South Bend news-times. (South Bend, Ind.) 1913-1938, 1921-06-28
LESS DEMAND Is
REASON FOR THE
LOWER OIL PRICE
Reduction of Figures Shows
That Demand, Not Pro-
duction, Counts.


pendent oil refners although admit
ting that prices paid for Pennsylva-
MIA crude oil and other grades pro-
duced in the east are way down, are
themselves placed in a position
where they are operating OH a basis
that affords a very narrow margin
between profit and loss and are so
loaded up with refined products for
which there Is no market that the
conditions Of less than six months
ago, when the Independents were con-
stantly bidding up the price Of crude
until the Pennsylvania grade reached
the top figure Of $50, are today TAX
ing as little as possible. With Penn
sylvania crude oil down TO $3.50 a
barrel-the lowest price in over five
years-it is again being demonstrat-
ed that ii is not price but demand
that sells any product. And that de-
mand, excepting in the case Of gaso-
line, is conspicuous by its absence.
a well known local refiner and job
Der Of crude and refined oils today
pointed TO the fact that Iefners. who
but six months ago were bidding
against each other in an effort TO
secure Pennsylvania crude OIL are
today loaded 10 the limit with re-
fined products and going into a mar
ket where keen competition for pros
pective buyers has been forcing the
price down TO dispose of stocks that
have taxed storage facilities to the
limit, in order TO avoid being put in
position where they would have to
stop buying crude and shut down
Every price cut by a jobber or a
refiner." stated the local man.
makes the situation more acute A
refiner may make a special price in
order 10 move some special line with
which he is overloaded. This is pie
for the buyer, who, regardless of the
conditions which have forced the
seller 10 make the new low price,
Immediately stands pat on that price
with all Corners. and thus the lack of
demand has been slowly but surely
forcing down values for finished pro-
ducts.
"As a matter Of fact" continued
the local oil man. the present cut in
the price of crude had already been
largely discounted by cuts in the
price Of the finished product the past
few days"
Western Competition Hurts.
Although there are several rehners
who are continuing TO operate their
plants, it was pointed out. the opera
tons are not nettig any profits, and
some who do not want TO sever con-
nectiOns with their sources Of supply,
in anticipation Of a revival of bust
ness, are actually doing business at a
loss
The producer is the man who right
now is getting the worst of it-espe-
cially those who bought production
or who drilled in new production the
past two or three years.
The refiner, stated the Information
al News Services informant, except
ing under extraordinary conditions,
usually buys and sells at the market.
The producer who drilled at the
peak of the market prices and cor
respOndingly high costs is faced, even
if he is able TO carry his load. with
the possibility of having to wait
good many years before he can be-
gin showing a profit on his wells.
AS TO where prices will eventually
go, nobody seems willing TO predict
or guess. There is naturally the
pessimism that comes with a cut
and some profess TO see further
drops in sight. Others, more optim-
istic, believe that even if there should
be further cuts they will not be for
any length of time. as the curtail-
ment Of operations and productions
and the prospective revival Of bust
ness are expected to cause a turn.
SO far as the better grades Of
crude oil are concerned there has
been no increase in the supply avail
able, excepting in the stocks in hand.
Western crudes have been brought
into the market in increased produc-
ton, and gasoline from these grades.
although not 10 be compared with
the high grades refined from Penn
sylvania oils are laid down at east
ern points at a price that makes
them formidable competitors with
the eastern grades.
Aside from the demand for gaso-
line there is but a limited sale for
lubricants and other crude by-pro-
ducts at this time. Just what this
means 70 the refner, ii is pointed
out, is apparent when il is stated that
for every barrel Of gasoline refined
from Pennsylvania crude there is a
surplus of other products that must
either go into storage or be sacri-
feed in price equivalent TO about
two barrels.
The villain" in the old-fashioned