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Taking a Page from Rockefeller's Book

Friday, February 17th, 2012

Nearly every investor knows the story of John D. Rockefeller and Standard Oil.

The rise of Standard Oil has been the subject of countless documentaries both praising and attacking its fortune.

But there's a chapter in the story of Standard Oil's success that most people overlook.

While Rockefeller himself is considered the wealthiest person in history, there was another man who helped shape Rockefeller's empire...

His name was Henry Flagler.

Behind the Rockefeller Fortune

(Don't feel bad if that name doesn't ring a bell. If you have heard of Flagler, maybe you paid more attention in history class than your teacher gave you credit for.)

I'm always surprised at how few people understand the role Flagler played in Standard Oil's control over the U.S. oil industry.

Once, after being asked if Standard Oil was his idea, Rockefeller reportedly said, “No, sir. I wish I had the brains to think of it. It was Henry M. Flagler.”

You see, Flagler was one of the men to whom Rockefeller went to raise capital for his new endeavor with oil, after years in the grain business.

Flagler, Rockefeller, and a third partner named Samuel Andrews took over the United States oil industry in middle of the nineteenth century. And "took over" may be grossly understating Standard Oil's dominance in the field...

Remember, the U.S. was the world's largest oil producer. At one point, there was more crude being pumped out of Pennsylvania oil fields than anywhere else on the planet.

By the early twentieth century, these guys controlled nine out of every ten barrels produced in the United States — and two-thirds of the entire world's oil supply.

Make no mistake, dear reader; these men were utterly ruthless in their dealings.

Flagler single-handedly brought the railroad companies to their knees during contract negotiations.

He recognized the huge edge that Standard Oil held over the railroads and took full advantage of it — and this at a time in history when the railroad monopolies dominated transportation.

Of course, monopolizing the oil trade in this manner had severe repercussions. It attracted a fierce opposition and lead to its breakup in 1911.

The result was the creation of 34 independent companies, many of which you will undoubtedly recognize today. We're talking about the big players like Exxon, Mobil, Chevron, Texaco, Amoco, Conoco (the list goes on and on).

Now we may be seeing this story play out all over again...

This time around, it's all about another cheap and plentiful source of energy: natural gas.

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Taking a Page from Rockefeller's Diary

Rumor has it Rockefeller kept a private diary that fetched more than six figures at an auction held decades after he passed away.

Whether or not this is just an old wives' tale whispered among Exxon execs to pass the time before a board meeting begins, one can only imagine the wealth of insight contained in such a historical document...

A bit of Rockefeller's advice would be worth billions.

As it turns out, some companies are taking a page of the Standard Oil playbook by controlling every aspect in the upcoming surge of North America LNG exports.

And this collective isn't bothered by the wide daily swings we've seen in a panicked market.

Although a few of my day-trading friends may not be able to recognize this opportunity, these companies have proven they can deliver for investors:

four stocks gas

In fact, you can see above that just four of our latest natural gas plays have performed for us over the long haul... with an even brighter outlook in the years to come.

Regardless of how you feel about the tactics used by Standard Oil, its value was well over a trillion dollars at one point. And its fortune wasn't just built on the back of U.S. demand...

By 1885, 70% of Standard Oil's sales were made overseas, reaching markets in Northern Europe and Russia.

In similar fashion, these four companies are also ready to tap the overseas market.

Countries like China are more than willing to pay top dollar for a stable, secure energy supply.

Back when Flagler and Rockefeller first began shipping kerosene to China in the 1890s, the country's population was only 400 million. Today, that number has swelled to more than 1.3 billion — and China's demand outlook has never been higher.

And here's the best part for these four companies negotiating this $2 trillion energy investment with China...

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Until next time,

Keith Kohl Signature

Keith Kohl

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A true insider in the energy markets, Keith is one of few financial reporters to have visited the Alberta oil sands. His research has helped thousands of investors capitalize from the rapidly changing face of energy. Keith connects with hundreds of thousands of readers as the Managing Editor of Energy & Capital as well as Investment Director of Angel Publishing's Energy Investor. For years, Keith has been providing in-depth coverage of the Bakken, the Haynesville Shale, and the Marcellus natural gas formations — all ahead of the mainstream media. For more on Keith, go to his editor's page.

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