Milford chronicle., 1947-07-04
PETROLEUM INDUSTRY
WILL INVEST OVER
$4,OOO,OOOyOOO In
CAPITAL IMPROVEMENTS

CAPITAL IMPROVEMENTS
A record capital investment OF
more than four billion dollars will
be made by the Petroleum Industry
in the United States in the two
years of 1947 and 1948 for new and
improved facilities needed to serve
the soaring public and Industrial
demands for all kinds of oil pro-
ducts, William r. Boyd, Jr., Presi-
dent of the American Petroleum In
siitute announcer today.
An outlay of this magnitude in
! the two year period will represent
more than 22To of the total invest
ment of about eighteen billion dol
lars in. the oil industry, the coun-
try's second largest.
The projected capital investment
in 1947-4S is based on a survey of a
number of companies which have
actually budgeted OUTLAWS in the
period totalling more than three
billion dollars.
Capital investment will be made
In 4 divisions of the industry, all of
which with the exception of crude
oil production, are at pratical, or
close to. maximum operating capa-
city. On the basis of reporting COM
pany figures approximately two bill
lion dollars will be used in produc-
tion (including exploration and the
acquisition of prospective oil bear
ing land) slightly more than one
billion one hundred million in re-
fining; about $440. 100000 in trans,
p0rtation; approximately $4S0,0OO,-
0O0in marketing; and about $751;
100000 for miscellaneous purposes.
A sizeable portion will be used
also for progressive research with
an eye to the development of new
and improved products, including
work on processes for the conver-
sion of natural gas and coal into
liquid petroleum products.
Several products account for the
industry's current record -expendi-
lures. One is the unprecedented
growth and demand for products
which has reach levels far higher
than had been anticipated, and ano-
tiier is the inability to proceed with
normal expansion programs, be-
cause of the war. Post war restric-
tions on essential materials still
continue and will remain for some
time to come. Today, there are
shortages of steel, drill and line
pipe, and most of the other mater
ials needed by the industry.
< From the standpoint of demand,
war. time peaks which were not ex-
pected to be approached for several
wears, actually were topped in the
latter part of 1916, and the upward
spiral has continued into 1947. Such
demand creating factors as hlgh
empIoyments and income levels,
rapid installations of oil burners
and diesel engines, widespread
farm mechanization and also the
Unsuitable public demand for ira
vel by automobile, together with
heavy Industrial and foreign de-
mands-all combined to lift the
total far in excess of that expected.
Accounting in part for the high
en- expenditures, too, are increased
labor and the material costs all
along the line as compared with
pre-war years. Developmental costs
of producing oil are far in excess
OF costs in pre=war years; :retnery
equipment which cost $$4OO a bar
rel of capacity pre-war, now costs
more than $1,000; pipe lines which
cost $4,000 a mile, now cost $3O'-
600 a mile; and marketing facilities
now cost more than twice as much
as pre-war. ..-
The largest expenditures in l941
and 1948 will be in production, the
finding and the developing OIL ne"
oil reserves. One group of comnan-
les, for example. will spend close
to one billion dollars in the pro-
duction division alone in the Two
year period, and the total amount