Phillips 66 – The Gasoline That Won the West
An 1870s grasshopper plague of Mosaic proportions drove little Frank Phillips’ (1873-1950) Nebraska family to a farm near Conway, Iowa, where he grew to adulthood. From childhood, Frank exhibited the gifts of a virtuoso entrepreneur. Barely in his teens, he owned a barbershop. By his early twenties, he owned every barber shop in town. He married the daughter of a local banker, who recognized his gifts and hired him to sell bonds. Phillips succeeded well enough the banker paid him an enormous commission which road staked his independent business ventures that followed.
Like most great entrepreneurs, Frank Phillips possessed a keen “nose for the deal.” Upon encountering his friend and Methodist Missionary to the Osages C. B. Larabee at the New Orleans World Fair in 1903 and hearing the clergyman’s account of the burgeoning early-1900s Indian Territory oil boom, Phillips gambled and moved his family there. Younger brother L. E. (1876-1944) did the same. There, they entered the rough and tumble wildcat exploration business. Their first well struck oil, but the next two failed. They staked everything they had on one final spud, the Anna Anderson Number One. It came a gusher. It paved the way for everything that followed for the Phillips boys. Their brother Waite (1883-1964), a successful oil man, entrepreneur, and philanthropist in his own right, was a sometime partner with them.
Banking on Oil
More conservative and even-keeled than many of their peers, Frank and L. E. feared the boom-and-bust cycle of the oil business. While Waite mostly pursued his own ventures, they shifted their resources toward banking, where they prospered. By 1916, they were laying the groundwork for a chain of banks across middle America when history once again intruded to turn them back to the oil business. With World War I raging across Europe and the Middle East, and Allied nations clamoring for American petroleum, oil prices had more than doubled. The Phillips brothers “called an audible” and consolidated all their holdings into one new entity—Phillips Petroleum Company, which they incorporated on June 13, 1917. The company totaled $3 million in assets and twenty-seven employees.
Now committed to the petroleum industry, the Phillips brothers, with Frank as president and L. E. as vice president, led their new company into international dominance. Huge strikes in Texas Panhandle and western Kansas fields spurred Phillips’ innovation in the burgeoning natural gas industry and their number one national ranking in natural gas liquid production. They produced and sold their own gasoline, chemicals, aviation fuel, and liquefied petroleum gas.
Within five years, Phillips had exploded to over $50 million in assets. A 1927 automobile road test with Phillips’ new gasoline formula on Route 66 near Tulsa generated a then-blazing speed of 66 m.p.h. Thus was born the legendary fuel, and then brand, Phillips 66. The timing was appropriate, as the first Phillips 66 service station opened the same year in Wichita. The company parlayed the Route 66 and 66 m.p.h. elements of the colorful road test into signs for the stations and other company properties that featured the likeness, albeit orange and black (later, red, white, and black), of a U.S. Route 66 Highway sign.
During the Great Depression and Dust Bowl years that so devastated Oklahoma—and threatened Phillips 66’s own survival—the company forged ahead, providing jobs crucial to thousands of Oklahomans and to the economic survival of the state. Frank found numerous smaller ways to bless the children of Bartlesville as well, including a silver dollar and bag of fruit and candy for each during Christmas season, and free circus tickets. These and many other acts garnered him the affectionate nickname of “Uncle Frank” from his fellow townspeople.
L. E. retired in 1934 and declined U.S. Secretary of State Patrick J. Hurley’s invitation to serve as American Governor General of the Philippines. The final year of Frank’s presidency, 1937, was the most profitable in Phillips history to that point. Some of the words he spoke to his employees reflected his old school “tough but tender” persona:
“Work hard and demonstrate loyalty, and I'm a great guy to work for. Do neither, and there is no one worse….I am egotistical. I exercise the 'privilege and prestige of the office.' I'm bombastic, hard to get along with, an easy touch, a farm boy at heart, and conveniently hard of hearing. I'm just a sentimental old man. I'm tough and I know it. I'm the boss, and don't let anybody try to question it.”
Frank Phillips told Boots Adams, “I'm going to object to everything you do. But you go ahead and do it anyway.”
Boots Adams
One of the most pivotal events in the history of Phillips Petroleum was Frank Phillips’ 1938 passing of the president’s baton to longtime employee Kenneth S. “Boots” Adams. The move was freighted with potentially devastating consequences for the organization. The two men’s business and leadership philosophies differed in numerous respects. And, high-level company managers opposed the choice for that reason. Even Frank even told Adams, "I'm going to object to everything you do.” But he added, “you go ahead and do it anyway."
Frank became the company’s first Chairman and CEO, which he remained until his 1949 retirement. The two men proved a historically winning combination. Adams, a Kansas native only thirty-eight years old, was one of the youngest leaders of a major corporation in America. He was bristling with innovative ideas and possessed the steely constitution and savvy to motivate others to move his plans forward.
Adams aimed from the beginning of his tenure as president to steer Phillips 66 into an array of developing petroleum industries. Heading this list was the rights to natural gas mining. Traditionally considered a waste product, Adams bought them low, anticipating what happened by the end of World War II—the commodity more than doubling in value. He committed everything he could to the pursuit, including buying his own modern-style Pace Setter home that utilized a host of natural gas appliances, and encouraging others to do so. A decade after the war, Phillips dominated natural gas reserves with 13.3 trillion cubic feet. These alone valued at more than $8 billion in late-2010s currency.
Adams recruited graduates from numerous scientific fields to strengthen Phillips research and build its technological acumen. These initiatives enabled him to develop a powerful Phillips petrochemical industry silo. He drew a particular bead on synthetic rubber. This took on historical import with the onset of World War II when the Japanese violently conquered Southeast Asia and cut off its crucial supply of natural rubber to America. U.S. rubber reserves were too meager to support a massive war effort of more than two years at most and synthetic rubber products were inferior and expensive. Producing a durable supply of alternative rubber suddenly loomed as indispensable key to winning the war.
Adams threw the weight of Phillips Petroleum into a leadership role in what the government termed the GR-S, or Government Rubber-Styrene program. Its resounding success played a crucial part in helping overwhelm America’s Axis enemies. As a testament to its importance to World War II victory, the GR-S, also called the U.S. Synthetic Rubber Program, eventually won recognition as a National Historic Chemical Landmark. Phillips also perfected the HF Alkylation process during the war, another key to winning the world’s most catastrophic conflict. HF Alkylation enabled the production of high-octane aviation fuel, which boosted the power of Allied aircraft such as the matchless P-51 Mustang fighter and helped give them a precious winning edge over their determined foes.
In 1954, Phillips pioneered production of multi-grade motor oil with its famous TropArtic (as in tropical and arctic). This watershed product enabled automobiles to keep the same motor oil year-round—a practice long since taken for granted by motorists—rather than having to switch grades according to seasonal temperature variations. The company even innovated with “highway hostesses,” registered nurses who patrolled Phillips 66 gas stations everywhere. They enhanced customer experiences by inspecting restroom facilities for cleanliness and supplies, as well as recommending quality nearby dining and lodging options.
Boots Adams’s successful, nearly half-century-long Phillips career ended with a memorable Bartlesville parade that featured everything from a water tower decorated like a birthday cake to high school marching bands to former President and World War II legend Dwight Eisenhower. “Ike” presented his close personal friend—whose important role in providing synthetic rubber to transport and otherwise support Eisenhower’s massive armies in Europe helped win World War II—a painting from his own brush of Adams chairing a Phillips board meeting.
Phillips Petroleum research and products played a crucial role giving America a precious winning edge over its determined foes in World War II.
Final Chapters
By 1984, Phillips Petroleum was the eighth largest petroleum company in America and, carrying forward the legacy of longtime president and chairman Boots Adams, led the industry in research and technological patents. Only Tinker Air Force Base possessed a larger in-state payroll than Phillips, which employed over 8,600 people in Oklahoma, including 7,700 in Bartlesville.
But outside and sometimes very hostile corporate takeovers proliferated in America’s booming Reagan-era economy. Near the end of the year, one of the most dramatic hostile takeovers efforts in American history exploded into view. Famed oilman and Holdenville native T. Boone Pickens engineered the campaign against the multi-billion-dollar Bartlesville-based business. It was a thunderous clash of titans that roared until Christmas Eve. Phillips warded off Pickens’ attempted take-over, but he grew wealthier from the effort and the company tripled its debt.
Indeed, the close call with Pickens and the squeeze it put on the company likely proved the beginning of the end of Phillips as an independent and Oklahoma-based organization. The 1984 takeover campaign forced it to sell off valuable assets, which helped lead, less than two decades later, and following a series of out-of-state worksite tragedies, to its 2002 merger with another oil giant founded in Oklahoma, Conoco. Phillips moved its corporate headquarters to where Conoco already was, and remains—Houston.
