Evening star., 1927-08-28
lR|AT|ON IN PRICE
F GAS EXPLAINED
erproduction Called Cause,
ut Motoring Public Reaps
Sale Benefit.

Gasoline prices in certain sections of
j., country during recent months have
led considerably and in some cities
motorist has found filling stations
hin a block selling fuel at different
.ces. This variation in price causes
siderable annoyance, especially IL
> motorist, after filling his tank TO
nacity, encounters station where
.soline is selling at from l to 3 or
ITS below the price he paid.
SctWeen States also there exists
terence in price even more marked,
.sording to a writer in the New York
mes. because of the gasoline taxes
hich are imposed by all States eX-
,Dt New York and Massachusetts.
hese taxes vary from / to cents.
There Is this to be said, however,
,he Times writer points out:
IF the present gasoline price sltua-
on is irritating to the motorists 1t is
llually so for the oil companies, for,
hile motorists may benefit from the
over prices, every gallon sold at
ne bottom figure means possible loss
, refiners and filling station proprie-
ors.
Blame Is Placed.
"The trouble, from the oil companies
,tandpoint, is that too much crude
oetroleum is being produced. There
] no way in which this production
an be curtailed nor the resulting gaSo-
me production kept off the market.
IND even with 25,000,000 automobiles
md other millions of internal combus-
ION engines of various types drawing
m it, the market is unable to absorb
ne quantities of so-called distress
motor fuel.
1.-THE production Of crude oil differs
materially from that of any other
basic commodity. Ordinarily, when an
overproduction occures. operations can
be discontinued until the market
catches up with the supply. In the
oil industry, however, a new well is
drilled and turns out to be a producer.
Immediately the owners of surround
ing property put down wells in order
to get their share before the oil which
NAV or may not underlie their lands
is depleted by the original well. That
is what has been happening in the
Seminole Field in Oklahoma for sew
eral months.
"Once produced, the oil must go into
consumption. 1t cannot be stored in
definitely without heavy loss, and, vast
as are the facilities of the industry in
taking care of the surplus, the oil must
De kept moving from well to consumer,
practically regardless Of price, or chaos
will result.
"Overproduction naturally forces
down the price of crude, but it has
no influence on the cost of refining,
transportation and marketing, which
make up IS per cent Of the cost of
gasoline at the filling stations. It has
hok ~ ar,1do nntrnln11Y17
in the great Mid-Continent Field were
to be given away free of cost, gasoline
could not be produced and sold in
Washington, for instance, for less than
Il cents a gallon.
Difference i'm Facilities.
''That is the principal trouble with
the oil situation today. Too much
crude. In this connection, the position
Of the oil trade differs little from that
Of several other important industries
agriculture, for instance, bitumin-
Gus coal, textiles, shoes, lumber. All
Of these are suffering from surplus
of goods. The point is that the compe-
tition between gasoline producers has
forced down prices until motor fuel
has become the cheapest of the lead
ing staples and the end Of the decline
does not appear to be in sight.
Continuing, he says:
1.-THE VARIATION in gasoline prices as
between filling Btations in the same
vicinity as due TO the difference in
the marketing facilities of the various
producers. Strong companies with es-
tablished distribution systems are able.
within limits, to maintain prices that
will yield some profit or, at least, pre-
vent actual loss. Other companies, not
so favorably situated, find themselves
with increasing stocks OF gasoline
which they are compelled to move even
at a loss, and the managers Of filling
stations to which this fuel goes are
forced to sell it for a while at least
at prices which yield little, If any.
profit, and which, If maintained for
any length of time, compel the strong.
er companies to cut their prices to
meet competition.
"Such a state of affairs cannot fail
in the long run to exert an unfavor-
able influence on business in general.
But the gasoline consumer benefits,
and his complaint of price variations
as between cities and States does not
appear to be we'll founded when 1t is
considerd in the light of similar diff
ferences in prices Of other commodi-
ties"