1868 | Energy
Energy
Rockefeller, Andrews & Flagler begins a battle to drive out competition in the chaotic U.S. petroleum industry as Rockefeller develops a huge market for his kerosene by underselling coal oil and whale oil (see 1865). Henry Morrison Flagler, 35, moved west from his native Canandaigua, New York, at age 14 after finishing eighth grade, and has married Mary Harkness, whose uncle Stephen owns a distillery at Bellemore, Ohio, that supplied the whiskey once sold by Clark & Rockefeller in Cleveland; he joined Rockefeller and Andrews last year and when the firm gets into deep difficulties he will persuade Stephen V. Harkness to loan it his entire savings of $70,000 to keep it going, providing the wherewithal to acquire more refineries and pipelines as the firm grows larger and more efficient. With a capacity of 1,500 barrels per day when many competitors refine only one or two barrels, Rockefeller buys his wooden barrels at 96¢ each when other refiners pay $2.50. Roxbury, New York-born financier Jay Gould, now 32, concludes a secret deal with Rockefeller and Flagler whereby they receive a 75 percent rebate on oil shipped through the Erie Railroad or one of its subsidiaries; Rockefeller and Flagler then persuade the new Lake Shore Railroad vice president General J. H. Devereux to let them ship crude oil to Cleveland and refined oil to New York at a rate of $1.65 per barrel, 75¢ less than the official rate, by promising 60 carloads of refined oil per day, enabling the New York Central subsidiary to operate trains made up exclusively of tank cars and reduce its tank-car fleet from 1,800 cars to 600 by cutting the average round-trip time of trains between New York and Cleveland from 30 days to 10. Rockefeller, Andrews & Flagler does not yet have enough refining capacity to make good on its promise, but in less than 2 years it will be producing 10,000 barrels per day (see Standard Oil, 1870).