The Morning Tulsa daily world. [volume] (Tulsa, Okla.) 1919-1927, 1922-07-28
THE OIL MARKET AND TIE GRAVITY
SYSTEM


SYSTEM.
Tho oil market ls a very important matter TO
Tuyaa and Oklahoma. And just at present the
oil mHIket is In q more chaotic condition than
has existed since petroleum became important
in the southwest. what We moan to say ~ that
IL is n scrlus Of contradictions and ebnorman-
ties.
Tor instance general conditions in tho indus
try Justify the recent reductions In tho price OF
crude; possibly further reductions. Briefly these
cond ,tions may be stated thus. There great
stores OF crude oil above ground, constituting
enormous reserves. while fkelds OF unusual pro-
ductlyity have Just been opened up; refined
nroducts are not moving In that volume neces-
sary to crsate and maintain firm market con-
dltions In tive face OF tho crude production; not
withstanding an immense volume OF motor car
sales and an apparent normal activity on tho
part OF motor car users. tho demand for gas
has not been sufficient to strengthen the cur
rent market prico OF gas
Naturally tho question confronting refner
is whether to create reserve OF gasoline In the
face OF an uncertain mOret and uncertain
demand. or merely maintain the status OF
going concern and await settled conditions II
gasoline s to presently be In great demand and
crude presently due for advances the retiner
who then had large reserve OF vas to put on
the market would be In clover compared to the
refiner who was operating from hand to mouth
and producing gas from tho higher priced
crude.
It is the unsettled and undetermined condi-
tlons OF the industry In the face OF increasing
reserves Of crude that has brought about de-
crease in the market price of crude. The clear
purpose Is To either discourage production, and
thus reduce It. or to buy 1t Mt n price that will
Justify tho additional Investment necessary to
store It.
All OF this is said in a most impartial way.
merely I'm an attempt to honestly state existing
conditions Yet we find that while tho latest
cut in the price OF crude was met by oil market
factors. two OF the most important OF these
factors Immediately followed their cut by post
ing a premium for crude OF ss gravity or better,
What is the explanation Of this conduct In the
face Of the undlsputed conditions Just described7
one is compelled to believe that there ia
atoot deliberate determination 10 force re-
adoption OF the old gravity system In otfcoting
the purchase OF crude. and The World does not
hesitate to denominate tho gravity system OF
grading and valuing oil ns tho most unjust
gystom ever employed In grading and valuing
any product
The marketing factors which have followed
the recent cut in the price OF crude by posting
premiums for tho higher grades OF oil, really
handle little more than per cent OF tho daily
production OF this field other than that pro-
ducod by their own production departments. II
is evident. therefore. that the premium posted
does not offer announcement to the industry
as a whole from the standpoint OF the average
producer. II simply means that values are
seriously disturbed In order that tho inslgnit-
icant need OF these factors may be filled by the
most valuable oil produced.
what let us ask. is 10 become OF tho great
majority Of producers. most OF whom have oil
from one TO several degrees below sS1 Or
what Is to be done with the ss gravity oil pro-
duced which the factors referred 10 unable
20 take? Is It not evident that the relntroduc-
ton Of this old dIscredited method Of grading
and valuiug oil can have no other consequence
than 10 seriously disturb all values in tho In
dustry in the first instance work n terrific in
Justice to the great majority Of oil producers
IN the second?
And is Il not certain that under such a
method OF grading and valuing oil there Is room
for the practice Of that partIality which is at
the root OF every nequity and special tayorlt-
Ism in politics finance and social relations1
However gratifying the premium system may
be 20 those who directly enjoy IT'S benefits. the
fact remains that II Is disturbing factor 20
the oil business in general, and, ~ # is carried
TO the point where the old gravity system IL re-
viyed and practced every oil producer win he
the loser.
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AN OLD.TASmONED GIRI.