Montana oil and mining journal. [volume] (Great Falls, Mont.) 1931-1953, 1941-03-22
BLAME FOR OIL
.tontlnuea frop Paee %

continued from PAGE onel
laws is to obtain a stabilized price
structure to the disadvantage OF in
dependents. "
Pipeline Rates
Majors own IS percent OF the
crude oil trunk lines and 81 per-
cent OF the tankage and high earn
ings made by the pipe line COM
panies have been used to subsi-
die other divisions. especially mar
keting."
Majors dominate the refining
industry while independent refiner-
les have had high mortality "as is
so vs. II illustrated by the example
OF the East Texas field. The main
reason for this has been lack OF
crude oil and transportation facili-
ties There is sufficient evidence TO
indicate that the policy of the ma
jors has been to prevent the indie
pendents from getting adequate
crude oil supplies through the re-
finery price squeeze and by their
control over pipelines.
Use OF Iowa Plan"
Although most OF the majors
have adopted the Iowa plan for
their marketing outlets they have
continued TO control these stations
in substantially the same way as
before This has been accomplish
ed largely through short-term can
collation. clauses in leases and price
concessions. The majors have act
ed as group in exercising these
controls over service station op-
orators. must now operate on a
commission or gallonage basis and
they buy their petroleum products
from the majors on a rigid tank
car market. When independent COM
petition does exist the lessee must
meet this and absorb the losses or
risk having his lease cancelled.
Cook concludes: After reading
this report one may ask how does
the independent exist in view of all
the controls exercised by the ma
jors An examination OF this can be
made for each of the divisions of
the industry:
How They Survive.
In the producing division the
Independent is often the person who
happens 10 own prospective oil
lands which We're obtained before
probable oil production on II was
a consideration. To that extent
iuck played an important part in
these small fortunes OF the indie
p ndents On the other hand.
widcatters gamble on their skill
in discovering oil. Most OF them
end up in bankruptcy. but small
OF them do make for
tunes
RefinerS
The Independent refiners exist
mainly by being able to obtain
supplies of crude oil from flush
fields In the East Texas field the
Independent refiners were fairly
successful until proratiOn laws
were passed. During the peak of
their prosperity there were "A in
dependent refiners located in this
field, but today all have closed
down except two or three. 1t is
that the flush fields of
Illinois are now affOrding an OPP
portunity for the independent re-
Timers to operate profitably. iii |
nois does not regulate crude oil |
production on the basis of mar !
ket demand.
JObbers
THE profitableness of the truly
Independent jobber depends mainly
IN his ability to do business with
he Independent refiner. The service
station operators exist mainly by
working longer hours and paying
over wages than the majors now
Jay at the few company-operated
tations. and did pay before they
Idopted the Iowa plan.
Generally speaking. it can be
aid that many Independent produc-
rs and refiners sell their crude oil
md gasoline to the majors and
make enough to continue in bust
Tess.