Smyrna times., 1947-07-10
REPORT RECORD
INVESTMENTS
Petroleum Industry To Spend
Four Billions On I'M
prOvemen.s
FOUR DIVISIONS

"A I6lOIQ CdJlld1 A4lNSSNAAAShS Va
more than Four Billion Dollars
will be made by the Petroleum In
dustry in the United States in the
two years of 1947 and 1948 for new
and improved facilities needed to
serve the soaring public and in
dustrial demands for all kinds of
oil products, William R. Boyd, Jr.,
president of the American Petrol
cum Institute announced yester-
day. An outlay of this magnitude
in the two year period will repre-
sent more than % per cent of the
total investment of about eighteen
billion dollars in the oil industry,
the country's second largest. The
projected capital investment in
1947-48 is based OH survey of a
number of companies which have
actually budgeted outlays 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 ex-
ception of crude oil production, are
at practical, or close to, maximum
operating capacity. On the basis
of reporting company figures ap-
proximately two billion dollars will
be used in production (including
exploration and the acquisition of
prospective oil bearing land) (;
slightly more than one billion enc
hundred million dollars in refining;
about S440,000,000. in transporta-
tion; Approximately S4S0,O00, 1000.
in marketing; and about $4,000.
900. 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 factors account for the
industry's current record expendi-
lures. One is the unprecedented
growth and demand for products
which has reached levels far high
er than had been anticipated, and
another is the inability to proceed
with normal expansion programs,
because of the war. Post war re-
strictions on essential iaterials
still continue and will remain for
some time to come. Today th IRE
are shortages of steel, drill and
line pipe, and most of the other
materials needed by the indtStry.
From the standpoint of 'lemand,
war time peaks which sere not ex-
pected to be approach ID for sew
eral years, actually were. 'ocp ! IN
the patter part of 1916, and the
upward spiral has continued into
1947. Such demand creating fac
tors as high employment and in
come levels, rapid installations of
oil burners and diesel engines,
widespread farm mechanization
and also the Unsuitable public de-
mand for travel by automobile, to-
gether with heavy industrial and
foreign demands-all combined to
lift the total far in excess of that
expected.
Accounting in part for the
higher expenditures, too, are in
creased labor and the material
costs all along the line as compar-
ed with pre-war years. Develop
mental costs of producing oil are
far in excess of costs in pre-war
years; refinery equipment which
cost $500. barrel of capacity pre-
war, now costs more than $1,000;
pipe lines which cost $4,000 a
mile, now cost 100000. a mile; and
marketing facilities now cost more
than twice as much as pre-war.
The largest expenditures in 1947
and 1948 will be in production, the
finding and the developing Of new
oil reserves. One group of COM