The Morning Tulsa daily world. [volume] (Tulsa, Okla.) 1919-1927, 1922-02-25


Department of the Interior
Office OF Indian Affairs,
Washington.
"Mr. j. George Wright,
Supt. Osage School.
"My Dear Mr. Wrlght:
IN your letter of October 26,
1921, you invited attention to the
various prices OF oil in the Usage
nation posted by purchasing COM
panles during the month OF Octo-
ber
"On october l all purchasing com
panies posted price OF sl.25 per
barrel. on October 3, five COM
panies taking approximately 10000
barrels OF oil n day published a price
Of Sl.50 per barrel. On October S,
the Gulf Pipe Line company taking
about 5000 barrels day posted a
ike price. and on October Z, four
other companies taking approx
mately 44.500 barrels met this price.
on the same date, the Gulf Pipe
Line company posted price OF
'i.75 per barerl for 3S gravity oil
or better.
'Wh lie this case was under con-
sideratlon an informal request was
made by some of the oil producers
that they be given an opportunity to
be heard on the question OF what
constitutes the highest posted mar
ket price in the Mid-Continent oil
field, under which the oil leases are
required to settle for their royalty
by the provisions of section 2 OF the
Usage oil lease form. That section
provides for the rate OF royalty
and that settlement shall be based
on the actual selling price, but at
not less that the highest posted mar
ket price in the Continent oil
field on the day of sale or removal
"On January 10, 1922, the date sci
for the hearing. a number of the oil
operators, as well as representative
OF the purchasing pipeline com.
panies, were present and presented
their views orally as to what was
meant by the term highest posted
market price
1T was urged by them that the
term meant the highest price mt
which oil was selling generally.
which the producers could \obtain in
the open market from companies
taking oil from oil producers offer
ing It for sale as distinguished from
price posted by some local refin-
cries, which had pipelines In the oil
fields TO supply their own needs.
"For example, MIR. Crocker, the
representative OF the Cosden Pipe
Line company, which. during the
month OF August. 1921, took 252,-
500 barrels OF oil in Usage county.
said that the interests which he rep
resented were principally concerned
in the refining business, and that
leases were taken by them and pipe
line laid to the oil fields for the
purpose OF assuring an adequate sup
ply of crude oil to run their retin-
cries, and that as n rule In order
TO secure the necessary supply they
paid a price in excess OF the prices
paid by the larger purchasing COM
panies.
Several OF the other purchasing
companies represent local refineries
and buy oil principally. " not en-
tirely. for their own refineries, TAX
Ing II so far as possible from their
own leases and buying only enough
more In the open market to keep
their reflneries going, paying when
necessary to secure 1t price above
that paid by the large purchasing
companies.
THE independent producers for
the most part are obliged to dispose
OF their oil to the larger purchasing
companies at the price posted by
them for the reason either that the
companies paying n higher price
have pipeline facilities to enable
them to take but a small proportion
OF the oil, or have no pipeline at all
IN many parts of the field, These
Producers therefore urge that the
price posted by the smaller purchas-
Ing companies cannot be said to con-
stitute a market price. but more In
the nature OF a premium above the
market price. They also urge that
the term Continent oil field
should include only the territory
which constituted that field at the
time the lease form and regulations
were adopted: namely, the states of
oklahoma and Kansas, and not
me present Mid-Sontinent oil field
which takes In producing terri
tory in Texas, Arkansas and
louisiana, some of the territory be-
ing much nearer to the Gulf OF Mex
leo, and thus might by the shorter
distances II will be transported cause
higher price to be posted than for
OIL IN Oklahoma and Kansas.
II Is noted you report that et-
tective November 7. 1921. all the
purchasing companies posted a price
or $2.0O per barrel. and that on the
same date the Gulf Pipe Line com
nauV pnatnA go o. -. L.r,nt g., . .