Standard Oil was founded in 1870 in Ohio by John D. Rockefeller. Rockefeller was born into a working-class family but quickly accumulated a significant amount of money through his early business ventures. He was able quickly to expand Standard Oil in part through legitimate business practices and improved efficiency, but mostly due to tactics such as buying out competing businesses, negotiating exclusive discount deals with rail companies for transporting products, and secretly colluding with other companies to control the markets. By the late 1880s, Standard Oil had accumulated hundreds of millions of dollars in revenue (not adjusted for inflation) and controlled about 88% of the national oil marketplace.
In 1890, Congress passed the Sherman Antitrust Act, which outlawed companies from engineering the markets to restrict fair and competitive business. The state of Ohio sued Standard Oil on the basis of this law, and in 1892 the company was forced to separate its structure into regional companies, such as Standard Oil of New Jersey, Standard Oil of Ohio, and Standard Oil of California (the branch with which Daniel deals in the film, and which in real life was led by H.M. Tilford, as in the film). However, in practice these companies remained a part of the same national conglomerate, thanks to a group of shareholders owning stakes in multiple Standard Oil divisions and covertly directing their operations in coordination with each other. These high-level owners also bought controlling stakes in railroad companies and directed them to ship Standard Oil’s products at low prices while charging higher prices for competing companies (this is the practice which Daniel was concerned about in the film and the reason he wants to build a pipeline to the coast).
By the time that There Will Be Blood takes place, in 1911, the collective institution of Standard Oil had by some measures grown to an even greater height than its peak before the Ohio lawsuit. However, this same year marked a lawsuit by the federal government against Standard Oil and the subsequent Supreme Court decision in Standard Oil Co. of New Jersey v. United States which held that the aforementioned business practices were still in violation of the Sherman Antitrust Act and ordered them to be broken up into genuinely independent divisions. They did, and this effectively ended the Standard Oil monopoly on the American oil industry, though Rockefeller profited immensely from the consequent buyout of his shares in the companies, and became the richest man in world history. The extent to which the breakup was even effective in the long term is also debatable, since many of the offshoot oil companies have since merged with one another, the most notable example being ExxonMobil.
