Pittsburg dispatch. [volume] (Pittsburg [Pa.]) 1880-1923, 1890-09-17
PITTsBURG. WEDNESDAY. SEPT. Il. lS9
TuE PRODUCERS REMEDY.

The oil situation, as it has been set forth
in the columns of THE DISPATCH, is fraught
with the gravest results to the oil producers,
and at the same time contains a promise OF
remedial measures. The actual effect of the
elimination of competition by absorption is
set forth in the tersest manner by Mr.. David
Kinks communication in yesterdays paper.
Although consumption exceeded production
last month, the reduction of prices for crude
and the removal of premiums which the
Standard has made, decreased the returns to
producers for last month SS7S,OOO, or at the
rate Of SO, $50, 600 per annum. This is
decidedly heavy penalty for the producers
10 pay for the loss of competition IN piping
and refining petroleum.
Whatever hair-splitting and ine-spun
hypothesis may be advanced to explain this
showing. one fact exhibits the real cause OF
it bevond DISPUTE. The fluctuations of the
price of certificates may be due to other
causes than the control of the monopoly,
such as gain in production, or a diminu-
ton of demand. Mr.. Kirk shows that such
causes are not at work in this case. because
the consumption has exceeded production by
600 barrels in the past nine months;
and refined oil is practically at the same
level now that it was last November, though
crude has declined over % per cent. But
beyond the cogent bearing of this fact one
unvarving and almost universal proof exists
of the value of competition to the producers.
This proof has been furnished by the
Standard itself, and consists of the fact that
wherever and whenever competing pipe Lines
or independent refineries have succeeded in
reaching the producers. the Standard has
paid premium of from s to 25 cents on the
oil thus reached by competition. When
that competition has been bought up or
stifed by the Standard, the premium has
disappeared. as it has done in the southern
district during the past year.
This is the Standards own valuation of
the worth of competition to the producers
and it demonstrates two important things.
The first is that the great share of the bur-
den, which it is able to impose by its monop-
DIV, falls on the producers. Take Mr..
Kinks estimate of S10,000,0 900 as the annual
amount which it has been able to take from
the producers by the absence of competi-
ton, and it is not difficult to account for a
great share of the wonderful wealth which
that monopoly has accumulated in the past
seventeen wears. What is more to the pres
ent point, it shows beyond dispute the true
and permanent remedy for the evil. 1t cor
roborates wha: The DISPATCH has always
urged. that the only way to loosen the grip
OF the Standard on the petroleum situation
is to establish and maintain competing pipe
lines and independent refneries This was
the original purpose of the Producers
Uhion; and it was the vital mistake of that
movement in permitting itselfto be switched
of to support the Standards suggestion OF
shutdown, that is largely responsible for
the present situation.
As for the method to alleviate the present
burden, Mr. Kirk stands upon solid and i'm
pregnable ground. His only error is in too
liberal statement as to the amount OF
money needed to create competition. 1t may
be true, as he claims, that $40, 900, 900. or the
annual loss 10 the refners, might be required
to build plant that will do the present
work OF the Standards 500 600, 900 of wa
tered capital; but much less sum will es-
tablish pipe lines and refnerles that will
call competition for the purchase of crude
oil into active force again. judging from
the value of the independent concerns
bought up last year 81, 500, 600 ought to es-
tablish pipe lines and refneries that will
restore the premium in the lower field, and
$4,000, 900 judiciously distributed in pipe
lines throughout the region would call into
existence new refineres that would make it
impossible for the Standard to depresS the
market for crude by its fat
In other words, if the competing pipe lines
and refneries should not earn cent BY their
own operations, they would pay for them
selves in six months by the saving to pro-
ducers. With such showing there should
be no question as to the course to take. If it |
is objected that the Standard will buy up |
these competing concerns by bidding higher |
prices ior them, the answer is plain that the |
producers can afford to sell the works at a |
profit, and to build new ones with the pro- |
ceeds until the Standard has its fill of that |
sort of property. The remedy is plainly in |
the investment of all the money that can be |
raised in competing pipe lines and refin- |
cries. If the producers act unitedly for that |
end they can break the power OF the Stand |
ard within two years.