Los Angeles herald., 1907-05-20
CONTROLS LINES;
HENCE DOMINANT 7
CORPORATION COMMISSIONER
SCORES STANDARD
Abuse of Pipe Control CONSTITUTED
Leading Element in Big Conn
pany's Success, Says
Knox Smith
snecial to The Herald.

snecial to The Herald
WASHINGTON, D. c., May l9.-Conf
missioner of Corporations Knox 0iiii'N'
IN his report on the petroleum lnuus'ly,
5o,,o+as much space to the Standard oll
company.
rrhe Investigation of the oil Industry
bv the bureau of corporations Clearly
shows that dominating position mas
been attained in nearly every depart,
,,,oyt nv a single concern-the Stanuatu
| Oil company. The Importance oi tiio
cornoration in the industry IN lSo4' Iiie
reriod with which the investigation mas
been most particularly concerned Is
briefly summarized as follows: ,,
"The Standard OIL company ana ann.
ated concerns handled S4.2 per cent VI u,
the crude oil run through ieiiio
the United States. H.. -
"a single Standard refinery, that at
Revonnee N. J., consumed more cruoe
oil than all the seventy-five or more IN
dependent plants Of the country con-
bined. ,., INV,
"The Standard and it's affiliated con
earns produced S6.5 per cent OF the
countrys total output of 1llumlnallne
oil. It's proportion of the export trace
in illuminating oil, as we'll as lts snare
in the domestic sales of that artlcle'
was substantially the same as It's per-
centaee of the total production
can even more dominant position Is
maintained by the Standard OIL COM
pany in the transportation OF Oil by pipe
lines. particularly in those fields produc-
ing the better grades of crude OIL Inns
control of pipeline facilities and the
abuse of it constitute one of the leading
elements in the company's ability TO
dominate the oil business"
Conditions Changing
"In considering the Standards pro-
portion of the production of crude OIL
and of the pipe line, refining and mar
keting branches of the oil business, 1t
cannot be too strongly emphasized that
a comparison of the Standards opera
tions with the total production or cruue
oil in the United States means nothing,
continues the report. "In the past FEW
years conditions in the oil Industry nave
undergone an immense change.
"In the five years ended with 1900 the
production of crude in the Appalachian
and Lima-Indiana oil fields constituted
about 95 per cent of the output for the
entire country. After 1900 the develop
ment of new fields, particularly in Kan
sas and Indian Territory, Texas and
California, went on so rapidly that in
1904 the output of the Appalachian and
Lima-Indiana regions had dropped to
less than so per cent of the total for the
country, and in 1905 to less than 40 per
cent.
"Still more recently, in 1906 and 1907,
a large new production has developed in
Illinois. The total production of crude
in the United States more than doubled
between 1900 and 1905.
"The Standard Oil company, through
it's pipe lines, has transported, and in
it's refineries has consumed, nearly nine
tenths of the crude oil of the older APP
palachian and Lima-Indiana fields. 1t
transports and refines only q compare
lively small fraction of the production
of the Texas and California fields.
California and Texas Factors
Nevertheless, the enormous increase
in the production of these two fields has
scarcely disturbed the dominating posi-
tion of the company in the industry In
general.
"In the first place, of the production
of California and Texas q very large
percentage is not used for refining pur-
poses at all, but is consumed In its
crude state for fuel, and that consump-
tion is largely confined to those states
themselves and their immediate vicin-
ity. Again, even that portion of the
production of these fields used for re-
fining, which includes only the better
grades, yields a much smaller quantity
of the more valuable finished products
illuminating oil, gasoline and lubri-
eating oil-than the oils of the older
eastern fields do. The significance of
such crude production, from a refining
standpoint, is therefore correspondingly
| restricted.
illuminating oil derived from Cali
fornia crude now supplies the Pacific
coast and that from Texas crude largely
supplies that state and parts Of the i'm
mediate adjoining states; but the total
population they supply is compare
lively small, and these oils have had
little influence on markets elsewhere in
the United States"
Summing up the report says:
| "The STANFORD Oil company does not
control majority of crude production
| by actual ownership of the wells, but
its control of the pipe lines the only
effective means of marketing most of
this oil gives it just as complete a con-
troll of crude production as by direct
title to the fields, and the result is that
the Standard is almost the sole pur-
chaser, and it's daily quotations for oil
are the official Price in most of these
fields.
This indirect control is practically as
effective as direct ownership would be.
The Standards domination in refining
and marketing is largely due to this
control of pipe lines, to the many IL
legitimate advantages in rail transpor-
tation of crude and its products which
1T has enjoyed, and to the unfair
1t has enjoyed. and to the unfan
methods of competition which it en-
ploys.
THAT the Standard is a highly eff
ficient concern there can be no doubt,
but efficiency alone can give monopoly
power only by putting prices so low as