The Washington times., 1922-08-18


area that lies just southeast Of
(. Galveston, Tex. .,.
for 100 barrels OF Teapot gasoline
royalty oil. Shannon of is "a de-
grees baume; Lakotah oil is 81 de.
grees baume; First Wall Creek is
now 36 degrees, and Second Wall
Creek is 81 degrees.
ing all In Salt Creek except the Van,
royalty. A high rate for oil of 80
degrees or over and lower rate for
oil under 80 degrees. This applies to
the wild cater even.
What Wildcats" Pay.
But in the Sinclair private car
lease the higher rate does not begin
until the oil reaches 81 degrees, In.
stead of the 80 degrees limit for all
others. This means the Salt Greek
average well" leases will pay the
high royalty on the Lagotah 81 de.
gree oil, while Sinclair will get II
not only at a lower rate Of royalty,
but by paying sixty-three barrels of
fuel oil for 100 barrels of crude gas.
oline Lagotah oil.
In the proved Teapot portion OF the
Salt Creek pool Sinclair will pay a
royalty 12h per cent on the first
fifty barrels of his average size"
we'll but the wild cater" who wa
compelled to surrender his mining
claim under the leasing law, testing
improved areas in the designat ed
structures, pays Is per cent on this
first fifty barrels
On the next fifty barrels Sinclair
pays a royalty of 16 2-3 per cent,
while the wild cater" pays 20 per
cent on the same fifty barrels. "On
the next 100 barrels Sinclair pays 90
per cent In his proved ground. wtilc
the wild cater" must pay 25 per
cent II lucky enough to find oil. On
the third hundred barrels they each
nay 25 per cent. But Sinclair pays
in residuum from which the high.
grade valuable portions OF the crude
have been removed, while the wild
cater" gives up the unskimmed
crude with gasoline still in IL.
As bit Of camouflage the Sinclair
ease provides for royalties up TO 50
ner cent on average size wells" OF
LOCO barrels or over. But as no
field in the United States averages
over 300 barrels per well, these high
er rates are meaningless except to
deceive thoss who are not informed
Secretary Fall In his letter to the
President says 81 per cent Of all
crude oil produced in the United
States comes from wells averaging"
less than five barrels per day.
Sinclair pays less for high grade
oil than he does for low grade oil.
Beneficial Terms.
On the first fiftv barrels and on
all oil where the wells average"
fifty barrels Sinclair pays a royalty
of 1876 per cent on low grade oil, be.
ing the same as paid by the above
Wild Cat prospector. AID, as stated
above, on the first fifty barriers Of
high grade oil. and on all oil where
the wells, average" fifty barrels,
Sinclair pays 12h per cent. while
his neighbors pay 25 per cent and
33 1-3 per cent and the wild cater
pays Is per cent. In the haste to
give a good deal the changes made
in established high grade oil royal.
ties brought those royalties below
that charged for his low grade oil.
Salt Creek and Wild Cat leases.
and all other leases except Sinclair's .,
provide that the Government royalty
must be paid monthly in cash. or
in kind.
sINCLAIR's LEASE PROVIDES
THAT HE SHALL PAY FOR THE
ROYALTY IN HIS COMPANY'S
OR SCRIPT, EUPHONIOUS.
LY CALLED "OIL CERTIFICATES"
IN THE LEASE. They are to be
"non-fnterest bearing"
Later the United States will use
these shin plasters to pay Sinclair
for building steel tanks, or In pay
ing him for gasoline, kerosene, lu.
bricating oils, or fuel oil for the navy.
From the origin OF our Govern
ment, bylaw and custom, the Gov.
ernment called for bids In it's pur-
chase Of supplies. BY the Sinclair
lease his company will furnish tho
navy with gasoline, kerosene and
lubricants at market price"
There is to be no competition. Sin.
clair and his standard connections
own the great bulk Of crude oil, the
refineries and the pipe lines. In short,
they make "the market PRICE" to suit
themselves. .
So the effect of the lease Is that
for the future the navy Is to be sup
pleid by the Standard a. the stand.
ards price. and without fear OF
competition.
No Cost-Pius Provision.
BY the teapot's lease Sinclair
Company or It's nominee" 10 to
build storage tanks, or tank farms,
for the navy at twenty-seven coast
points. The navy is to pay Sinclair
or his nominee" for the tanks.
There is to be no competition.
There is not even a cost.plus pro-
vision. Sinclair will buy the steel,
contract the labor or construction,
the excavation ground work, the
connecting pipe system. and even
the finishing point. His Judgment
and honesty-or that Of his "nomi.
nee''-will replace the safeguards of
competitive bidding on specifications
submitted. So great q monopoly In
supplying the navy, and the building
of so many tank farms at discretion.
Is a radical departure from all pre-.
vious practice. .-.......
As to the fuel oil furnished, while
he may pay the market price, or ship
into this country free of duty his
Mexican oil, Sinclair will receive sew
eral times it's market price," For
each barrel or each s3.l00th Of q
barrel Of the cheap gasoline he will
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