5. Rockefeller entered the oil business at the precisely right time
During the 1860s, government subsidies drove the price of oil to over $13 per barrel, up from 35 cents when the war began. The price the government paid for oil led to the first wave of wildcatters drilling oil wells, and by the end of the war oil glutted the markets. Prior to the Civil War most kerosene was extracted from coal (coal oil) and it was soon evident that crude oil could be a cheaper source of kerosene. At the same time, establishment of a refinery was relatively inexpensive, as were the costs of operating one. Rockefeller observed that the most expensive cost of refining crude oil was shipping it to the refinery, and then shipping the finished kerosene to market. Shipping was an area in which he was already expert at managing costs.