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Quaker State Corporation

Feb 23, 2009 | Posted in Essays, Pennsylvania Oil Companies

By Neil McElwee, 2009

The origins of the Quaker State brand of motor oil date back to 1914 when Thomas G. Phinny of Oil City and his son, Hopewell, arranged to provide a motor oil to the H. H. Franklin Co. of Syracuse, New York. This Syracuse firm manufactured automobiles with air cooled engines that placed extreme demands on the engine’s lubricating oil. The automaker began to use the Phinny’s Quaker State Medium Oil exclusively in the factory crankcase charge and in their dealerships for motor oil changes. New Franklins were shipped to the dealerships with a five-quart can of Quaker State Medium Oil. The Quaker State brand with the endorsement of the Franklin Automobile Co. first appeared in national print advertising in the Literary Digest of March 13, 1915.

The Phinny’s original tradename for their product line of oils was Quaker State Mineral Oil. Trademarks used with the Quaker State brand throughout the balance of the decade included the familiar stylized “Q”, “S”, “M” and “O” letters imposed over each other, a mark you find on earlier Quaker State cans, containers and product literature. The four letters refer to Quaker State Mineral Oil. Thomas and Hopewell Phinny established a partnership called Phinny Brothers Co. Phinny Brothers Co. applied for a Quaker State trademark with the U. S. Patent Office in December 1920. The Phinnys claimed in their application they had been using the Quaker State trademark since 1914. The trademark was officially noted and registered August 16, 1921.

From the beginning, Phinny Bros. Co. was in chronic need of new capital, financing and marketing assistance. Early on, the Phinny’s received this assistance from James D. and Charles D. Berry of Oil City. The Berrys operated J. B. Berry Bros. Inc. Berry Bros. was a nationally prominent oil brokerage with a jobber and distributor operation from Arkansas to Chicago and east to New England. Berry Bros. found buyers for the refined oil of firms it represented. They also purchased and produced crude oil. The super salesman was James Berry. Starting out as a jobber for Standard Oil of Kentucky, James Berry had friends among oilmen everywhere. He was well known for working the Chicago hotel lobbies during an oil convention, selling a tank car here, a tank car there until by the convention’s end he had sold several hundred railroad car loads to jobbers and distributors all over the east. He could sell on a friendly handshake because buyers liked him and trusted his competence and integrity. The Berry Bros. maintained their offices in the Chambers Building on Center St. in Oil City. Phinny Bros. had an office in the same building.

The Berry Bros. Co. was the broker for the refined output of the Emlenton Refining Co. The Emlenton Refining Co. owned the old Emlenton Refinery established in 1892. This was the refinery used by Phinny Bros. to manufacture their Quaker State Mineral Oil. Phinny Bros. Co. was often late in paying invoices due the Emlenton Refining Co. The Emlenton Refining Co. was incorporated in 1905. The company was run by an executive committee consisting of the four owners: P. J. Bayer, Samuel Messer, Harry Crawford and Thomas Gregory. At the time, all the owners lived in Emlenton. The four men served on the Emlenton Refining Co. executive committee for 26 years, until 1931.

In 1915, Berry Bros, and the Emlenton Refining Corporation formed an equal partnership to finance the manufacturing and marketing of Phinny Bros. Quaker State Mineral Oil. The partnership was called the Eastern Refining Co. The Berrys and Emlenton Refining put up $25,000 each to finance the undertaking and thus became early on the joint owners of the Quaker State Brand and the Phinny Bros. Co.

During World War I, Harry Crawford suggested Eastern Refining become the owner of a second marketing brand, Sterling Oil. Sterling Oil was created in the 1890’s by P.J. Bayer to market the Emlenton Refinery’s output of “Sterling” cylinder, engine and dynamo oil and miners oil around Erie and Western New York. The brand was not doing well, but Eastern Refining acquired it. In the next decade, the Sterling brand would be successfully used to market the gasoline produced by the enterprise. Sterling Oil was incorporated as a distinct Pennsylvania corporation in 1923. The firm had a chain of gas stations in Western Pennsylvania, Western New York and Eastern Ohio. Sterling Oil Co. of West Virginia, a separate business entity owned by the Ohio Valley Refining Co., operated a chain of gas stations in West Virginia.

At the end of the First World War, the partners in the Eastern Refining Company marketed the refining production of three refineries: the Emlenton Refinery, the old Independent Refinery in Oil City and the new Ohio Valley Refinery built in St. Marys, West Virginia by the Ohio Valley Refining Co. in 1916. The partners owned both the Quaker State and Sterling Oil brands. Eastern Refining had become a formidable regional confederation of individual marketing interests with a national brand. Samuel Messer managed Eastern Refining.

In 1923, the Eastern Refining Co. was liquidated and reorganized as a new corporation, Quaker State Oil Refining Co. The Quaker State Oil Refining Co. maintained its administrative offices on the fifth floor of the Chambers Building in Oil City.

The Bradford Field experienced a remarkable recovery in production in the 1920’s due to secondary recovery techniques employing water flooding and air and gas re-pressurizing. Producers in the Smethport area formed the McKean County Refining Co. in 1923 to refine their own abundant crude. The firm built a new refinery at Farmers Valley near Smethport. In early 1929, the owners of the Farmers Valley Refinery wanted out of the refining business and announced they actively were looking for a buyer. Quaker State Oil Refining Co. bought the modern plant toward the end of the year, the first refinery actually owned by this marketing firm.

The varied businesses, interests and properties of nineteen distinct companies were consolidated and merged into a new corporation, the Quaker State Oil Refining Corporation on June 23, 1931. This merger and reorganization took two years to accomplish. The boards of the nineteen companies individually met and individually agreed to exchange stock in their old companies for stock in the new corporation. Eight individuals had controlling interests in the nineteen merged companies: James Berry, Charles Berry, Florence Berry Lowrie, P. J. Bayer, Harry Crawford, Thomas Gregory, Samuel Messer and Edward Theobold.

H. J. Crawford was elected President and Chief Executive Officer at the age of 64. Though not active in the management of the corporation, the corporation was run by the executive committee, Crawford remained President and CEO until 1948 and CEO until his death in 1953.

The solvent dewaxing process developed by the major oil companies in Texas and Mid Continent was slow to be adapted in the old fields of the East. The Quaker State Oil Refining Co. contracted with the Texas Development Co. in 1936 to build a 900 barrel a day solvent dewaxing plant at Farmers Valley in 1936, the first in the Appalachian Field. Eventually, the process was installed at the Emlenton Refinery and Ohio Valley.

Also in 1936, Quaker State Oil Refining contracted with Standard Oil of Indiana to have Quaker State Motor Oil marketed as a premium motor oil at Standard’s service stations throughout the firm’s fourteen state territory. Though at first awkward, this relationship with a major oil company complimented Quaker State’s national network of jobbers and distributors.

Throughout World War II, Quaker State Oil Refining focused on providing the military with lubricating oils. The plants ran night and day, seven days a week. The consumer market was not forgotten, but it was definitely no longer the company’s principal focus. The installation of solvent dewaxing and extraction was completed at the Emlenton, Ohio Valley and Farmers Valley plants. Quaker State joined with Pennzoil and Freedom Oil to operate a 100-octane aviation fuel plant at the old Independent Refinery in Oil City. Quaker State, organized as a marketing company under Samuel Messer’s strong influence, was decidedly a refining company during the war years. Guy Hunter, a refinery veteran, ran the Emlenton Refinery and, as Quaker State Vice President of Refining, gradually the entire company. Hunter would succeed Harry Crawford as President in 1948. Hunter ran Quaker State from Emlenton, preferring to be there rather than in Oil City. The corporation’s administrative offices, however, remained in the Chambers Building in Oil City throughout.

During the War, a brilliant chemist who worked in secret as a recluse for a small refinery in Buffalo emerged as a giant in the lubricating oil field. The chemist was Carl Georgi. Georgi was the chief operating officer of the Enterprise Oil Company, a firm that was merged with Quaker State in the 1931 incorporation. The Enterprise Oil Co. manufactured the Duplex brand of motor oil. Duplex was famous in its time because it was the motor oil chosen by the Pierce Arrow Automobile Co., also of Buffalo, for its factory crankcase charge and used by Pierce Arrow dealers for oil changes. Pierce Arrow started using Duplex Motor Oil in 1901. Duplex is considered by historians to be the first branded 100% pure Pennsylvania Motor Oil. Duplex was the first to double-seal metal cans and drums to protect the quality of their premium product. Pierce Arrow issued a one-gallon can of Duplex Motor Oil with every new car.

Duplex was originally used as a marine oil. It continued to be used in this very demanding environment and was chosen by the U.S. Navy as the oil used in its torpedoes during the War. This special, critical use was why the Buffalo plant and Carl Georgi were guarded by the government. During and after the War, Georgi ran Quaker State’s product research and development in Buffalo and Emlenton. In the 1950’s, Georgi initiated Quaker State’s Technical Services Department.

In the latter 1950’s, Quaker State once again became a marketing company first and foremost and emphasized its efforts to maintain and increase its share of the consumer market. Forrest Koontz replaced Guy Hunter as President and Chief Executive Officer in 1958. Koontz was a consummate salesman with a long relationship with Quaker State’s more than 1,000 distributors around the country. In 1961, Quaker State contracted with Amoco, Standard of Indiana’s affiliate in the East, to provide Quaker State products to Amoco’s extensive dealer network throughout the East and South. Quaker State established relationships with mass marketers such as K Mart and Pep Boys beginning in 1962.

Forest Koontz retired due to age in 1964 and was replaced by Lee Forker as President and Chief Executive Officer. Right after taking office, Forker notified the Quaker State board that a large New Orleans shareholder, Louis Roussel, wished to be placed on the Board of Directors. Roussell also wanted to purchase the Berry family’s sizable holdings of Quaker State stock. Before the matter was decided, Hugh Liedtke bought Roussel’s stock and approached Quaker State seeking a merger with Pennzoil. Liedtke made a friendly takeover offer that was declined. To dilute Liedtke’s influence, Forker convinced the Quaker State Board to authorize an increase in capital stock from one million to 2.5 million shares, authorize an additional stock distribution of one share for each existing issued share, and to eliminate cumulative voting of shares.

As matters stood in early 1965, Pennzoil owned 8 % of Quaker State. Forker approached Liedtke to buy back Pennzoil’s Quaker State stock. Quaker State borrowed $5,000,000 and bought the Liedtke-controlled stock back in December 1965. Liedtke moved Pennzoil to Houston in 1965. Quaker State stayed in Oil City for another thirty years.

During Forker’s tenure, Quaker State improved their three refineries in Emlenton, Farmers Valley and Ohio Valley. A new packaging plant was built in Los Angeles with tank storage for 5,000,000 gallons of oil. A new research laboratory was built in Seneca. Relations with mass marketers were refined along with initiatives to support Quaker State’s decades old distributor network. Forker announced plans in 1970 to build a new refinery, the Congo, in Newell, West Virginia. This would be the first new lube oil refinery built in the old Appalachian Field in decades. The crude oil would be piped from the company’s wells located east of Canton, Ohio. Forker became Chairman of the Board in 1970 and would gradually retire from active management. While Forker was President and Chief Executive Officer, Quaker State prospered.

Quaker State moved in 1977 into a brand new office building on Elm St. in Oil City. The firm looked forward to years of continued prosperity. Quaker State diversified into coal, buying the Valley Camp Coal Co. The Valley Camp adventure did not go well. Within a decade, Quaker State sold off as much of Valley Camp as they could. Quaker State’s venture in 1980 into a network of fast lube centers showed real promise. Quaker State financed over 100 such centers in 1980 including ones owned and operated by Arctic Circle of Salt Lake City. Quaker State acquired Arctic Circle for $29,000,000 in November 1985 and reorganized it as Quaker State Minit-Lube, Inc. The Minit-Lube venture proved very expensive with disappointing returns.

As a result of a consultant study completed in 1987, top management persuaded the board of directors to approve a name change from Quaker State Oil Refining Corporation to the new Quaker State Corporation. Quaker State lost market share in the latter 1980’s. In the early 1990’s, the Quaker State brand was still recognized as one of the top premium motor oil brands in the country, but change was in the air. New top management moved the company abruptly from Oil City to Dallas in 1995. Today, Quaker State is owned by Shell.