The Barre daily times. (Barre, Vt.) 1897-1959, 1916-02-28
INDEPENDENTS ARE
OUT OF COMPETITION
Because Of High Tariffs and Unreason-
able Shipping Requirements Imposed
By Petroleum Pipe Line compan-
les, Says Report to Federal
Trade Commission.

|
the mid continent field, through high tai
iffs and unreasonable shipping require
ments, have excluded independent shiT
pers from their lines was made to.da
by the federal trade commission in IL
report 10 the Senate on a special inves
tigation OF the business.
Ii the five systems that control Oh
mid continent pipe lines charged thei
own refineres for carrying oil at the rat
they offer 10 carry IL for the independ
ents, the report declares, their annual ne
earnings should show a Ais per cen
profit on their pipeline investments. A
il is, they are declared to earn more thar
10 per cent
The investigation was ordered by tn
last Congress, which later directed an in
terstate commerce commission inquiry
To avoid duplication, the trade commits
sion confined its work TO the mid-conti
nent field, while the commerce commits
sion turned its attention TO systems OPP
Grating in the East.
The commission summarizes its find
ings in this language;
"The dominant position of the mid
continent field makes the facts developed
in this report OF vital Importance TO the
entire country.
"The fixed investment in pipe lines is
extensive and corresponds closely with
the actual cost of such property.
"Pipe line construction in the mid
tinent field has followed, instead of pre-
coded, crude oil production, and such in
vestment is comparatively secure.
"There is q large difference between
the cost of pipe line transportation, which
is very low, and pipeline tariff rates,
while the independent shippers cannot
use railroads because their rates are still
higher.
'The pipe line companies require large
minimum shipments, which makes it i'm
practicable for small producers or rein
ers to ship crude oil by pipe line.
"The price of crude oil delivered at the
refneriss is to large extent made up
of the transportation charge.
"The cost Of pipe line construction is
so great that small concerns cannot build
lines from the mid-continent field to the
large consuming and distributing mar
kets.
Lower pipe line rates and smaller
minimum shipments are necessary to en-
bile small concerns to compete with large
affiliated with pipe line com
panes.
Reasonable and equitable conditions
Of shipment by pipe line would tend to
i greater equality in the prices OF mid
continent and Appalachian crude oil and
IN the prices OF refined products in differ
INT markets"
OF the five large systems operating in
.he field the commission found that two |
belong to the Standard Oil company and !
hat third is controlled by Standard Oil |
capitalists. The Standard Oil lines are |
,iven as the Prairie, running northeast |
% Illinois and Indiana; the Oklahoma
louisiana, running southeast to Baton |
Rouge, and the Magnolia, running south
o Texas points. The others are the Gulf
md Texas systems.
Of Standard Oil methods the report
aid
"The advantage which the Standard
iii group derives from the, exclusive use
# the only trunk line from the mid
ointment field to the East would be
argely removed if this pipe line system
ecame common carrier in fact as well
5 in name"
1t is explained that though Congress
as declared pipe lines common carriers,
title use has been made of them as such,
s the small refners almost without ex {
option buy their crude petroleum local h
r The interstate commerce commission
~ x~af cd In riH a nd /
rents submitted by the pipe lines, be-
luse it has not completed its own inves-
cation into pipe line conditions.
while the Standard Oil interests have
this field some lines which show rela ,
We high costs" the report adds, never ,
leless their chief line running northeast r
, Chicago excels all others in capacity I
nd in the extent to which that capacity
used. This line shows the lowest cost. In
his favorable situation is partly due TO g
he fact that there is no other line rum a
ing to points east of the Mississippi a
8 all the connecting trunk pipe lines be-
yeen this river and the Appalachian v
ountains are controlled by the Stand d
d Oil group and independent reineries Ii
e small and scattered, other pipe line Il
ncerns in the mid-continent field have Ii
1t attempted TO run their lines to the
asst, but have built them to the Gulf of
exieo. For this reason the Standard
fineries are able to obtain mid-eonti
mt oil at a great advantage over COM
ting refneries located in the principal
nsuming districts"
The report has this TO say OF pipe line
offs:
"The net earnings, before dedueting
md interest, OF the companies which
crate the five pipe line systems in the
id-continent field have been 1888 per
Mt on the net investment for the three X
ar period, 1911 TO 1913. These net
rnings, however, do not show what u
ey earned from pipe line operations, n
cause in most cases these companies n
e engaged in other branches OF the oil
siness such as producing, refining and N
lrketing, and their pipe lines are oper-
I'd merely as departments OF this in n
rated form of business. These COM
mics generally treat their earnings as q
lugh they arose entirely from mer-
lndising OIL because they as yet have
/ TO any significant extent performed "A
duty Of common carriers. III
The significance Of pipe line rates i
Il appreciated by showing the rate OF
urn on investment which would be OBJ
ned if all the oil shipped by the in
ests owning the pipe lines were
Irred the tariff rates al which the pipe II