Albuquerque morning journal. [volume] (Albuquerque, N.M.) 1903-1926, 1916-03-01
PIPE
LINE COMPANIES
ARE UNDER FIRE
Charge Is Made in Report of
Federal Trade Commission
That Independent Shippers
Do Not Get Fair Deal,

tassociated Press Correspondence
Washington. Feb. PA charge
that petroleum pipe line companies OF
The mid-eontinent field, through high
tariffs and unreasonable shipping re-
lquiremcnts. have excluded indcpend-
cnt shippers from their lines was
llnade today by the federal trade COM
mission IN lis report TO the SENATE on
a special investigation OF the business.
IL the five systems that control the
MID continent pipe line carrying their
J own refincries for carrying oil TIT the
rate they offer to carry II for the In
dependents, the report declares, their
annual net earnings should show a
f1.5 per cent profit on their pipe line
I Investments. As IL Is they are de-
| elarcd to earn more than . per cent.
! The investigation was ordered by
the last congress, which later directed
IN Interstate Commerce commission
inquiry To avoid duplication the
trade commission confined It's work
to the mid-continent field, while the
lcpnlmercc commission turned its at
tcntion to systems operating in the
east
The commission summarizes its
| findings ia this language
THE dominant position of the mid
continent field makes the facts devel-
0ped I'm this report Of vital import
ance to the entire country
The fixed investment In pipe lines
Is extensive and corresponds closely
with the actual cost OF such property.
Investment Secure.
pipe line construction in the mid
continent field has followed, instead
Of preceded. crude oil production. and
such investment is comparatively Sc
cure.
"Thore Is q large difference between
the cost Of pipe line transportation,
which IL very low. and pipe limo tariff
rates. while the independent shippers
cannot use railroads because their
rates are stil higher.
The pipe line companies require
large minimum shipments, which
makes It impracticable for small pro-
duccrs or refincrs to ship crude oil
by pipe line.
THE price of crude oil delivered at
The reflnercs Is to large extent !
made up of the transportation charge. |
The cost Of pipe line construction 1
IL so great that small concerns can |
not build lines from the mid-eonti- !
nent field to the large consuming and !
distributing markets
Lower pipe line rates and smaller |
minimum shipments are necessary to |
enable small concerns 10 compete /
with large refineries affiliated with |
pipe liue companies.
Reasonable and equitable eondi- /
tiOns Of shipment by pipe line would 4
tend To greater equality in the prices |
of mid-continent and Appalachian !
crude oil and in the prices Of refined I
products In different markets
Standard OIL Interests.
OF the five large systems operating |
in the field the commission found I
that two belong to the Standard OIL /
company and that n third Is controll
cd BY standard Oil capitalists, The
Standard oil lines are given as the
Prairie running northeast to Illinois
and Indiana; the Oklahoma-Louisi-i
ana, running southeast to Baton
Rouge, and the Magnolia, running
south to Texas points. The others
are the Gulf and Texas systems.
or the standard oil methods the
report said:
THE advantage which the Standard
oil group derives from the exclusive
use OF the only trunk line from the
d-eoniinent field to the east would
be largely removed IL this pipe line
system became n common carrier IN
fact as well as In name"
1t Is explained that though con-
gress has declared pipe lines common
carriers, little use has been made of
them as such. as the small reflners
almost without exception buy their
crude petroleum locally. Tho Inter
state Commerce commission has not
vet passed on tariffs and requirements
submitted by the pipe lines. because
IL has not completed It's own invests
cation into pipe line conditions
while the Standard oil interests
have In this field some lines which
show relative high costs" the report
adds. nevertheless their chief line
running northeast to Chicago excels
all others in capacity and In the OK
tent to which that capacity Is used.
This line shows the lowest cost. This
favorable situation is partly due to
90 the fact that there Is no other line
running to points east OF the Missis-
sippi river. AS all the connecting
trunk pipe lines between this river
ana the Appalachian mountains are L
controlled by the Standard oil group,
ana Independent refneries are small
and scattered, other pipe line concerns Z
in the mid-continent field have not
attempted Ia run their line TO the east. i
hut have built them to the Gulf of
Mexico For this reason the stand
ard rcfinerics are able to obtain mid
continent oil at great advantage
over competing refinerics located in +
the principal consuming districts
Pipe Line Profits.
The report has this to say Of pipe i
line profits
The net earnings, before deduct
ing bond interest, OF the companies
which operate the five pipe line sys-
TENS In the mid-contnent field have
been 1854 per cent on the net invest
mcnt for the three-year period, 1911 /,
To 1913. These net earnings, how
ever do not show what they earned
from pipe line operations because I'm
most Eases these companies are en-
gagged In other branches of the oil
business such as producing, refining
and marketing, aud their pipe lines
are operated merely as departments
OF this integral form OF business.
These companies generally treat their
earnings as though they arose entire
~ from merchandising oil, because
they as Vet have not to any signifi-
cant extent performed the duty of
common carriers
THE Significance Of pipe line rates
Is best appreciated bv showing the
rate Of return on investment which
would be obtained If all the oil ship
ped by the interests owning the pipe
lines were charged the tariff rates at
which the pip. line offers to take the
oil of other shippers Taking all these
five pipe lines together the net in
t4ef fttt Y.t tai Ia