The New York herald., 1921-07-02
HUGE OIL TAX HALTS
STANDARD IN MEXICO
TeagIe Announces Company
Has Stopped Shipments From
Below Rio Grande.
OTHERS TO FOLLOW SUIT
Atlantic Gulf Awaits Develop
ments i'm Hope of MOdifi-
cation of Order.

The Standard Oil Company of New
Jersey has stopped all shipments of oil
from Mexico and has withdrawn it's
tankers from that service. according to
announcement made yesterday by Wal
ter c. Teagle president. A number Of
other companies. including Mexican Pc
troleum, Royal Dutch, Mexican Eagle
and Texas Company. are expected to
take similar action as a result of the
putting into effect yesterday of the
heavy export tax decreed fortnight ago
by President Obregon.
Oil companies maintain that they will
be unable to pay these heavy taxes and
at the same time make a profit and the
opinion is freely expressed in oil circles
that complete shutdown of these Mex
lean properties is the only thing to be
expected unless the Mexican Government
rescinds or materially modifies the new
tax
''Since April. 1917" Mr.. Teagle said,
the law of Mexico has imposed ad va
lorem duties on crude petroleum and its
products shipped out of that country de-
termined by the application Of certain
percentages to the value of the oil in
Mexico. The percentages established by
the law are not in themselves unreason-
able. but the Mexican Treasury Depart.
ment has from the beginning fixed
values for the purpose of the tax in ex.
cess and with entire disregard Of actual
values and the terms of the law, with
the result that the taxes demanded have
been. generally speaking. not less than
double the amounts legally assessable.
Against this arbitrary and illegal
administration of the law the Standard
CnmnanV IN Uifb 0fhar. yv,at
bers of the Asso citation of Producers Of
Petroleum, has repeatedly protested.
and has sought successfully from tho
Carranza, De Ia Huerta and Obregon
governments an opportunity to make
full presentation of the facts and to
secure a readjustment of valuations to
accord with actual figures Assurances
Of fair consideration and promises OF
relief were usually given, but no real
hearing has ever been granted. Our
sworn figures have been ignored. and
the valuations instead Of being reduced
have been progressively increased.
'These taxes have been paid under
protest and suits brought in the Mexican
courts to test their validity. without az
yet any relief being afforded.
Effective July /, 1921. the law Of
1917 was repealed, and two new DEGREES.
recently promulgated by the Chief Ex-
ecutive. took it's place Their cumula-
tive effect is to impose upon oils ex-
ported from Mexico taxes amounting 10
practically 100 per cent of their value.
Protest to President Obregon has been
made without avail.
Under existing marketing and eco
nomic conditions these new taxes are
confiscatory and prohiIbitive and we are
advised that they are unconstitutional
from the standpoint of Mexican law as
well. In these circumstances this COM
pany has had no alternative but to dis
continue shipments of Mexican oil and
withdraw its tankers from that service.
Arrangements have been made to meet
all it's obligations by utilizing stocks on
hand and other available sources OF
supply"
Other companies have not yet deter
mined what action they will take. The
Sinclair Consolidated Oil Corpora tons
largest investments are in this country
and the closing down of the Mexican
fields will be of benefit to its American
properties. The Mexican Petroleum
Company has as yet made no arrange
ments TO stop operations and shipments,
but ii is believed that IL the tax is al
lowed 20 stand something of this sort
may be looked for
The Atlantic Gulf Oil Corporation has
adopted a passive attitude and is await
ing developments in the hope that
modification OF the tax decree may be
effected. Officials of the company. how
ever, say that If the big tax Is permit
ted to stand it will be necessary to close
down, as the total taxes will equal the
actual value OF the OIL