It was the biggest corporate split-up in the history of trustbusting, topping even the historic dismemberment of the old $660 million Standard Oil Co. in 1911. Standard-Vacuum Oil Co., an $855 million oil-marketing combine with 37,000 employees in 50 countries and sales last year of $1 billion, will be divided between its joint owners, Standard Oil Co. (New Jersey) and Socony Mobil Oil Corp. The decision was embodied in a partial settlement last week of a long, controversial suit filed by the Justice Department against five of the biggest U.S. oil companies: Jersey Standard, Socony Mobil, Standard Oil Co. of California, Texaco Inc. and Gulf Oil Corp.
Originally filed as a criminal action by the Truman Administration in 1952, the suit charged the five with conspiring with Royal Dutch Petroleum Co. and British Petroleum Co. Ltd. to fix free-world oil prices and control world oil production. The Eisenhower Administration toned down the suit to a civil one in 1953, and the Justice Department spent seven years re-examining the merits of its case, which even the trustbusters knew was none too strong. Last week two of the defendants, Jersey Standard and Gulf, while not admitting any guilt, signed consent decrees promising not to enter into any cartel deals for the next 25 years. Although the suit continues against Socony Mobil and the other two companies, Socony went along with Jersey Standard's terms for breaking up Standard-Vacuum.
Mutual Vacuum. Standard-Vacuum was set up chiefly as a marketing company in 1933 when Socony was overloaded with facilities for selling oil but short on reserves, and Jersey Standard had plenty of oil but not enough outlets. Over the years Stanvac developed oil production of its own, now has well capacity of 84,000 bbl. a day and refinery capacity of 293,000 bbl. a day. Last week's decree does not affect production and refining facilities, which may still be jointly owned, but only Stanvac's marketing operations. These will be divided between the parent companies, and both oil firms last week joined the Justice Department in hailing the decision to break up Stanvac. It will increase both companies' competitive opportunities in the so-called underdeveloped areas of the world, give them greater individual flexibility in countering Soviet oil competitive thrusts.
Jersey Standard will take over Stanvac's assets in India, Pakistan, Ceylon, Southeast Asia, South Korea, Malagasy and East Africa. Socony Mobil will get the bulk of the assets in the rest of Africa, Australia, New Zealand, Hong Kong, Aden, Formosa and much of the Southwest Pacific. The two companies will retain joint ownership of Stanvac's rich Indonesian wells and split the oil business in Japan and the Philippines.
Shortage Insurance. In its separate consent decree, Gulf agreed to set aside 100,000 bbl. of oil per day for ten years from its production in Kuwait for sale to independent oil companies. Gulf has always sold to independents, and the Government's requirement is really only an insurance policy for the independents should an oil shortage arise.