The Morning Tulsa daily world. [volume] (Tulsa, Okla.) 1919-1927, 1922-03-08
Relation of Producer and
Refiner
BY W. H. GRAY.


retary to discuss the relation Of the
Independent producer to the mde-
pendent refinCr. aud incidentally 10
discuss the position of both OF them.
| as II Is and will be. affected by inn
portations OF oil from foreign coun-
tries. and especially from Mexico.
Grading oil by Gravity.
Il think there has not been the
team work heretofore between the
Independent producer and the lnde-
pendent rCfiner that there should
have been, and that am sure there
viii be In the future. One OF tho
main difficulties between the two
has been the question Of premiums
The Independent refiner has al
| ways complained because he was
compelled 20 pay premiums, and
| many Independent producers have
regarded the independent refiner as
! legitimate prey and have been will
| ing to gouge him for almost any
amount on premiums. Tho fact Of
| the matter IS that the payment Of
premiums by Independent refiners
| Is no more nor less than a gravity
| basis Of purchasing oil.
The Standard Oil company has
not been willing to adopt a gravity
| basis for purchasing oil in its
strictest sense. They have underta-
ken to establish a gravity system by
| districts, In one field paying one
| price, based on the values I'm the
OIL However, IL there happened to
| bo oil OF various gravities in the
| same field, they would establish one
! price for IL all, and OF course in
| these districts the heavy grades OF
| oil would command a higher price
| than II was entitled TO receive and
| the high gravity oil would command
| a price which would be less than
| its actual value.
This method OF price making on
| the part of the Standard Oil Comf-
| pany enabled the Independent re-
| finer TO establish a gravity basis,
and in many instances to pay a
premium over the Standard OIL COM
| pany's price and make money.
| therefore, the Independent producer
! Is justified in demanding them. The
| point that should be watched is the
| size Of the premiums. independent
| producer should not ask too much
| and the Independent reflncr should
| not be willing TO concede too much,
| for in the end this will not be for
| the good OF either.
There should be n closer rela-
! tionship between the independent
! producer and the Independent re-
! finer than there really Is in order
| that all could cooperate in an eff
fort to- maintain reasonable and fair
| prices based on the gravity OF oil
between the two groups.
Last summer when l was urging
! congress to place a tariff on MeXi-
can crude. l told them that crude
Oil. when refined, divided itself into
two ends, the high and the low, and
that while many various products
were made from II, yet for the pur-
pose of establishing q price to be
paid for II, uhe producer and refiner
| divided this oil into two parts, one
OF which they call the high ends
namely, gasoline and naphtha, and
the other they call the low ends
| namely, fuel oil and gas oil, and
| whenever there was an overproduc'
tion or an uuder-consumption OF one
Of these ends, the price would have
| to go on the other end in order 10
| sustain the price OF crude oil in this
country, and that the unbrldled i'm
! pOrtations OF lOwgravity oil from
| Mexico, because OF the predominant
ing low ends which 1t contains
would ultimately mean a high price
for gasoline. We have now reached
the point where that propheey has
come true. A strong gasoline mar
. ]
weak fuel oil market. The consumer
OF gasoline Is carrying the load and
unless there is q distinct change IN
the situation in the very near flu
ture, the consumer Of gasoline must
carry heavier load.
Under CONSUMPTION of Heavy Oh
and Shortage of Light OIL.
THAT there is an undor-consump.
Ition OF heavy oils will not be denied
and il may be said that there Is
shortage Of light-gravity crude. on,
Of the problems, therefore, whicf
the Independent producer and tho
independent refiner should work TO-
lgether on Is that Of supporting tn,
market for low-gravity crude an6
for the low end which the retlner'
are turning out, In order TO ac
comphsh this the independent re
finer must give more consideration
in the future to the matter Of stor
age and less attention to tho matter
of plant expansion, and there shoulC
be some system worked out between
the producer and refiner by which
during the gasoline season when th'
demand Is strong and consumption
, heavy. the light ends of this Oh
could he taken out and sold on th'
: market ana the ntdNA thuS SlhlN'
for the Joint account of the reflne
p and producer until the winter sea
, son could absorb It.
There IS no fuel In the worll
(which can be stored with any les
loss than oil. II can be insured
! against fire at low rates, and can bl
, held in storage for many years with
out detcrluratng in value. II Ia ul
to both the producer and refiner u
sustain the fuel-oil market durlni
. 1.-THE coming year in order that m
: price Of gasoline may not reach sue!
levels that consumption will be al
! fected,
THAT there is an production
4 of heavy oil can hardly be denle,
, Iby any one acquainted with the oi
situation. In order that you may ap
, preciate fully that consumption
not keeping pace with production
wish TO state to you that oil iror
the PaniCO district In Mexico Is be
ing sold at the well for 20 cents an
Y 80 cents per barrel, when light-graN
4 ity oil from the ToteCu diCtrict Is be
r. ing sold at 81 a barrel Healdto
70 crude, situated in the heart of IN
e great Mld-Continent field is he!n
n sold for 81 per barrel while light
y gravity crude few miles away fror
il IS being sold at S2.4O per barre
I Fuel oil Is being delivered az Al