Despite its early successes, Imperial Oil struggled to make a profit and issue dividends in the early 1880s. The discovery of new oil fields in Pennsylvania and New York drove down the price of oil, and the creation of the Standard Oil Trust resulted in an increase of American oil imports into Canada. In a move to boost kerosene prices, Imperial closed down ten of the twelve refineries it had acquired through the merger, leaving only the Silver Star refinery in Petrolia and the Victor works in London. In 1883, the Victor works was struck by lightning and burned to the ground, and under Englehart's direction, the company concentrated its refining efforts at Petrolia.
By this time, Standard Oil had also become interested in the desulphurization process after moving production to oil fields in Ohio that had a similar sulphur content to Lambton County. In 1886, Standard Oil persuaded Frasch to return to the United States and join their company by offering "a salary higher than that of any other scientist in the country" and an exchange of his shares in the Empire Oil Company for an equivalent amount in Standard Oil. After returning to the United States, Frasch perfected his desulphurization strategy, and Standard Oil held a monopoly on the process until 1905.
Despite rising revenue and growth in the 1890s, Imperial Oil faced continuing challenges in its markets, primarily from Standard Oil, which operated a series of subsidiary companies across Canada. Although Imperial dominated the Western Canadian market, the company could not establish a strong foothold in the Maritimes or Quebec as Standard supplied these regions through long-term contracts with local companies. While the Conservative Party's National Policy had stopped Standard Oil from fully entering the Canadian market, the economic policy came under attack by Standard Oil lobbyists and Canadian consumers, who asked for a cheaper and higher quality product. In 1893, Ottawa reduced import duties on refined oil products from 7.2 cents to 6 cents per wine gallon, and in 1896, Wilfrid Laurier's government reduced the tariff again to 5 cents. Additionally, Laurier removed restrictions on tank cars and tank steamers, allowing foreign companies to bulk ship oil into Canada by rail or sea. Before, foreign companies had to repackage their product into oil barrels before entering Canada, adding roughly five cents in shipping and handling charges to each gallon of imported oil.
In 1895, Imperial Oil's Board of Directors began negotiations to sell the company to the Colonial Development Corporation, a British company. After three years, the deal collapsed, and the Board of Directors instead chose to sell the company to Standard Oil. The agreement specified that Standard Oil would acquire 75% of Imperial Oil's shares, Imperial Oil would acquire all of Standard Oil's Canadian subsidiary companies, Imperial's capitalization would be increased to $1 million, and Imperial shareholders would receive a dividend of $93,000. Following the deal, Imperial Oil shut down the Silver Star refinery in Petrolia and moved its refining operations to Sarnia, Ontario.
In the same era, the company was also involved in film production, providing funding for independent documentary films. Glenbow Museum in Calgary holds a large collection of Imperial Oil's film inventory.
Imperial Oil supplied more than 2,000 service stations as of October 2020, all of which were owned by third parties. It sold its remaining 497 stations in 2016 to retailers such as Alimentation Couche-Tard (mostly Ontario and Quebec), 7-Eleven (mostly Alberta and British Columbia), Parkland, Harnois (Quebec) and Wilson Fuel (Atlantic Canada). In the late early 1990s Imperial Oil had acquired retail operations from Texaco's Canadian unit Texaco Canada Incorporated.
With ExxonMobil having majority ownership, Imperial Oil licences its parent company's brands, including the Esso and Mobil names for service stations, and the Speedpass electronic payment system.
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