Labor Unions and Antitrust Legislation: Oil and Gas Part 4

Hello All!

Time flies when you spend it with the Oil and Gas Journal; I’m all the way to 1939. Quite simply, there’s a lot of data, and being beholden to library hours does somewhat restrict the quantity of work that can be done, but it’s worth having an air-conditioned work environment this time of year. Anyway, on with the show.

Professor Brent Kaup, my advisor, and I may very well decide to scale down the final product from this summer’s work, although the broader project on energy shifts will certainly go on. For the rest of this summer, I will likely help him draft a paper on the relationship between antitrust legislation and labor unions within the oil industry. I kept noticing that other countries during the 1930s were far more successful at unionizing oil and gas workers than the U.S. was, and it wasn’t entirely clear why; according to post-materialist global systems theory, the U.S.’s status as a developed country by this time should have opened the floodgates for labor unions across all industries like it did for Great Britain, for example.

The secret in part lies in the fact that oil workers are more dispersed by location and by skill than workers of a lot of industries are. A dozen workers at a drill site may be in the earth monitoring the rig, while others may be hundreds of feet above on the floor of the oil derrick. Some workers are monitoring the drill pump engines, while others are treating the above ground storage tanks. Furthermore, thousands more workers are at a distant refinery, while others construct the pipelines that cover that mileage between the drill site and the refinery. In short, there’s not necessarily the same solidarity between oil workers that there is for the hundreds of coal miners who go into a mountain base together with pick-irons in their hands.

A different kind of fragmentation also made unionization hard in these times. Part of the New Deal’s mission was labor reform, but a much larger part was trust-busting. Monopolies were seen by many Democrats of the day as the main cause of the Depression, and they had to be stopped at all costs. The Standard Oil trust had already been broken, but there were several landmark cases throughout the late 1930s that challenged cartel-like pricing practices within the oil industry. Nevertheless, simply because of the growing variety of tasks within the 1930s oil industry, each barrel of crude went through several different companies: a drilling company, a refining company, an independent filling station operator, and a pipe line distributor in some cases. There were certainly attempts to consolidate these functions under oil and gas conglomerates, but these were vigorously opposed by Congress. In fact, one of then-Senator Harry Truman’s main legislative forrays was a bill that wished to divorce oil companies from pipe line operations.

What does all this mean? It means that if in the early 20th century a union had wanted to go to all of the trouble to unionize an entire oil field’s operation, it could have negotiated benefits for the refiners, drillers, distributors, and marketers of one employer: Standard Oil (an example), which would later be fragmented into things like Exxon and Mobil One. In the 1930s, a union wanting to unionize these various employees would not only have to manage the geographic separation of the workers, but they would also have to negotiate and collectively bargain with multiple companies and multiple hierarchies, all to join together workers that really didn’t have much in common with each other to begin with.

Consequently, to this point, I’m not finding much in the way of successful mass unionization in the oil and gas industry, despite legislative successes like the Wagner Act of 1935 on collective bargaining and the institution of a minimum wage in 1938. Things may change, but the 1930s world shows that 1) the fragmentation of workers distinguishes the oil industry from other dominant manufacturing industries in America and other economic powers, and 2) an inclination away from consolidation of the oil industry (however successful) was in stark contrast to the oil monopolies, often state-owned, of Latin American and European countries.

So, friends, this is what I’ve been up to. I’d greatly appreciate feedback on this idea. I think, if proven correct, this research challenges our conceptions of the New Deal. It is often assumed that trust-busting and labor reform were mutually-reinforcing goals of the New Deal, but it may be that they confounded each other in reality.