Tulsa daily world. [volume] (Tulsa, Indian Territory [Okla.]) 1905-1919, 1916-04-02

thirds capacity. That consideration
~ offset in certain instances, however;
oy the fact that revenues of some of
these companies has been derived
from business other than pipe line
transportation.
! The National Transit company, for
instance, previously has operated a
machinery department for the manu-
facture of oil trade supplies. II now
has Incorporated that business in a
new company, the National Transit,
Pump 4 Machine CO., and has re-
duced the capitalization of the Ne.
tional Transit company SO per cent
because Il Is much in excess of the
amount Of pipe line business now done
by the company The oifioia, state
rnent OF the company N connection
| with the transaction says: There Is
no prospect of expansion of its bust
ness through development of new
iIelds of pI Oduction within the ,crri-
tory where IL operates"
| Furthermore the eastern lines have
TO contend with gradually diminish.
ing business, as shown by the mar
keted production of the Appalac hian,
or Pennsylvania field. In 1870 the
| production was 100000 barrels a
year. Ii reached it's maximum OF
SG,0oO,000 barrels in 1900. In 1911
production was about "a. 600, 900 bar
| rels.
| In regard to the hazard of decreas-
ing supplies ard :he peril of loss of IN
| Nestment may be mentioned the case
OF the Eureka Pipe Line company,
which built line at IA cost of about
100000 into the Blue Creek field in
West Virginia when that pool was
opened. The pool quickly declined
and for the time there was no need
OF pipe line of the size of the 'Eure-
ka. In order to save its investment
the company built storage in that
OF its unprofitable position.
The Mid-continent pipe lines have
| rot made their reports Tor 1915. The
published report of ITS investigation
| INTO the five companies operating IL.
that territory, but it's report of earn
| ings stops with the year 1913, or the
year preceding the putting into ef-
| feet of lower rates. Naturally. the
| federal trade commission report in
dicates prosperous condition OF
| those companies, the average rate of
| earnings on the net investment from
1871 to 1913. inclusive, being a0.4i
per cent. During those years some
of the Mid-contInent companies op-
Grated their own refincries or other.
! wise had business in addition to the
transporting of oil. If all the oil
| transported in 1911, 1912 and 1913
had been charged the present pipe
line ratec, the average ,or the com
fanies would have been Abb per
| cent, according to the commission.
How earnings of the mid continent
companies ran in 1915, the first full
year of operation under reduced rates.
is unknown.
This much is known, however, that
the production of oil, now the only
1 g..
decreased heavily in that field in 1915,
the Gushing pool, the largest produc-
ing area there, alone declining from
100000 barrels day at the beginning
of the year to less than 100, 900 at the
end of December. The sudden col
lapse of Gushing was as surprising as
| its bringing in. and oil men say that
the decline in Oklahoma production
is permanent. II it is then IL would
appear that the investment of the pipe
line companies in that field Is in
jeopardy.
The report of the federal trade
commission makes the statement that
the extensive proven area and great
productivity of the mid continent
field have greatly lessened the hazard
Of the pipe line business there. The
| report, however deals with production
through 1914; consequently nothing Is
half of 1915.
The nub of the whole question In
the pipe line business is the extreme
hazard TO which they are subject in
the matter Of continuance of produc.
ton. If production diminIshes per-
manently in the Oklahoma field, then
the investment of $i3,S50,OOO there
by pipe lines Is in danger.
Granting the prosperity of the mid
/ N ho
| traOrdinary abundance of oil brought
out during the last few years, it Is
also fact that these companies by
| reason of the conditions under which
they have operated have held the DOM
inant position in the pipe line indus
try throughout the country. Because
| they have been able to stand lower
rates on account of the boom in their
territory, the position of the eastern
lines, suffering from unfavorable con-
ditions, has become all the more acute
and the chances of increased com
petition in their field has become
more remote than ever.
That the decision would have no eff
feet on marketing conditions was
maintained by expert oil men when it
was ordered and their observation has
since been vindicated, and its ineffec-
tiveness is now obvious. While the
producer in the mid continent field
was loudest in his demands for court
action against the big oil carriers he
was, and is, in only the slightest de-
gree affected by pipe line rates be-
cause the producer does not pay the
rates. The refiner pays them. The
shipper, it Is true, is credited with
paying them, but he straightway adds
the charges on to the bill to the re-
finer.
The refiner, however. had made no
kick.
Eelief that the decree making the
pipe lines common carriers would re-
| suit in wider markets to the producer
was also unfounded. 1t did not re-
suit in the pipe lines taking for ship
inent any more oil than they had IA
ciiities for handling, and they had al
ways done that. The only restrictions
| they had, and they are still in force,
relate to a minimum sized shipment.
| The only reasonable method Of pro-
ceGure to bring about reduction of
the price of oil products to the con-
| sumer is to increase the facilities for
| transportation. This can only be done
| by allowing such a wide margin of
profit under normal or favorable cir
cumstances as would attract capital
into that uncertain and variable in
dustry. The interstate commerce
commission pursues the wrong course
IA eAs, L..