The Houston daily post. [volume] (Houston, Tex.) 1886-1903, 1901-12-28
EASTERN OIL TRADE
Is Now in a Condition Which Is Very
Pulling 10 Everyone.
EXPENSES ARE GROWING
While the Production in PENNSYLVANIA
Is Rapidly Diminishing.
IN THE OHIO AND INDIANA FIELDS
The Reduction ia Price Has Caused a
Check in Development.
REASON FOR THE STANDARDS ACTION
Sensational Cuts Were Made in Order
to Shake Out the Stuff Which
Was in the Pipes.
IN THE OHIO AND INDIANA FIELDS
The Reduction ID Price Has Caused ;
Check in Development.
REASON FOR THE STANDARDS ACTION
Especial to The postl


Pittsbure, Pa. December 27-The mys-
tory of the decline of about $50 In the
price Of the Standard oil company's securi-
ties, which has mostly occurred since
the copper war was precipitated, may be
Traced almost directly to the unsatistac-
tory ccIdiiior of the Eastern oil trade
nat trade is ir a puzziing condition,
which has been especially complicated by
the action of the standard company recent.
ly in making three cuts Of 8 cents each
in the price of Pennsylvania crude, the
standard for high grade oils. People here
admit that some of the stocks decline may
have been due 10 the copper muddle but
most of II can be traced to legitimate
trade conditions, and the differences drawn
regarding the Standard company's profits
Production of Pennsylvania oil this
month. as shown by the pipe line runs
has declined over 10000 barrels per diem.
The gathering charge is 20 cents a barrel,
from which may be figured out loss OF
$4,000 a day from the investments III the
various pipe line companies. The trust
line pipeage charge is 81 cents, aud II
the ratio in these systems be the same
and IL is nearly so-then the decline In
nipe Inc runs is over $4,000 loss daily
from gathering and transportation alone
This together with the profit on REIN
ing and marketing, VIII foot up decline
OF nearly S750,0o0 month In the high
grade fields producing Pennsylvania oils
But ali other fields, with the exception
of that of Lima o. have also shown de-
clines--not as large as in Pennsylvania,
but enough to cause considerable loss. II
is not expected that the average for the
current month will show up much, II
| any, over an average daily production of
$4,000 barrels.
The plain fact is that the oil producing
territory OF the Appalachian range nas
become so widely distributed as TO neces-
state enormous OUTLAWS Of pipe lines ex-
tensions and operating expenses, which
must be acknowledged as a considerable
item In the face of declining production.
In the Ohio and Indiana fields, which turn
out oil of a lower grade, the cuts in the
/ rrice have caused a decline in prospect
| Ing and sinking Of test wells and will
| probably cause a further decline In pro
| duction.
The cuts have paralyZed operations In
the fields of the four producing States
Pennsylvania West irginia, Ohio and
Indiana. Nobody knows whether there
are to be other reductions or not In many
quarters 1t is believed that the stand
ard is playing a game that will force re-
turn of dreaded dollar oil'' by the nrst
of the new year, or soon thereafter.
! Producers, in view OF smaller produc-
! ton, had expected advance in all prices,
their reasons being that tUhing November
the output declined 1884 barrels daily, as
compared with October, while the net
| stocks Of PENNSYLVANIA oil declined 3d.
e94 barrels during the month. 1t Is true,
on the other hand, that In November
the amount exported was greater than in
any previous month in the history of the
oil trade. and that the total exports for the
year will exceed that of any previous
year by about 100000 gallons. But the
lower prices for the crude product do not
warrant any extensive drilling. In the
pennsylvania fields during the first eleven
months of this year there were drilled
fewer wells by 1922 than in the same
period Of 1900 and during the FIRST
twenty days Of December shipments have
exceeded runs by $1,000 barrels daily.
All this makes a very interesting situa-
ton in stocks, with difference OF 200
barrels lost in probation.
While the Standard has been extremely
close as TO its reason for announcing
three cuts in rather a sensational man
ner and in quick succession, the best in
formation IS that is was done for the
purpose of shaking out production that
had already been run into pipe lines, and
ON which storage was being maid in expec-
tation of a higher price. 1t was expected
that this would cause quick closing OF
credit balances to get out Of the way of
the feared dollar oil" The ruse. II 1t
was such, has been very largely success
iul The other motives alleged in thd
gossip of tbe oil markets are all more
or less absurd Meantime however con-
hdence msl in the fields ha@s been badly
upset and panicky conditions prevail in
the boom" towns Of the region, as well
as in older localities. Producers who
have no more territory TO drill are more
interested than operators for further de-
probation means heavy loss, with no
means of recuperating- Operating pro
ducers can drill more wells. and, barring
the cost Of drilling. their income will not
be seriously affected.