The latest list of America’s top 10 richest people in the oil and gas sector is out, and three people on the list can thank the ingenuity of one man for the immense wealth they inherited that gave them a head start in their lives.
Most notable among the oil barons are the Koch brothers, Charles, 78, and David, 73, who top (by a long shot) the list of the wealthiest oil and gas barons (and baronesses) in the United States, according to a report released Wednesday by WealthX, which tracks high-net-worth individuals globally. The siblings from Wichita, Kansas, have a combined net worth of $83 billion, split down the middle between them.
The other eight people on the list are worth $61.9 billion combined, including the reclusive heiress Elaine Marshall, whose estimated $8.3 billion in wealth was willed to her in 2006 by her late husband, E. Pierce Marshall. That gave Elaine, 77, the ranking of America’s fourth-richest woman in 2012, according to Bloomberg. E. Pierce was the son of J. Howard Marshall, the oil baron who was a business partner of the father of the Koch brothers, Fred C. Koch, who gave J. Howard a sizeable stake in Koch Industries, the conglomerate held by the Koch brothers, which, in 2011, was the second largest privately held company in the U.S., according to Forbes’ list of the 500 biggest companies,
What all of this boils down to is this: More than 57 percent of the total net worth of the current top ten richest Americans involved in the oil and gas industry come from a background that begins with Fred. C. Koch.
Fred, of Quanah, Texas, was the son of a Dutch printer’s apprentice who arrived to the U.S. in 1888. He started his career in Port Arthur, Texas, and quickly distinguished himself as an engineer. With a fellow MIT classmate, he invented a new thermal cracking process for converting crude that, according to The New American, angered the small number of mega-corporations that dominated refining at the time, because their process was cheaper and allowed more competition. These corporations used their clout to put Fred and his partner, P.C. Keith, out of business by swamping them with dozens of lawsuits that mired them in litigation for years, in a process that today would easily raise antitrust allegations.
Fred was vehemently anti-Communist and wrote in his 1960 memoir, “A Business Man Looks at Communism,” that African Americans “loom large in the Communist plan to take over America,” and that welfare was a ploy by Communist infiltrators in the Republican and Democrat parties to get minorities involved in a "vicious race war.” But ironically, he bounced back financially from his losses in Texas by helping Communist Russia establish 15 cracking units between 1929 and 1932.
Though he did business with the Bolsheviks, it was his experience in the Russian countryside to which he later attributed his vehement anti-Communist views, especially after he witnessed Stalin’s purges of some of his former engineering colleagues.
So that’s the history behind the immense wealth of three of the seven richest oil and gas industry players in America today. The Koch brothers are far from wastrel children of a savvy entrepreneur -- both brothers went to MIT, like their father ,and grew the wealth they inherited.
They head a conglomerate that directly employs 47,000 people in the U.S.
Koch Industries is involved heavily in refining, chemicals and biofuels, as well as forestry, consumer products, fertilizers, polymers and pollution control equipment. For that, the Koch brothers are considered both inheritors of wealth and self-made. They loom large in philanthropy and also spend heavily in steering U.S. campaigns toward their ideological objectives, some of which -- namely supporting candidates who want to cut entitlements -- would make their father proud.
Along with Elaine Marshall, three other people on the list are there because they inherited their wealth:
Milane Frantz, 43, of Houston, Texas. Her estimated net worth is $5.5 billion, thanks to inheriting part of the financial legacy of her parents, Lee Ellis and Dan Duncan, co-founders of Enterprise Products Partners L.P. (NYSE:EPD), which does business in natural gas liquids.
One of the other two people on the list who are considered wealthy by inheritance is Ray Hunt, the 70-year-old CEO of Hunt Consolidated Inc., a Dallas-based oil and real estate holding company. He inherited Hunt Oil Co. in 1974 from his father, the famous Texas wildcatter H.L. Hunt. Ray’s estimated net worth: $5.3 billion, which put him at No. 7 on this top ten list. Ray’s son W. Herbert Hunt is also on the list at No. 10. He’s worth $4 billion. Herbet and his brother Nelson became famous in 1980 for losing billions and going bankrupt on silver speculation on Silver Thursday.
What about 100% self-made entrepreneurs on the list?
They are: Harold Hamm -- The 68-year-old from Lexington, Ok., the son of cotton sharecroppers who started as a gas station attendant and is now the CEO of Continental Resources, Inc. (NYSE:CLR), the Oklahoma City-based crude oil and natural gas explorer that was a pioneer in working the Bakken formation, the oil cache in Montana, North Dakota, Saskatchewan and Manitoba that has become a major source of U.S.-extracted crude oil. Hamm’s estimated net worth is $14.1 billion, and he ranks third behind the Koch brothers on the list.
Jeffrey Hildebrand -- The 54-year-old CEO of Hilcorp Energy Co., based in Houston, Tex., rose to No. 9 on the latest WealthX list of the richest individuals in the U.S. oil and gas sector in a rather conventional self-made way: He went to school to study geology, got his master’s in petroleum engineering, worked for major players, including Exxon Corp., before taking his academic and work experience and business acumen to establish his own oil and natural gas exploration company.
Filling out the list are two men who, like the Koch brothers, inherited wealth and then ran with this early head start to become top ranking oil and gas billionaires.
Philip Anschutz of Russel, Kansas. The 74-year-old bought his father’s oil company, Circle A Drilling, and made loads of cash in exploration in Wyoming, which he then used to invest in sporting-related entertainment companies. He continued to invest in petroleum-related enterprises as well. Anschutz is worth $9.9 billion and is ranked as the fourth-wealthiest individual on the list.
George Kaiser, the 71-year-old chairman of BOK Financial Corporation (NASDAQ:BOKF), a Tulsa, Oklahoma-based financial holding company. He started on his path to success by working for his father at Kaiser-Francis Oil Co., which was founded by his parents and uncle, who were Jewish refugees who fled the Nazis and settled in Oklahoma. Kaiser’s wealth is estimated at $9.8 billion, thanks largely to non-oil related investments, namely buying the failed Bank of Oklahoma, N.A., from the government. The Kaiser family foundation was a key investor in Solyndra, the green-energy company that went under after receiving a $535 million Department of Energy loan.
Angelo Young is a general assignment business reporter who joined IBTimes in April 2012. Much of his career has been behind the scenes as a copy editor, assignment editor and...