers planned
for use by the company to deliver Middle Eastern and West
African crudes to deepwater terminals at Bantry Bay, Ireland,
and at Okinawa for transshipment to European and Far Eastern
refineries by smaller vessels. Refining capacity was increased
along with Gulf's expansion in other petroleum operations. The
company owned full or partial interest in thirty United States
and foreign refineries. In 1967 the company processed an average
of 1,295,000 barrels of crude oil daily. By the 1960s Gulf had
become a major producer of petrochemicals, plastics, and
agricultural chemicals. In 1967 Gulf entered the field of
nuclear energy. In this program it began uranium exploration and
acquired the General Atomic Division of General Dynamics
Corporation, renaming the subsidiary Gulf General Atomic
Incorporated. At the end of 1967, with total assets of $6.5
billion owned by more than 163,000 shareholders, Gulf Oil
Corporation had 58,000 employees working in more than fifty
nations to provide the world with petroleum and other
energy-producing products.
Gulf fell on hard times in the
1970s. Several of its key management figures were implicated in
illegal political contributions in the early 1970s, and their
successors, in the eyes of many in the oil community, failed to
provide clear and aggressive leadership. The company's long and
valuable association with Kuwait ended in 1975, when Gulf's
operations there were nationalized by the Kuwaiti government. In
spite of costly attempts to find new sources of oil, the
company's reserve supply was rapidly dwindling by the late
1970s, declining by 40 percent between 1978 and 1982. In 1983
Gulf was still the sixth largest oil company in the United
States and managed to turn its oil reserve crisis around,
replacing 95 percent of its reserves by the end of the year.
Because of what many perceived to be its weak and excessively
bureaucratic management structure, Gulf seemed a good candidate
for a takeover. In August of 1983 Thomas Boone Pickens's Mesa
Petroleum Corporation,qv
rebounding from an unsuccessful attempt to acquire General
American Oil Company,qv began
to buy up shares of Gulf Oil. After Mesa had gained control of
11 percent of Gulf's stock, Pickens engaged in a proxy fight for
control of the company. Gulf executives fought Boone's takeover
and eventually invited takeover offers from other companies and
collections of investors. On March 5, 1984, the Gulf board voted
to sell the company to Chevron (Standard Oil of California) for
$13.2 billion. Gulf operations were merged into Chevron in what
was the largest corporate merger to date.
BIBLIOGRAPHY: Craig
Thompson,
Since Spindletop: A Human Story of
Gulf's First Half-Century
(Pittsburgh: Gulf Oil, 1951). Daniel Yergin,
The Prize: The Epic Quest for Oil, Money
and Power (New York: Simon and
Schuster, 1991).
James A. Clark and Mark
Odintz
- Handbook of Texas
Online, s.v. ","
http://www.tshaonline.org/handbook/online/articles/GG/dog2.html
(accessed March 3, 2008).
(NOTE: "s.v." stands for sub verbo, "under the word.")
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