Evening star. [volume] (Washington, D.C.) 1854-1972, 1930-06-30
MARKETING CHIEF
PROBLEM IN OIL
Consumption Growing at Al
TimeS-VaCuum- Standard
Action Interesting.


NEW YORK, June 30.--Important
plans hinge on the taking of testimony
in New York today in the Governments
case against the Standard Oil Co. of
New York and the Vacuum Oil Co. to
prevent contamination of the agreement
reached by those two companies to
merge.
Both were units of the old Standard
Oil trust dissolved by Supreme Court
decree in 1911. Now they seek to re-
unite, not as a trust, but as a greater
independent oil company. The fact
that both companies willingly take the
case to court, instead of acquiescing in
the Governments view that they are
inhibited by the 1911 decree from con-
solidating, indicates how vital to their
future the two organizat lions consider
the outcome of this litigation.
The plan to consolidate two units of
the old oil trust serves to direct atten-
ton to the peculiar and difficult posi-
ton in which the oil industry finds it
self today. The problem of most basic
industries today is one of creating
demand for their products during these
times of general business depression.
The world is using less than normally is
the case, with the result that volume OF
industrial activity has declined from 25
to 40 per cent in many lines, and the
business of individual corporations has
declined in proportion. Witness the
falling off in steel output, copper manu-
features, consumption of crude rubber
and Of iron ore and other products.
No Decline in Demand.
In the case of the oil industry. there
has been no such decline in demand,
despite the business depression. On the
contrary there is every indication that
the world will use more oil and oil
products this year than in any previous
year in history. not excepting 1929.
when all records for consumption of oil
we're broken. Statistics available SHOW
that consumption of gasoline so far this
wear has run about IL per cent ahead
of that for the corresponding 1879
period.
Neither is there any problem OF sup
ply to both oil companies. There Is an
apparently unlimited stock of crude OIL
underground, which can be tapped az
any time and in any quantity desired
The problem of the oil industry, tneIe-
fore. is simply of adjusting supply 10
the ever increasing demand and pre-
venting waste of one of natures most
valuable resources without at the same
time indulging in cut-throat compeu-
ton In other words, the problem OF OH
companies is largely one of marketing.
Much has been done toward regulating
production of crude oil, ana something
has been accomplished toward curtah-
ing excess production of gasoline. The
American Petroleum Association also
has adopted a code of business ethics
designed to eliminate all unfair busl-
ness practices. Nevertheless the COM
petition in the oil industry for gallonage
is very keen, and it is becoming keener
every day.
Hence the necessity of consultations
and creation of larger wholly integrated
units. The future of the oil industry
may be visualized AS concentration OF
the business into the hands OF COM
paratively few big companies.
Boundaries Being Wiped Out.
Old territorial boundaries are being
wiped out, as Standard Oil ofTshoots in
wade each others fields, not to fight
each other so much as to war on COM
mon foes.
Strange as it may seem, there are
only two companies in the country
doing a Nationwide business, and
neither is an offshoot of the old Stand
ard Oil trust. Those companies are the
Texas Corporation and the Shell Union
Oil. The former is an American COM
pany, but the Shell is controlled by the
ROYAL Dutch. The Texas Corporation
enjoys the distinction of being the only
company distributing its products in
every State of the Union. Shell Oil re-
tails all over the country, but not In
every State, as yet.