He won in on showing that people will pay a premium for stable prices. The prize committees called it "for his achievements in the fields of consumption analysis, monetary history and theory and for his demonstration of the complexity of stabilization policy". A long sentence saying, for his finding that people will pay a premium for stable prices.
I do NOT know if he used standard oil as an example, but the history of Standard oil's monopoly from about 1870 till 1912 i a clear example of it. During this period Standard's price for oil was NOT the lowest price, but you could count on Standard's price, as other oil vendor's went up and down. People want to be able to budget, but can't budget if they do NOT know what a cost will be. If you provide a stable price, even if higher then others, people will buy from you year after year. That was the basis of Standard's Monopoly (This provided the money for Standard to bankrupt the rest of the industry by undercutting them when one of them undercut Standard, Standard's monopoly was based on a real economic need, the need for stable prices, but on additional illegal acts that lead to the Break up of Standard oil in 1912).
The rest of his economic policy, the main thrust of his work, was NOT the cause of his winning the Nobel Prize. It is like Keynes observation on price stickiness (The Nobel Prize for Economics was only first granted in 1969, thus dud NOT exist when Keynes was alive). "Price Stickiness" is the concept that prices will NOT go immediately up or down when costs go up or down. The subsequent change in price will occur to reflect how people handle the change in price. For example in the late 1990s, it was shown that any price increase in the well head price of oil would show up in four weeks at your local gas pump, but any decrease in price at the well head would NOT appear for eight weeks at the pump. The reason is "price stickiness". When prices goes up, no one wants to take a lost, so the stock on hand is sold for what its replacement will be sold for. When Prices goes down, people do NOT want to take a lost, so the oil is sold at the price it was paid for, NOT the costs of its replacement, Thus oil price DECREASE is twice as "sticky" as oil price increase. Keynes was first noted for this observation, NOT the rest of his economic policy.
Just comments on Nobel Prize Winning Economists, and in most cases they won the economic prize for a universal finding of great importance that had little or no relation to their main thrust on economics.
For more on Friedman:
http://en.wikipedia.org/wiki/Milton_FriedmanFor more on Keynes:
http://en.wikipedia.org/wiki/John_Maynard_KeynesList of winners of the Nobel Prize for Economics:
http://nobelprize.org/nobel_prizes/economics/laureates/The speech awarding the prize to Friedman (It is as clear as the above quote, but if you read between the lines it is for the observation people will pay a premium for stable prices).
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