Evening star. [volume] (Washington, D.C.) 1854-1972, 1899-09-07
AGAIN ON THE STAND
Editor Boyle Testifes Before the In
dustrial Commission.
how PRICES FOR OIL ARE FIXED
Why Producers Do Not Become
Refiners.
INTERESTING
SCENE

AN INTERESTING SCENE
The industrial commission resumed its
session in the Bliss building this morning
and Mr.. P. c. Boyle continued his testi-
mony about the Standard Oil Company.
/ Proft ssor jerks asked Mr.. Boyle a num-
| Der of questions. which developed the fact
that about so per cent of the oil output of
Pennsylvania is purchased by one man,
who posts the price he will pay for oil.
The fluctuations of prices from day to day
sometimes range low as a fraction of
one cent per barrel. These fluctuations are
controlled by the changes in the prices of
! refined oil. The latter prices, Mr.. Boyle
said, are fixed by the prices in Europe.
as it not So asked Chairman Phillips
that frequently the price of crude oil ad-
vances before the advance in refined oi?'
Il am not clear as to that replied Mr.
Boyle. Il am not personally familiar with
the movements of refined OIL
Mr.. Boyle then. at the request of Prof
jerks. gave a list of figures showing the
fluctuations in the price of oil in former
years. Mr.. Boyle said that competition has
long series Of years.
In reply to question from Mr.. Farquhar
of the commission, Mr.. Boy'e said that the
first oil exchange was established in 1871.
opened in 1877
They now deal in futures in OIL" said
Mr.. Boyle. They speculate in the price of
oil Tor months ahead. as they do in grain
Explaining the dealings in the country
oil exchanges, he said there were two ele-
ments-those interested in higher prices,
and those interested in lower prices.
who We're the supporters of the ex-
Ch2nReS!' asked Mr.
Well. they were generally called
lambs: ~" responded Mr.. Boyle ''They
were the public, who came in to bet on oil,
or. as 1t more frequently occurred, on
wind
What were the losses of the public?'
II should say at least s1O0,oOO,OOO."
Who shared the benefits?"
THE producers, shippers and handlers,
all along the line
How Prices Were Fixed.
Mr.. Boyle said that gambling in margins
was destructive of prices, and finally a
protective union of oil producers was form
ed to keep down the evil of speculation
as far possible. The first oil markets
were made by the dump" men, the own
ers of oil tanks on Oil Creek. They de-
Veioped into refiners Of oil They bought
crude oil in small lots from dealers who
could not hold their oil. Thus, as the
producers could always find a market with
the dump men, scale of prices was
fixed Upon the advent of pump lines the
dump men passed away and the refiners
had their own way. Then the buyers used
to meet in the evenings at some stated
place and discuss the trade. This was
the beginning Of the oil exchange, for, as
the business increased, the dealers found
it necessary to meet in the day time and
restrict the hours of trading
In answer to suggestion from Mr.. Far
quhar Mr.. Boyle expressed the belief that
the low price of oil to the consumer is due
to the combination of oil producers and oil
refiners to limit output and keep down
wild speculation.
Mr.. Boyle acQuiesced in another sugges-
ton from Mr.. Farquhar of the commits
sion, to the effect that the producers could
not share profits with the reflners, but
must limit their production so as to con-
serve their own interests.
Producers as Rehners
why don't the producer refine their own
ol?" asked Mr.. Livingston.
They have tried, but failed"
"Why?"
We'll, 1 will refer you to the officers of
the association" replied Mr. Boyle: your
honored chairman CMr. Phillips) might an
swer that question:
Mr. Phillips suggested that the producers
being so widely scattered could never unite
SO az to secure the rebates and drawbacks
which the larger combinations obtain from
the shipping interests.
Mr. Boyle said the producers might or
ganiZe as refiners. but they would lack the
skill as manufacturers and the rchandiz-
ing skill which the oil refiners possess The
ills of the producer largely proceed from
over production and then from specula ton
Mr.. Boyle then detailed the unsuccessful
efforts of the producers in the early
seventies to effect a combination to limit
production. He said in answer to a ques-
ton by Mr.. Livingstone, that for ten years
surplus stock of 100000 barrels of oil
was carried. During that time the price of
oil was materially lessened to the consum-
ers. 1t resulted il. q reduction of at least
or 10 cents a gallon
When the surplus was wiped out did the
price increase?' asked Mr.. Livingstone
No; the price of oil has steadily fallen"
Has the value of capital stock in these
refinery corporations decreased with the
fall in the price of oil?'
NO, replied MIR. Boyle.
well. that seems to to be rather
paradoxical," remarked Mr. Livingstone
Mr.. Boyle In explaining a movement
some years ago among the producers look
ing to proposed shutdown of the oil
wells, said that at that time Chairman
Philips wells We're producing 5000 barrels
day. which was thought pretty strong
production for a man prominent in the
shutdown movement.
Mr.. Phillips said his position was thor
oughly understood at the time. and that he
had been identified with the movement from
the first.
Comfort for the Standard PeopIc.
Mr.. Boyle described in detail the various
combinations among the oil men, extend
ing over a period of years, and the gradual
absorption of the companies by other COM
b!nations. He brought his narrative down
to the formation of the Pure Oil Company
in 1899 at a meeting of producers at But
ler, Pa. The stated purpose of this company
was to market the product of the retners
and pipe lines.
This trust was reorganized in 1897 under
the laws of New Jersey" said Mr. BOYLE
Why do you call this company a trust?"
demanded Mr.. Phillips.
We'll, the first president of the company
called it trust
From this point the proceedings caused
considerable amusement among those in the
room who We're familiar with the relations
of some of the audience to one another.
The friends of the Standard Oil Company,
who had been held up advocates of a
great trust, derived some comfort from the
references to the Pure Oil Company, show
ing it to be a trust. Mr.. Boyle called the
Pure Oil Company an octopus and
graphically portrayed its efforts to absorb
allied interests. He read the articles of in
corporation of the Pure OIL Company. in
which the word ..trust,' was frequently