ExxonMobil

ExxonMobil Corp. is the world's largest publicly traded oil company, and one of the largest U.S. companies, with $404 billion in revenue in 2007 and a market valuation of $504 billion at year end. In 2007 the Irving, Texas-based company produced roughly 3 percent of the world's oil. The company was formed in 1999 when Exxon Corp., the largest U.S. oil company, acquired Mobil Oil, the country's second-largest oil concern.

Nearly two-thirds of the company's net income in 2007 was generated through its production of oil and natural gas, which includes fields in the Gulf of Mexico, the Arctic, Russia, the Caspian Sea, offshore West Africa, and the Middle East. ExxonMobil has about 11 billion barrels of oil reserves as of the end of 2007, or 0.9 percent of the world's proved reserves—which ranks it behind government-owned oil companies such as those of Saudi Arabia (the largest), Iran, and Venezuela.

ExxonMobil also has a large worldwide petroleum refining and marketing operation that includes 32,000 service stations. It owns several top-selling global brands, such as Esso gasoline and Mobil 1 motor oil. Its petrochemicals operation is also large and spread around the globe, making, among other products, key building blocks of polyester and plastics.

ExxonMobil had its origins as the largest parts of Standard Oil, the massive petroleum company incorporated in 1870 by John D. Rockefeller and his partners. Standard Oil became one of the biggest and most famous companies in the world, built in part on its efficiency in transportation and refining, and in part on ruthless competitiveness. Standard controlled 90 percent of U.S. petroleum refining capacity by 1880, and dominated the petroleum and kerosene market for several decades. It eventually began acquiring oil-production companies, creating the first vertically integrated oil company. The United States sued Standard under the 1890 Sherman Antitrust Act, and in a landmark 1911 decision, the U.S. Supreme Court broke Standard up into 34 fragments. The largest fragments were Standard Oil Co. of New Jersey (which changed its name in 1972 to Exxon) and Standard Oil Co. of New York (which changed its name in 1966 to Mobil Oil). The year 1911 also marked the first time Standard's sales of gasoline surpassed those of kerosene.

When Exxon acquired Mobil in 1999, the merger was the biggest in U.S. history and the largest oil merger ever.

The independent Standard Oil Co. of New Jersey was among the oil pioneers in international expansion, [Page 656]first in Iraq and later in Saudi Arabia. In the late 1920s and 1930s, Jersey Standard also led the way in expanding into petrochemicals.

The oil market changed in the 1960s and 1970s, as power shifted to national oil companies and the OPEC cartel of oil-producing nations. Oil prices rose, and many consumers blamed large U.S. oil companies such as Exxon—in part because higher oil prices pushed Exxon to the top of the Fortune 500 list of the biggest American corporations. Both Exxon and Mobil diversified into non-petroleum businesses, including Exxon's failed attempts to enter the computer market and Mobil's brief ownership in the 1980s of the Montgomery Ward department stores. Following these setbacks, the companies focused on their core businesses of oil, gas, and chemicals.

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