"Monopoly Power and Economic Independence: Standard Oil in Iceland, 1890-1930 "

In the 1890s and early 1900s, Standard Oil secured a monopoly or a near-monopoly in the Scandinavian markets. This also included the small, but rapidly growing, Icelandic market which was controlled by Standard Oil’s Danish subsidiary DDPA. As in the rest of Scandinavia, Iceland had long and dark winters. Kerosene therefore became an important product. After 1900, petroleum motors also helped transform Iceland’s fisheries. Oil products were therefore essential for the country’s economy.
However, politics helped complicate Standard Oil’s position in Iceland. Iceland was at this point a Danish dependency. While Iceland gained limited home rule in 1874, Icelandic patriots called for increased domestic influence over the country’s development. This also affected the political economy and oil market. Standard Oil met stronger resistance in Iceland than in the other Scandinavian countries. It met sharp criticism for its abuse of market power. In 1914, just before the outbreak of war, the Icelandic fishermens’ movement started importing petroleum. By 1916, Iceland’s government did likewise. In the early 1920s, the government organized a state monopoly for petroleum. We have so far limited information about this monopoly, but it was probably not economically successful. In 1925, Iceland again allowed independent companies to import and sell petroleum. However, the state oil company continued to operate, with the explicit aim to limit the international oil companies’ potential abuse of monopoly power.
The aim of this paper is to investigate the political economy of oil in Iceland: how important was Standard Oil to the development of the Icelandic economy, why did the company meet so fierce resistance, and how effective was the state petroleum monopoly? The paper is based on access to original source material from the archives of Standard Oil’s Danish subsidiary.