Evening star., 1933-09-13
GRADING NOW FIXES
CRUDE PRICE SCALE.
New System No Longer
Glasses Oil Solely by Pro-
duction Field.
BY the Associated Press.

BY the Associated Press.
TULSA, Okla, September 13-Visi-
bic evidence of an intensive pursuit
of savings in the crude oil purchasing
division along a line other than price
cutting has made its appearance in
the midcontinent oil industry.
It is economics of a comparatively
new sort brought on in part by the
necessity for showing profits and de-
claring dividends in spite of higher
wage scales under the N. r. A.
Its manifestation is in the meticu-
1ous price shading between oil pools.
The shadings are based on nearness
and other processing plants, sulph0r
content of the crude, gasoline content
the percentage of lubricating oil, the
purchasing company's particular need
for a certain type of crude, the COM
pany's desire to equalize its base cost
of crude containing comparable per-
centage of gasoline or other deriva-
ties and host of reasons lost in the
intricacies of company policy or COM
petitive conditions.
Behind it all is the growing demand
of stockholders for dividends, of which
they have been deprived in lean years
dIl0 I1lC 1Col1AdSAOlA Va Oll CACNutANSs
that they cannot operate gigantic busi-
nesses on the hit-or-miss basis of the
boom days.
It has only been about 10 or IL years
since all crude was grouped under q
flat price in various districts, regardless
OF gravity or type. Then came the
i Baume scale and gravity quotations. In
I time various methods of differentiating
7 between fields on prices were introduced
i These price tables have grown more and
more complicated recently. The prin-
cipal idea Of each company Is to reach
] the figure that means the most revenue
per barrel of oil, taking into considera-
ton the sale of its own crude, sale OF
! refined products and transportation
and processing costs.
Once all the broad West Texas pro-
ducing district was grouped under q
fiat price schedule. Now two counties
command a scent per barrel higher
price than six counties almost sur
rounding them. Oil from the latter con-
tainS higher percentage of sulphur
which results In a higher processing
cost.
In South Southwest Texas the Re-
fugio light oil" area produces a type
OF crude that yields, even in a cheap
summing plant, a gasoline of extremely
Hlgn OcCdne ratlng, or antl-knOck quail
lty, which may be used in the modern
decomposition automobile motor.
Crude from another Refugio pool is
ideal for Oil burning motors just as
taken from the ground.
Gulf Coast crude, while grading low
In gasoline content and on the gravity
scale, is an excellent source of good
quality lubricating oil, and a higher
price prevails for lower gravity output.
Conroe, newly developed. commands
S1.09 barrel, top Midcontinent price.
1t ranks about the same as East Texas
in lubricating and gasoline quality but
1t Is owned exclusively by large, inte-
grated companies; it is close to cheap
water transportation and refineries and
its sale is virtually only a book trans
action
There is a differential Of 10 cents
barrel in the price of Oklahoma
Kansas and North Central Texas crude
because. the purchasers say. the North
ern producers are entitled to the addi-
tional money to defray higher trans
portation costs to Gulf ports and re-
fneries.
These examples show only the more
obvious differences These and more
obscure reasons must be reckoned also
by the oil code authorities In Washing
ton if and when the crude oil price
fixing clause Is invoked.