Tulsa daily world. [volume] (Tulsa, Indian Territory [Okla.]) 1905-1919, 1915-05-05

only important quantities of Heuldton
crude refined in the course OF regular
commercial operations The bureau
also obtained Information relating to.
/ the prices OF the finished products
manufactured from Healdton crude
OIL
| \ careful investigation was made
INTO the question of whether discrm-
nation was practiced by the pipe lire
company In its purchasing of oil from
different producers i'm the field and
. particular attention was given. i'm this
connection. to the subject OF oil prO-
duced on Indian allotments. The in
Nestlgatiou of the bureau Of corpora
lions included thorough examination
or the books and records of the Mag
mona ripe Line company and the Mag
nolia Petroleum company
Monopoly of Magnolia.
The Magnolia Pipe Line company
from January 26, 1914, when il began
TO buy and run oil into its pipe line
system in the Healdton field. up 10
| November, 1914, had "A monopoly of
the only practical means of transport
ing the oil from the field TO a rcfin-
cry market II did not transport any
oil as a common carrier. The lack of
marketing facilities and the charges
for transportation We're such that the
| producers preferred TO sell their oil at
the wells to the pipe line company,
ana no oil was offered for trauspor-
| tation
Z The pipe line company bought all
| the on entering its pipe line, stored
! II, transported IL to the boundary line
between Oklahoma and Texas, and
sold it to the Magnolia Petroleum
company an allied concern. The Mag
| nola Pipe Line company i'm virtue of
the circumstances which made it the
only purchaser as well as transporter
of the oil produced i'm the Healdton
| field, in fixing the price which it
would pay for the oil, at the same time
fixed the market price for all the oil
produced I'm the field.
Reduction Of Price.
With respect to the cause Of the
reductions in the price fixed by the
| Magnolia Pipe Line company, the
| bureau finds no evidence of an intent
| TO arbitrarily depress land values in
order to buy producing property
more chcaply or to acquire stocks OF
oil already accumulated at price
much below its real value It is true
that officials Of the Magnolia Petro-
/ lcum company early in the develop
ment of the IealdtOn field made ex-
! Ceedingly favorable statements in re-
gard to the refining quality of the oil
and said it was a high grade oil They
assert that this was a bona fide mis-
| take and the evidence Of the CORE
! p0ndence in the files Of the Magnolia
| ltpe Line company and the Magnolia
| Petroleum company as well as their
actions support this contention When
they discovered that only a relatively
small proportion Of gasoline and koro-
| SCne could be obtained from it, that
the oil did not have enough lubri-
eating value TO make it practicable
| for them TO use it for the manufac-
/ ture Of lubricants, and that it had
! relatively high percentage of fixed
sulphur, TO remove which increased
| the cost of refining the Magnolia
| Pipe Line company made the various
| reductions in price. This was done,
! they claim, in order to put the f. O. b.
| refinery cost of the crude oil from the
| HcaldtOn field on competitive basis
| with the f. o. b. refinery cost of the
crudes from other fields that We're
| available to the Magnolia Petroleum
| company's refineries.
The bureau of corporations finds
that the contention of the pipe line
company regarding the small gasoline
and kerosene content Of the crude oil
| produced in the Healdton field is cor
rect. 1t is Of the opinion also that
/ while IiealdtOn crude is chemically
adapted to the manufacture Of lubri-
cants, yet in view Of the prices at
which other crudes better adapted to
| the manufacture Of lubricants could
| be bought and the limited market for
| the lubricants Obtainable from liCald-
! ton crude, its lubricant qualities added
! little TO its market value. The fixed
sulphur which is found in the Heald-
ton crude is removable from the gaso-
| line and kerosene by methods which
are not unduly expensive, although
more expensive than is necessary for
other competing Crudes. The sulphur,
| however, does not affect the value Of
| the HealdtOn crude enough to justify
any important reduction in the price
! paid for the oil. In brief, the con-
ClusiOn OF the bureau is that the re-
| duCtions in the price Of Healdton
crude oil were made because of the
| discovery by the Magnolia Pipe Line
company Of its small gasoline and
! Kerosene content, and because the
! lubricating values Of this crude were
not enough to warrant, under exist
ing conditions, its use for the manu-
| facture of lubricants. The pipe line
company, however, does not appear to
be without blame for its failure to de-
! termine the true character of the oil
| at an tuIly udlc. lulS would nave
saved much disappointment to pro-
ducers
Prices of Crude Oil.
! In regard to the question raised in
the senate resolution whether changes
were made IN the prices of the fin
ished products manufactured from
Healdton crude oil corresponding to
the changes in the price of the crude,
II should be noted that no finished
products from Healdton crude oil
were marketed until about the latter
part Of April, 1914, at which time all
OF the reductions in price had taken
place.
The bureau has made comparisons,
based on the total value Of the prod
uCts derived from them, Of the COM
mercial values of crude oil produced
in various oklahoma, north Texas and
north Louisiana oil fields. 1t has made
such comparisons on two bases-first,
the yields shown by the analyses
made by the United States bureau Of
mines, which uses a standard method
Of testing for all kinds Of crudes, and
second, the yields shown by regular
refinery operations. The results Of
| bOth cOmparisOns show that the UrO1-