The Indianapolis times. [volume] (Indianapolis [Ind.]) 1922-1965, 1923-08-20
DEVELOPMENTSOF
WEEK BR|GHTENS
BUSINESS WORLD
Oil Price War Threatens Life
of Competitors of Standard
Company.
BY DIR. LEWIS HANEY

I
NEW YORK Aug. 20.-The weeks
Developments have considerably
( frightened sentiment in tho business
world. Preliminary July figures show
+ a favorable balance Of trade. our mer-
chandise exports being $4,000, 600
/ greater than imports Pig iron prices
are tirmer
/ Wheat has reached a level which
means increased purchasing power for
farmers. even on smaller crop. Bad
news Is out on oil. and, as usual.
after the worst happens, an improve
ment is anticipated. We may expect
completion Of the adjustment Of sup
ply and demand
It Is q relief that oil leaders have
quit trying to maintain gasoline at
% cents retail in the middle west.
while the little rehner could get only
S12 cents at his plant. And crude oil
at from Sl.10 to $500 barrel is plain
I ~ too high, so that cuts may be ex-
pected which will stop over-produc-
ton
During the war petroleum prices
We're maintained at an unreasonable
I high level, being one Of the few basic
prices which were not regulated by
the government After the war there
was no real detlation Of the petroleum
industry. Prices were maintained. As
a result. great profits could he made
and Hood Of crude oil was produced.
OIL began to accumulate in larger
and larger quantities. Instead of
shutting Off production by reducing
prices Of crude oil in the old-fashioned
way big companies. notably the
Standard Oil Companies. kept up
prices and tried to store the OIL. This
was called a sterilization program.
Supply Swamps Companies
But new oil fields continued to be
opened up and stocks have bevorne so
great that companies are swamped
The situation is made worse by over
estimates rehners made concerning
gasoline consumption by automobile
users and gasoline-by far the most
important crude oil prodnct-has piled
up at refineries in unheard OF vvune
Independent" reflners have warned
big concerns that crude oil should
he cut and that gasoline prices re-
duced. Now. too late, reductions nave
come with vengeance OF course.
the Standard concerns will tempo
rarily lose money. But more serious
Is the threatened destruction Of small
competitors. More serious still Is this
evidence that we have not been get
ting a square deal in oil prices.
When the Governor of South Da-
kota offered 100000 gallons of gasoline
for sale at around Is cents he proba-
bly, did an unwise thing That guam
thy is only a drop in the bucket. but
il gave the Standard Oil Of Indiana
chance to cut the price to such
a low figure that it's competitors can't
stand it.
Present Prices Too Low
1t costs about 7c a gallon to pro-
duce gasoline In Tulsa at present
crude prices. To this must be added
about four cents for freight and dis |
tributing Two or three cents are re-
quired to cover service station costs. |
This makes a total actual cost of about
IA cents delivered to the consumer,
without profit. A price Of 15hc
means loss. IN August, 1915 the tank
wagon" price in the middle west was
ten cents and retail price little over
lie, but the gasoline jobper could get
his supply for six csnts and the cost
of refining was about four cents. Now
crude costs around $1.45 barrel and
the jobber pays the refiner about SC
gallon for gasoline. In 1915 many
independents were forced into bank
ruptly. The situation seems worse
now.
Situation Will Improve
Judging by the past the situation of
the big refiners however, should i'm
prove. In the second half of 1915,
after the price war gasoline advanced
about SC by December. When crude
oil production is checked by price cuts.
will begin, but it will