New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1889-06-29
THE BIG OIL DEAL CLOSED.
SALE OF $780, 900 BARRELs AT NINETY-OND
AND A HALF CENTS.
THE STANDARD THE PURcHAsER-AN ADVANCE
OF ONE AND oNEHALF CENTS BARREM
OVER THE "PUT" PRICE FOR JULY I.
RESULT OF THE PRODUCERS

sHUT.1N MOVEMENT.
The big DEAL made over a year ago betwcsa
tho Standard OIL Company and tho leading
producers Of Pennsylvania petroleum was closed
out yesterday. The 3.5oO.oo0 barrels Of ol
held by the Standard In trust for the producers
was sold to the retlner at 81 1.2 cents per barrel
an advance Of l-2 cent over the price which
the Standard had agreed to give for tho oil on
July l. This represents q profit Of between 9
and cents per barrel to the producers, or BE-
tween 100000 and s230,0 1t ends the trnns-
actions involved IN one of the most interesting
economical experiments made in recent yesrs
In the summer of 1887 the price Of crudo
petroleum langufshed Ground so cents
barrel, figure ruinous to all but the BEST
equipped and most fortunate Of miners for oil
A large stock above ground furnished the op-
portunlty for bear operators to depress values In
the speculative market a new field Of oil had
been diScoN cred in Ohio whose possibilities were
unknown, and the work of the drill in many
Pennsylvania regions was uncovering wells that
yielded 5000 barrels day. Negotiations TO pre-
vent the utter destruction of the oil industry were
opened between the leading producers Of the West
and the Standard people, which resulted in an
agreement for the stoppage Of drilling operations
and the shutting in Of third Of the current out
put,
The producers carried out their part of the
contract and accomplished a reduction in stocks
above ground Of about IL, OOO, 900 barrels. Since
then the output of oil has never approached the
consumptive demands to within 5000 TO $1,000
barrels day. The Standard agreed to give tho
producers who observed the agreement 1000, 900
barrels Of oil at g. cents, tho profits on which
were TO be distributed whenever called for at tho
end Of the shut-ln year. From November, 1888,
this CALI was extended at the convenience Of
the producers, and in the latter part Of January
last the Standard agreed extend the time Of the
call to July and to assure the producers o
profit Of ; cents a barrel. The carrying charges
and interest would have made the
cost Of the oil about SIS cents on
that date. The scheme worked almost
a revolution in the position Of Pennsylvania petro
lcum and gave a higher average OF price for the
current output of oil through 1888 than had been
attained for several years previous.
This week the producers who had in charge tho
disposition OF this reserve CALI oil came to this
city 20 hold n consultation with the Standard
ma gnatcS. There have been here Of the Executive
Board OF the Producers Protective Association
Thomas w. Phillips, president; K. j. Straight
treasurer J. K. Goldborough, Rufus Scott John
L. Mckinney, j. w Lee T. B. Clark and J. 7,
Jones. Inc ADVISORY WHICH Collsistu VI
delegates Of producers who in the
shut-in movement but not members OF
the protective association, was represented
by L. II. Smith. W. j. Young. 7. p Thompson and
james ANN. Conferences were held az the Fifth
Avenue Hotel, and yesterday afternoon Mr.. Phil
lip Mr. Mckinney and Mr. Young arranged with
the Standard officers the sale OF the big amount
of OIL his practically ends the work OF the
shutn experiment, the distribution OF prohts pro
rata, according 10 the amount OF production smut
IN by the producers being a matter lor futuro
Al the Fifth Avenue Hotel Last night the bis
producers were IN late session. but when they
were seen by Tribune reporter they expressed
satisfaction with the result Of their TRANSACTION.
Mr.. Phillips, 10 whose energy and persistence
Tho success Of the shut-ln was lorgely due, sal4
that while the producers were disappointed
that they had not been able 10 secure q higher
price they had consented to accept the markets.
closing quotation, because they realzed that -
nI Gould not be sold in the market without
causing break. Under the circumstances, they
decided that il was best to trH1sier me goods 70
the m lnuficturng interest which would need them
in IFS actual business, The producers, he saios
had not looked upon the reserve oil rs source
oi speculative profit, but Ind gone into the shutin
movement for the purpose Of helping the value OF
their ,Ially output lie thought that on the whole
the scheme had been n success: but be recognized
the difficulties thnt had lmpcded the advance oi
pet rolclm 10 a rrInuncrative basis, lie believed
that the Standard people had been disappointed In
the course nf mar~"t prices.
Mr. Mckinney said that even az the price az
which the oil had been sold he did not consider
that petroleum had reached the basis TO which
it was entitled. The general s"ntlment expressed
,vnS that tho shut-in movement had resulted
successfully, in SO far as It had improved the
p,>ltion of their commodity.
Thu. poSsblr action of the associated producers
with rcsprct to the disposition OF this reserve
ni has been the subject of much concern IN the
speculative markets. Tn" bears have argued that 10
was impossible for prices c. advance 80 long a, thS
niI mIrht be sold tor Il speculative profit. rum0r
tLnf thr refining interest had acquired the oil Was
the cause last Monday OF the sudden developmeno
uf activity in the crude certificate market and tha
aly,nce of over ten cents per barrel in the price,
Yesterdays market dull. as traders were wale-
ING for result Of the pending negotiations, oue
rents. finally closing at Ol l-2 cents, when was
,Lr closing figure M thc majority OF the oil mar
kn,. Lor, and I'm Western PcnnSy lvanla.