New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1907-05-20

has aimed to make its rates the those of
the railroads. Many of the rates named by these
tariffs already stated. are to Fawngrove, Penn
centrebridge. Penn, and Cnionville, n y. to TO
Independent concerns and to which, accordingly,
rates cannot be compared with railroad rates d.
rectly; nevertheless. they are about the same as
line rates rate from most points in Western Pennsy-
vanla Southeastern Ohio and West Virginia to
a barreD. and the same is true of rates from Lima
Ohio. and vicinity to philadelphia and to clean
Griffith. Ind.-where the Prairie Oil and Gas Com
systemic Lima and Cygnet. Ohio. and TO Buffalo
are also almost exactly the as the rail- rates
form no just and rational basis for the establish
ment Of pipe line rates reasonable pipe line
depreciation and leaves fair return for interest
on the investment and for risk The cost or pipe
line transportation is but small fraction OF the
cost of rail transportation where the volume OF
business is large.
COST OF TRANSPORTATION.
On the basis OF estimates to the cost OF trans
porting oil to the seaboard the OF trunk pipe
line transportation barrel and a ton a mile
may he computed. 1t is found that the operating
expenses amount to about oO9 of mill barrel
a mile, and allowance for depreciation at per
cent to about Dos OF MILL giving total cost OF
transportation Of about OH of mill a barrel
mile. Interest the cost of reproduction at 10
per would amount TO about Ole of a mill,
which, added TO the cost of transportation gives
about one-third Of mill barrel a mile.
There are approximately IA barrels of crude oil
In a ton according TO the practice of Eastern
railroads.. that the Of operation plus de-
probation amounts to about Is mills ton mile.
whereas the average OF rail transportation Of
freight in the United States is about mills ton
a mile.
Applying the estimates OF the cost Of transporta-
ton a barrel a mile to the distance via the trunk
line Of tho Prairie OIL and Gas Company, the OF
transportation from Humboldt. Kan, the Originate
connection is made with the seaboard lines would
be about cents a barrel. including operating
Ia nj Gf aT omar paVofN
the estimated cost Of reproduction would be about
the same amount barrel Adding these figures
GriHth 10 the seaboard it appears that the total
citation at per cent, from the mid-continent held
to the seaboard. would be about p cents a barrel
ana thtt charge OF ABOUT 20 cents oaTrel would
cover transportation cost and give return of 10
per cent on the cost of reproducing the lines The
standard names no pipe line rates from the mid
S91haemt Held but 10 cents Is but small fraction
by the same method OF applying the estimated
T1st 0aTseI rts 10 the distance IL appears
trunk lines Of the Ohio OIL Company, from the
Illinois field to Preble. Ind, It's Junction with the
operating expenses and depreciation, while the adj
ducns the lines would give total Of about cents
the seaboard would be about Is cents barrel and
charge OF 80 cents per barrel would DO sufficient
TO cover operating expenses ana TO give return or
10 per cent on tho estimated cost OF reproduction
10 her on The stSnated cost 81 oTeprrodcfion
is but n small fraction OF the rail rates.
All OF these estimates relate merely TO trunk
limo transportation and do not cover the cost Of
bringing 1t to the originating points of the trunk
Gas Company 1t appears that the operating ex-
during the hTst haLI OF lgvO amounted 10 ADolt a.
cents barrel. while. adding depreciation at per
cent on the cost OF the lines the total cost Of
transportation becomes about % cents barrel
Interest at 10 per cent on the Investment In local
which. added to the cost OF Transportation, would
give a little over cents barrel The regular col
pany is 20 cents barrel which represents a re-
turn OF about - per cent on the investment Iheso
estimates Of cost do not include cost of storage
milv The standard makes an additional charge
for storage In those cases where IL holds OIL Tor
A similar charge of 20 cents barrel is made for
local collection OF oil IN tho Appalachian and mid
continent fields The difference in the conditions
in these fields. as compared with those IN the mid
continent field. makes Il impossible TO determine
with certainty how FAR the estimate or cost ABOVE
mentioned would apply 10 the two Older nelds. Ger
tain conditions tend 70 make the collecting COST
iachan and iIma-Indiana nelds while other con-
ditions tend in the opposite direction II Is certain
however that the charge OF 20 cents a parrei IN
the two Eastern fields is excessive and represents
a profit far in excess of 10 per cent on tho invest
Inent
ADVANTAGE OVER COMPETITORS.
These facts show, therefore. the enormous adj
vantage which tho Standard Oil Company possesses
over competing refners by reason OF its control
Of the pipe lines In the mid-contnent Illinois.
Iiraa-Indiana and Appalachian fields. Whether
Standard
fneries these same eXorbitant rates for trans
IOrtation Is obviously matter Of indifference 10
the Standard organization as n whole To the In
dependent concern which might, II not otherwise
restricted make OF the Standard pipe lines. tho
excessive charges that it is at n tremendous
disadvantage compared with its great com
petltor. ii has been shown that the Standard
charge for transportation from tho Appalachian
field to the seaboard is more than 70 cents bar
rel higher thar the cost of transportation plus 10
per cent the cost of reproducing the pipe lines:
a cent a gallon will bring profit OF about 10 per
cent the necessary investment IN the refining
business. The independent reflner whose plant ia
situated In the oil regions is At an equal dlsad-
vantage in reaching a large proportion OK the mar
rates on mis- refined product while the Standard
brings its crude OH TO rehneTies near 70 inc centres
the rail rate. Even those refiners who make use
Of the trunk pipe line OF the Pure OH Company
from the Appalachian field TO the seaboard are
ut a very considerable disadvantage, since this
line is so small that its expenses per unit OF prod
uct handled are considerably higher than those of
The Standards abuse of its pipe line monopoly
thus OF the greatest sources OF its power II
the Standard pipe lines We're Obliged to transport
oil for others at reasonable charge; the oppor-
tunities for competition in the refining business
would be enormously increased, The failure OF In
dependent concerns TO eStablSh similarly eHlcleht
pipe lines been due to lack of enterprise or
capital II has been due IN part !" the Unfair PTde
pendent pipe line undertakings, and in part to the
other unfair practices by which the Standard has
attacked the Independent retners In the marketing
Of their product, and hence has prevented them
warrant the construction Of great pipe line systems
1t Is apparent, therefore, that the dominating
dustry has largely been secured by the abuse OF
transportation facilities, first by fragrant dscrim-
fusal to operate its pipe line system as extend
TO independent interests the benefits which they
the time. the Standard has prevented such
Independent interests from constructing lines of
trbuted to the power OF the company will be dis
cussed IN subsequent parts of this report hereafter