Los Angeles herald., 1907-08-12
PUBLIC PAYS
HIGH FOR OIL
STANDARDS METHODS DESTROY
COMPETITION
UNJUST DISCRIMINATION SHOWN
IN REPORT
Commissioner of Corporations Smith
Flags Trust That Is Daily
Robblng American
People
.contrnucd from Page one.

from l12 TO times as nlgn as tne
foreign margins.
These remarkable determinations in
favor of foreign markets at the ex-
pense of the American consumer have
naturally called forth excuses from
the apologists of the Standard. They
have attempted to create the impress
sion that the recent decline In prices
of American Illuminating oil abroad
was necessitated by an oversupply OF
that product. They have also claimed
that there has been severe COMPETE
ton against the American product
from the oils of Russia and other for
eign countries, and that the reduce
, lions in export and foreign prices
were necessary to retain the Ameri-
can export trade.
Neither of these arguments is well
founded There was no oversupply Of
Illuminating oil during the years 1904
and 1905, at which time foreign prices
were being severely cut. The exports
from the United States during 1904
were less than in 1901 and 1902. The
exports from the five important OIL
producing countries combined show
little more than a normal increase.
The worlds production in 1905 was less
than in 1904.
The exports from the five principal
countries combined In 1905 were more
than per cent less than in 1904. There
was an actual decline in the total i'm
ports into the United Kingdom during
1904 as compared with the two preced-
ing years, and a still more conspicu-
otrs decline during 1906 The imports
into Germany during 1904 were almost
exactly the same as during 1908, and
the imports during 1905 fell off con-
siderably. But the German prices
declined very materially in both years.
The conditions of supply, therefore,
do not excuse the extraordinary de-
cline in foreign prices in 1905 and the
resulting discrimination against the
American consumer. This decline was
not necessitated by any oversupply of
oil In fact, the movement of prices
was precisely the opposite of that
which would have been expected from
the changes in supply.
Trusts Argument False
The falsity of the Standards argu-
ments is further demonstrated by the
fact that during 1904 and 1905, a period
when the Standard claims that an
oversupply existed, that company
actually took large quantities of oil
in Russia to supply it's trade in Europe
and the orient During 1904 1t shipped
from Russia over a million and half
barrels of Illuminating oil for distribu-
tion in European and Asiatic coun-
tries. It has secured large crude pro-
duction in Roumania and has estab-
lished refineries there and in other
countries for refining foreign crudes.
1t is perfectly evident that the Stand
ard has not always been concerned
int mi tho aXnnrt trade in
American Illuminating oil, but has
been solely interested in maintaining
dts own domination in the markets of
the world, frequently at the expense
OF the United States.
1t is true that during 1904 and 1905 the
Standard met new competition in for
eign markets, burt its, new competitors
were largely a group of concerns
which drew a considerable part of their
supply from the United States itself.
Having a monopoly at home, 1t has
charged such prices as 1T could hereby
extort, and the American consumer
has had to pay these prices. Meeting
competition abroad, 1t has given the
foreign consumer enormously lower
prices, and it has used the profits
made at home to maintain its position
abroad, so that the American con-
sumner mas Deen severely ClSCIluilildlcu
against for the purpose of maintain
ing, not the dominance of American
export trade, but the dominance of a
particular combination which has used
its power frequently and conspicu-
ously to the disadvantage of the
American public.
A still more important and extra
ordinary state of affairs appears in the
conditions of prices In the United
States. A study of the Standards
price policy has brought to light, as
shown in this report a very remark
able system of determinations in
prices for the same products that the
Standard charges a price which is pro-
portionate to the extent of its monop-
oily in a given place, and reduces
prices in proportion to the degree of
competition which it may meet.
1t is to be emphasized that there is
substantially no general market price
for petroleum products, especially IL
Illuminating oil. The Standard sells
most of its illuminating oil and gaso-
line in the United States directly to
retail dealers at their own towns, de-
livered mainly by tank wagons. Con-
equently the prices are, as rule,
purely local prices. This system of
distribution and price making puts it
in the power of the Standard to vary
it's price according to local conditions
without disturbing prices in other To-
calities.
The significance of the extraordinary
differences in prices charged in many
different sections of the country or in
different towns can be appreciated
only in the light of the fact that a
very small amount per gallon consti-
tutes fair margin of profit on the in
vestment in refining and marketing of
petroleum products. A difference of
about mills per gallon In the price of
illuminating oil may mean difference
between a profit of 10 per cent on in
vestment IN refining and marketing
and no profit at all.
Wide Margin of Prices
But the actual differences in the
Standards prices among competitive
and noncompetitive towns and areas,
after making all allowances for diff
ferences in cost of production and
distributing, often amounts to several
cents per gallon. A combination which
ron command the porfits that these
figures imply, over large areas, has
therefore obviously tremendous
weapon when it enters on aggressive
nrice cutting against independent con-
Germs.
The most accurate and complete
data were obtained by the bureau on
this subject directly from the records
of the Waters Pierce OIL company Ga