The San Francisco call., 1910-07-06


from this situation that trouble, if it
does come. will first spring.
/ The other problems will be met and
solved. They involve storage and an
expanding market Storage is being
built and the greater market is assured.
These will come, but they will take
time. Meanwhile the small independ-
ent companies must be financed. It
was hoped that loans could be nego-
tiated on oil in storage, but all efforts
in this direction have proved unsuccess-
full
SMALL DANGER OF CUT
There has been no serious disarrange-
ment of prices as yet, although the
! Standard and Associated are making no
new contracts for the present with pro-
ducers. In some quarters it is believed
that the Union, Associated and Standard
have entered into price war, but many
others hold the opinion that there is
small danger of cut of great proper
tions to the consumer for the present
at least
There has been much speculation over
recent contracts here and in San Jose
at 80 cents to the consumer. This is
] by no means the lowest price of the
year and means very little. So many
conditions enter into these contracts
that mere mention of the price con-
veys no definite idea of the full effect
of the agreement
The Standard and Associated were
paying so cents for oil and were pre-
pared to pay as high as 60 cents early
in the year. The Independents banded
together and arranged to market
through the Union. Their returns
though this method have been from
Al TO IL cents barrel
GUSHER UPsETS MARKET
OF course there have been attempts
TO make it appear that the independ-
ents entered into disastrous and ruin
Gus bargain and are suffering the coz
sequences. This is not true and does
not take into account the salient facts.
the Lakeview gusher The Lakeview
appeared upon the scene al a time when
the Independents were uniting. It
threw upon their shoulders prob
lem such as never before entered into
the calculations of the marketing con-
Germs The Lakeview swelled the
states production by practically %
per cent.
Previous to this the production just
about balanced the consumption. The
independents were therefore confronted
with the necessity of marketing from
40. 900 to $4,000 barrels more oil day
than the consumption demanded. The
1T,,c .14,e,
means storage. The storage is now
being provided. Then the needed mar
kets viii be found. In the meantime,
as stated before, the small independent
is confronted by serious financial
situation.
ALL IMPORTANT
This subject is all important to the |
oil industry. There is no Disgusting
the fact that there is an element of |
danger in the situation. If the small |
producer can be assisted and saved
from the necessity OF shutting down |
during this period of readjustment all |
viii be we'll
The outlook has given rise to various /
views. The California Oil World is in
clined to believe that a struggle is on.
1t says:
For some time, as it is well
known, both the Associated and the
Standard have been refusing any
propositions whatever to buy oil.
This action on the part of these
marketers has been exceedingly
puzzling to the producers who have
tried to sell them oil. 1t is under
stood that the Standard is we'll sup
piled with fuel oil. This is likely
the reason it does not want to buy
any more. But it is known that
the Associated has none too much
for the business it is doing and
has planned to do. In fact, it is
asserted and believed to. be short of
oil. This shrouds its refusal to buy
oil in sinister mystery. But it is
insisted that this refusal on the
part Of the Associated to buy oil is
only an outward play for certain
effect; that it is quietly seeking to
buy oil from those whom 1t can
trust.
For some time a kind of general
status quo has been observed be-
tween the three big marketerS-the
Associated, the Standard and the
Cnion-indepen pendents-regarding the
matter of holding up the market
pending a satisfactory moral un-
derstanding. At the same time the
Associated has been harborihg
wrath at the way, as it puts IT, the
independents held it up" on that
famous SO cent contract. Therefore
nothing would please it more than
to do something that would disturb
and disconcertfthe business of the
independents. The manage
ment knows the Union n-independents
have a surplus of oil and does not
believe they can possibly dispose of
it at any figure. 1t may be that
the Associated has all of it's con-
tracts satisfactorily taken care of
and has begun to pirate the open
market and thereby disturb prices
to get even with the Union-inde-
pendents on that old, sore score.
In the meantime the organized
Independents are said to be well
prepared to cope with any eventu-
ality. The Standard still insists
that il wants to be let alone.
writer in the Los Angeles Express
thus points out the necessity of large
storage supply:
Considerable speculation now is
being indulged in by fuel oil con-
sumers as to what effect the pres
ent large production of petroleum
in California will have upon the
market That the output is some
what in excess of requirements is
recognized and some consumers be-
lieve that the law of supply and
demand viii work for. lowering in
price. There are others, however,
who do not anticipate downward
course, but look upon the present
market as reasonable, and contend
that overproduetion, under condi-
tions such as exist with the dis