The Connecticut labor news., 1923-01-26

By ROBERT C. BELL.
 Formerly Special Assistant to the Alt
 torney General in Charge With
 drawn Oil Land Matters.
 It may not be amiss to recall what the government IS to receive for its royalties from the Naval Reserve under the Secretary's program" It is provided that non-interest bearing "oi1 certif- the Mammoth Oil Company to the government showing the amount of royalty oil and the value thereof These certificates can be exchanged for: (a) steel tank storage, (b) fuel oil, Co gasoline, kerosene, 1ubri- eating oil or other petroleum products or (d) a portion in cash under certain conditions.
 UNCLE SAM PAYS.
 (a) If the government takes storage tanks, as proposed, the Mammoth Oil Company buys the materials and does the constructing, and the government does the paying. The materials are not to be purchased, or the work done under the competitive bidding method Sinclair becomes a purchasing agent for the United States and his acts are subject only to estimates.
 TWO DOLLARS FOR ONE.
 (b) When fuel oil is taken in ex- change, the oil certificates are not re- reemed at their face value. The gov ernment does not get dollars worth of fuel oil for a dollars worth of its crude oil At this point in the negotia- tions the Secretary must have missed a number on 'his program" He was dealing with experienced players" and 1t was arranged that tx exchange should be on a quantity basis and not on a valua- tion basis. Why? Because the high grade Teapot crude oil at Mid Continent prices IS worth about twice as much as fuel oil. The Mammoth Oil Company according to this program will receive two dollars worth of crude for one dollars worth of fuel. The contract provides that one barrel of fuel shall be delivered to the government for one barrel of crude, provided the Teapot crude tests 54 degrees Baume or over i; but if the test is lower then only 63-1O0 of a barrel of fuel shall be de- livered for barrel of crude Under the circumstances, the Mammoth Oil Com pany can refuse the royalty oil, extract the gasoline and kerosene content and pay the government by delivering 63 bar rels of the residuum for 100 barrels of the crude. Further comment on this part of the program IS unnecessary
 NAVY THE. VICTIM.
 (c? As to that part of the contract P1 oviding for the exchange of the royalty oil for gasoline, kerosene, 1ubri- eating oil, or other petroleum products, there is no fixed price of these products, or no provision for fixing the price thereof at the reasonable market value or othrwise; and 1t appears to be a scheme to give the Mammoth Oil Con- Pany monopoly on supplying these pro- ducts to our navy at It's own price, at least as far as the Teapot royalties will go in purchasing them,
 STANDARD FIXES PRICE.
 (d) The provisions in the contract for payment in cash are not clear; but it is absolutely certain that if cash is demanded the price of the oil will be fixed by the Standard Oil interests. Great care was used to make this part CT the agreement clear. It is provided that the value of the royalty oil shall be the same as the highest posted market price offered or paid. either, in the Salt Creek field, or in the Mid Continent field by the Sinclair Crude Oil Purchas- ing Company or the Prairie Oil and Gas Company. This sounds splendid to the unwary. Note that the provision is not the highest posted market price" but that it is the highest price offer or paid by certain companies, all Standard Oil Companies. In designating the Salt Creek field no company is men, tioned but 1t was not necessary, be- cause the Midwest Refining Company has a complete monopoly in that field, and has never paid more than one-ha1f the value of the oil. . In designating he Mid Continent field two Standard Oil Companies were selected to fix the price.
 The purposes of the Secretary's program" as set out in the preamble to the agreement of last April were: (a) to store oil for Naval purposes, (b) to prevent drainage of the reserve 0y wells located outside thereof, Co o create a competitive market for oils from the public domain in .Wyom- ng, and (d) to enable the government o exchange crude oil derived from royalties for fuel oil i
 ROBBING THE FUTURE.
 (a) Does 1t not seem ridiculous to open a great reservoir of oil, take 1t from its natural storage and place 1t, 0r the fuel oil received in exchange hereof, in artificial storage, to de- eriorate, and to throw millions of bar els on. an already glutted market specially when, according to scientists, he oil resources of our country will be exhausted in a few decades? Are we lot robbing the future by profligate waste of product not needed at the i, present? Regardless of who is respon- ,ible for this policy. 1t IS difficult to