Why is Standard Oil often cited as an example of a horizontal integration monopoly in United States business history?

Introduction / Context:
Horizontal integration is a business strategy in which a company buys or merges with other firms at the same stage of production, thereby increasing its market share and reducing competition. Standard Oil, founded by John D. Rockefeller, is one of the most famous examples of this practice in United States history. This question asks why Standard Oil is often cited as a horizontal integration monopoly.

Given Data / Assumptions:

• Standard Oil operated in the oil industry during the late nineteenth and early twentieth centuries.
• Horizontal integration involves control at the same level of the production process.
• The company was known for its dominant share of oil refining in the United States.
• Only one option correctly connects these facts to the definition of horizontal integration.

Concept / Approach:
The core concept is that Standard Oil used horizontal integration by acquiring competing refineries and consolidating them into a single powerful trust. At its peak, it controlled around ninety percent of oil refining in the United States. This strategy reduced competition and allowed Standard Oil to exercise significant control over prices and supply. Vertical integration, by contrast, would involve controlling multiple stages such as drilling, refining, transport, and retail. The option that mentions ownership of most refineries and buying competitors at the same production level fits horizontal integration.

Step-by-Step Solution:
Step 1: Recall that Standard Oil was a major refining company, not just a small local business. Step 2: Understand that horizontal integration means expanding by acquiring competitors operating at the same stage of production, such as other refineries. Step 3: Remember that Standard Oil used aggressive tactics, including price wars and buyouts, to gain control of most United States refineries. Step 4: Examine option a, which states that Standard Oil owned about ninety percent of United States refineries by buying up competing firms at the same production level. Step 5: Compare this with option b, which falsely claims that the company owned no refineries, and option c, which exaggerates control in global finance while minimizing its refining role. Step 6: Note that option d incorrectly describes Standard Oil as a government agency, which it was not. Step 7: Reject option e because it wrongly suggests that the company only produced crude oil and did not control refining.

Verification / Alternative check:
Business history sources consistently describe Standard Oil as a trust that dominated the refining stage by buying competitors, illustrating horizontal integration. They also mention some vertical integration, but the best known example is its consolidation of refineries. Courts later ruled the company in violation of antitrust laws and ordered it broken up. This evidence supports option a as the accurate description.

Why Other Options Are Wrong:
Option b is incorrect because Standard Oil did own refineries and focused heavily on refining. Option c is misleading and does not describe the actual structure of the company. Option d falsely claims it was a government agency, which it was not. Option e contradicts the historical fact that refining was central to Standard Oil's power.

Common Pitfalls:
Students sometimes confuse horizontal and vertical integration or think that any very large company must be vertically integrated. Another error is assuming that Standard Oil was a government agency because of its influence. To avoid confusion, remember that horizontal integration involves buying competitors at the same stage, and Standard Oil is a classic example because of its dominance in refining.

Final Answer:
Because it owned and controlled about ninety percent of United States oil refineries, buying up competing firms at the same production level.