New-York tribune., 1921-08-14
Why Gasoline
Is Dear With
Crude Oil Down
S. O. Journal Says Other
Products Have Dropped
More i'll Proportion: De-
cline Is $780, ,297,7

cline As 81 .0SO,Z0 .73O
Under the caption The Public and
.se OIL Business, The Lamp. the Off
80, organ OF the Standard Oil Com
nany Of New Jersey, in its August is
sue discusses at some length the rea-
cans for the present price of gasoline
compared with that Of crude oil 1t is
admitted that the average American
.sr owner feels that his gasoline is
The cut of 10 per cent in Mid-Continent
crude from the high price of last year.
The Lamp says, IN part:
"Gasoline has not dropped in price
as far as crude because the other prod
nets of petroleum have dropped much
more than crude in proportion Even
On the price OF gasoline the aggregate
saving to the public approximates one
half Billion dollars year The result
is that the public is dipping into its
nockets for less money than the petro-
ieum industry. as constituted to-day,
must have to live on. The industry is
irving to readjust its budget to the
change. pinching first here and then
there, and feeling decidedly uncomfort-
able about i all
prices of products OF petroleum are
determined, in the main, by just three
factors:
"First-The consumers demand
"Sexnd-Ihe supply of crude.
"Third-The cost Of manufacture
and distribution.
The resner cannot get away from
these controlling conditions, nor can
the rroducer The law of supply and
danard is inexorable in its workings.
IL corrects an oversupply by making It
,rnrostaole to produce SO much. and
when rrices go TOO high it operates to
increase production until there Is again
an cversupply.
Hard as he has been hit by success
sive reductions the producer mas en-
:oyei one important advantage over
the refner, in that he receives casa
each day for the crude oil deliver I'd.
The lefners and purchasing companies
are compelled to take the entire risk
in storing either as crude or finished
products the surplus over and above
the current public demand.
"Wc have seen in the United States
in the current year successive breaks
in the price Of crude oil which rave
carried Pennsylvania from $50 q Lar
rel down to s2.25, and midcontinent
from $3.50 to 81 The rehner does not
make these prices and he had nothing
to do with the collapse 1t was the
consuming public. reducing the total
fits expenditure. that brought about
TIE readiustment And as most re-
forms go TOO far, this scaling down has
gons beyond the point at uhlcn pre-
ducers can afford to develop new
sou,ces Of supply
Public Curtails Buying
"The extent to which the consuming
public has dut down it expenditure for
petroleum products IS amazing. The
inability of foreign nations to finance
any but the most necessary purchases
in this country has mad inroads into the
export demand for petroleum and other
products Of American Industries. A
record number OF vessels, many Of
them oil burning. are tied I'D and out
o. the market as consumers of fuel oil
A large number OF wartime industries S
have closed down and most othr plants
are running at reduced schedule. That
has reduced the demand for lubricants
and fuel oil The lessencd- demand
meant that refneries we're running
more crude than was being consumed
as finished products That led to price
cutting as each company tried to hold
able. TIE total receipts for petroleum
products we're thus rduced first by the
smaller volume of some products sold
ard second by lcwerd prices paid for
the total volume Of products sold.
II would be almost al impossible
task 10 ascertain with mathematical ac-
euracy the exact difference between the
amounts which the consumer was paw
ing the oil industry during the period
O. highest prices last year and the low
prices existing now 1t Is, however,
possible to obtain a rough approxima-
tIon Of the shrinkage in the public S
OH OIL Tor 1921 as against 1920 which
at least will ll'show the tendencies of the
market b. multiplying the output of
renneries = 1920 b. the amount Of the
decline IN current tank wagon market
prices toE fgueI oil and lubricants. the
prices being taken from current trade
journals for the two periods Such an
approximation showsthat it has been
tas constantly diminishing volume of
revenue from the public which has de-
pressed rne price OF crude. The de-
cine n the market value Of the prin-
elpal products Of petroleum igured on
tnis oss's IS shown in the following
table: - .
Decline In Value
t. D g.. !
HH1t'Sr ~ -...-..-.. 2oi4la 80
Gas and fuel oil .....,... s5ss57.s53
Ioo'4rst.ns oi.--- .............-.. 1851 a
Total .. s12as 2e7-2s
IT viii be seen thar if we se7ss take e la st
years reHnery output and figure its
salle se al prices obtaining on June %,
tszl, there IS shown a shrinkare of
sl'Sac, 2ss,000 Even il sl5o.000 900
were struck of Of the fuel oil decline
N me theory tht the highest prices
sxlS',ng during 1921 could not be
e .a'aee representa- tive. the srinkage in
sne volume Of revenue from the public
wonlo approximate $3.50. 900 900
om rom inc expense Of the manufac-
s11s and distribution and the sums
paie . producers it has not been pos
s.Dle % take anything like that ag-
s.sgats loss IN sales. The expense Of
salhsring and transporting crude
sse'oSs tne country By pipe line and
- sa'i. q manufacturing, transport
ane ara marketing the refined pro-
80 faken IN the aggregate. are not
Ds.o" the costs prevailing last
'' "Nen prices were at their peak
Declines In Crude
=, The following table shows the de-
s..ns IN the Haarket value Of domestic
'n..t .s.ees cam pairing last years prices
~.sn present prices and figures on the
resas o the total quantity Of crude
y.oe~cea In The various fields in the
year 300 VIZ
Ctiae>.- Decline IN Value
cs;'<~-< ---....... ...->--,. tzstzi2. 500
csrt,ti - ...---. 2s53o $50