OIL: Billion-Dollar Chip

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In the global gamble for oil, everyone knows that U.S. companies are cashing in the biggest jackpot in their history. But few realize the staggering size of the bets required to back up a winning hand. Last week Gulf Oil Corp., fifth biggest in the industry, provided a prime example. It announced that it will spend another $200 million to expand its refining and manufacturing operations, bringing its total expansion since war's end to $1 billion, one-twelfth of the whole U.S. industry's postwar investments. With such huge costs for hunting and producing oil, not even the giants can afford many mistakes. Says Gulf's 51-year-old President Sidney A. Swensrud: "A man used to be a good executive if he guessed right three out of five times. Now, you can't stay in business on executive hunches."

No hunches, but the cold facts of the world demand for oil are behind Gulf's expansion. Swensrud, who has already built the world's largest "cat" (catalytic) cracker at Gulf's main refinery at Port Arthur, Texas, will now build a still bigger one (63,000 bbls. a day) at Gulf's Philadelphia refinery. He will also build the world's biggest (125,000 bbls. per day) atmospheric and vacuum crude-oil "topping" unit (which skims off the lighter components of crude). The result will boost the military's supply of high-octane gasoline by 42,000 gals, daily. But Swensrud also has his eye on a longer-range peacetime market: the high-compression auto engine.

Answer Man. Swensrud has been exploring new oil markets ever since he finished Harvard Business School in 1927, went to work as an assistant to W. T. Holliday, president of Standard Oil of Ohio. While riding Standard's tank trucks and dropping in at filling stations, Swensrud always asked the "Why" for everything, jotted down the answers in a little notebook. He found out so many things that executives who played by ear couldn't answer that he rose swiftly to vice president. He was marked for the top job at Sohio when Gulf hired him away in 1947 as successor to aging President J. F. Drake, who stepped up to chairman when Founder William L. Mellon, now dead, retired.

Bill Mellon had started the business in 1901, simply to rescue a $5,000,000 loan which Cousin Andrew Mellon had made on some Texas oil leases. He salvaged the money so well that when he retired at 80 his empire (still 41% owned by the Mellon family) stretched from Venezuela, where only Standard's (NJ.) Creole and Royal Dutch Shell outrank Gulf's Mene Grande, to Kuwait on the Persian Gulf, where Gulf and Britain's Anglo-Iranian share more than 11 billion bbls. of oil reserves. Under him, Gulf got the prospecting rights to all of Denmark, and his global marketing and producing apparatus embraced subsidiaries through most of Europe, Africa and Brazil, plus proven U.S. reserves of 1.3 billion bbls.

Despite the empire's size, Swensrud soon knew it inside & out, traveling its reaches in Gulf planes, asking questions, jotting down answers in his notebook. In Swensrud's first year, Gulf's sales passed the $1 billion mark for the first time in history.