The Daily Ardmoreite. [volume] (Ardmore, Okla.) 1893-current, 1921-05-08
PROTECTIVE MEXICAN TARIFF, SUSPENSION
OF DRILLING, DECONlINUANCE OF PREMIUMS,
IS The REMEDY, STATES SECRETARY JAMES


ton" written by II. G.. James, secre-
tary of the Western Petroleum Re-
finers Association. and dated May End.
the writer in very interesting manner
covers the history of the crude cuts,
their causes and results, and their
bearing on the refining branch Of the
industry. Mr. James in his article
advocated the exact measures which
were undertaken by the Oklahoma
producers at Oklahoma City Thursday
morning in an effort TO improve mar
ket conditions by suspension Of drilling
operations, and the placing Of a pro-
tective tariff on Mexican crude A third
measure advised by Mr.. James Is the
discontinuance Of paying premiums for
the crude.
Extracts from Mr. James article
read as follows:
If l understand the situation cor
rectly, the reduction in the tank wagon
price was made by the Standard to
meet the general independent price fix.
ed by the jobbers themselves.
To Meet Postwar Readjustments
My personal view Of the occurrence
is simply this. The Standard Oil Co.
reduced the price of crude in harmony
with the trend Of postwar readjust.
ment, from $3.50 per barrel in the Md
Continent field to S1.7j, by cuts of SO
cents at time. Most Of oil men had
expected some decline in crude, but
they were not prepared for the un-
paralleled slash that took place The
rapidity Of the decline threw the re-
filming industry into state of panic.
Reflners were caught with large stocks
on hand and heavy commitments. They
were taken completely by surprise, and
bewildered. Had the reductions come
more gradually they would probably
have been better able TO meet the situa-
ton and their mental balance would
have been better maintained. But the
purchasing public, refusing to buy or
make commitments on q declining re-
fined market, and producers insistent
upon settlement for crude, induced
many refiners. pressed for immediate
funds, TO force upon the market re-
fined products OF prices out of rela-
ton to cost.
mo one seemed TO know how low
crude was to be reduced, and those re-
finers who had lost opportunities TO
sell at what seemed short time be.
fore as under the market and disinclin-
ed to be fooled again. cut their tank car
price unwarrantably low. 1t was u
result Of paricky state OF mind, the
uncertainty of the future-refners lost
money.
During this period the spread or
difference batween the tank wagon
price. the market price, and so recog.
nized by both the industry and the pub
lie, and the independent tank car price
the refiners wholesale quotation
varied from TO l2 and ID cents. ac-
cordng to location. The tank wagon
in Chicago was 90 cents. and the tank
car price receded as low as II cents.
Il am of the opinion that the an
nails Of the oil industry present no par.
allel TO this condition.
When Gasoline Carries Burden
"Ofl men know, whether the public
does or not. that had it not been for
the favorable price obtained for kero-
sene, gas oil. distillates and fuel oil,
the price Of gasoline would Of necessity
have gone up 10 80 TO 40 cents at the
refinery during the war period. Ex-
cept for the war period gasoline has
for years had TO carry the burden Of
cost of manufacture. This is easily
understood when 1t is realized that the
chief demand for petroleum products,
because OF the automobile. Is gasoline,
but gasoline cannot be made without
making much larger quantities OF fuel
oil and large quantities of Kerosene.
THE public has not been able TO un-
derstand why. when crude declined so
per cent, there was only a small re-
duction in the price Of gasoline TO the
ultimate consumer. Up until last win
ter the refiner could sell his kerosene
at his plant at and 10 cents a gal
lon and fuel oil at So TO $3.50 barrel.
Since the slump he has been unable TO
dispose Of kerosene at even 1 cents and
fuel oil had 10 be stored because there
was no sale for IL at SO to 60 cents a
barrel. A billion gallons Of fuel oil is
now in storage.
Thus it is obvious the price OF
gasoline could not come down in pro-
portion TO the cut in crude.
Now. the industry anticipated q big
demand this summer Tor gasoline, re-
sardless Of what the demand for fuel
oil or Kerosene may be, and 1t is evil
dent that gasoline must return to Its
pre-war responsibility OF carrying the
burden Of the cost OF manufacture. 1t
seemed more likely that the price Of
gasoline. therefore. would be higher
before the summer was over than low
er. regardless OF immediate conditions
"As l have said, spring demand stiff
ened refinery prices. Then came q
rainy spell, cold weather and slacken-
ed demand, and inexperienced refln-
ers reduced their tank car quotations
To meet the weather and again widen-
ed the spread between tank car and
tank wagon. This is q phase OF Oil
marketing that cannot be understood.
IL would be just as reasonable for
merchants to cut and slash prices
every time the women lols were un-
able TO get down town 10 buy. The
refiners do not add n single gallon TO
rho ultimate consumptIon by their