Los Angeles herald., 1909-06-28
PIPE LINES FOR
CALIFORNIA OIL
EPoCH-MAKlNG SCHEME WILL
MATERlALIZE
INVASION OF THE EAST LIES IN
PANAMA LINE
Route from San Joaquin FIELDS 10
Tidewater Forms First Link IN
Chain of Commercial
Conquest
Ry IRA b. WOOD

M announcement of the gigantic
- ii,,a nroieet of the Associated Oll
I'D Producers Transportation con-
oanies the latter organized on peieliA
Of the cooperating independehI PiUl
5,,oers of the San Joaquin valley Oh
Ss 10 1,erv noticeably stiffened the
value of both probed and prospective oii
1anSs and strengthened oil shares gen
erallv. These effects are natural ~
tt,a construction of the proposed pipe
lives 70 tidewater with terminal s1oI-
aee of commensurate magnitude dlsO
nTovided for in the plans OF potn com
nanies. will constitute another IN hPot Pp,t
mi enoch in the oil industry OF can
fornia. for such huge augmentation VI
+be facilities for marketing the produc-
tior Of the great interior oil dlstflcts
means that the consumption OF CalI-
fornia oil is to be very largely III
creased. ,,,,,-,.,, fo,.
The market was never so hungry Ior
California oil as it is TO-DAY, puI tIe
tra,,sy1ortation facilities available for
the interior fields, great as they were
thought to be a few years ago nave
for some time been taxed beyond their
canaeity. notably in the instance OF the
Associated Oil company. Ihe exist
ing pipe line facilities for Transporting
the interior oil to tidewater, We're prln-
cinallv Installed prior to the develop
mRnL OF d lOI6lSh AlieNA NJ -
oil. and. 1t may be said safely, before
a full realization of the expansion pos
sibilities of the home market.
Demand Reaches Japan
California oil is now in demand across
the Pacific in far-away Japan ana On
the western side of the American con-
tinent from Alaska to Chile, While the
construction of the Union Oil COM
pany's pipe line across Panama pre-
saqes a formidable invasion of the At
lantic territory. There are understood
TO be in existence contracts Tor CAL
fornia oil to be shipped during the
ensuing nine years to points outside OF
California, Nevada and Arizona, aggre-
eating not less than 600 barrels.
The annual expectation to one remote
foreign country alone, Chile, is equal to
40 per cent of the states entire output
ten years ago.
The decision to build these new pipe
lines exposes the fallacy of the feeble
attempt made recently on the part of
the Associated management to nave 1t
appear that there was danger of an
over production of California oil OF
course, this intimation was laughed at
by everybody familiar with the real
conditions of the states oil industry,
except the Associated's management
and a few producers Independent in
sons. under the thumb of the Asso-
ciated 1t is undoubtedly true that
there has been an over production In
so far as the existing transportation
facilities of the Associated Oil com
pany are concerned, but it is absurd to
Intimate such a thing in regard to the
market for oil, generally, and these
pipe line undertakings, involving the
expenditure between them of probably
10000 000 afford the best possible evil
dence of such absurdity.
Are Sure of a Market
The men controlling the affairs of the
corporations that are to construct these
new lines are in intimate touch with
the market situation, and they would
not countenance the expenditure Of the
vast sum referred to unless they were
confident the market possibilities more
than justified so doing. The giving out
of an intimaton or warning of i'm
pending over production was intended
to serve as a rod for inculcating docil-
ity in the Independent producers, so
that the latters expectations regarding
the contracts to be made in 1910 with
the Associated might be curbed
In this move some Independents lent
a little voluntary assistance, not they
themselves believed in impending over
production, but that on general princi-
pies they deemed it good policy 20 dis
courage new production. Thus the AS
sociated's bear" policy found assist
ance among the very people it was in
tended to make submissive. But the
independent producer will escape the
bear pen and take the bull route that
lies via the pipe line of the Producers
Transportation company.
The consumption of California oil in
1898 amounted to about $500, 900 barrels.
The consumption in 1908 exceeded 46,
100000 barrels. In 1907 great inroads
began on the stored oil, and it was
generally conceded that in that year
the oil storage was practically ex-
hausted the consumption exceeding the
production for those twelve months by
about 100000 barrels.
Increase Consumes Surplus
SO rapidly has consumption gained
that there has been little replacing of
the storage reserve drawn on in 1907
and 1908, and today there is practically
no surplus oil above ground in Cali
fornia-except as it may be congested
for lack of transportation at points of
production, a condition not pleasant to
Visible Conner 6