Jackson advocate. [volume] (Jackson, Miss.) 1939-current, 1957-07-20
Price Hike Seen Adding $36 Million
Annually 10 lndustry's Steel Bill
PAA Urges Increase
In Crude Oil Price
To Offset Hike

TULSA, OKLA Especially Re.
cent steel price increases raised the
oil producing industry's annual
steel bill about $50 million and fur
Their increased the need for a crude
oil price adjustment to offset ris-
ing costs, the Independent Petrol
cum Association of America said
last week.
Robert L. Wood, Midland, Tex,
president of the national organiza-
ton of Independent petroleum pro-
ducers, said the higher steel prices
represent "a cost increase of at
least one cent per barrel Of oil
production"
Wood pointed out that the steel
price rise came on top of a 500
million annual wage increase in
the oil producing industry which
he said added 3.75 cents to the
cost of producing a barrel of oil.
These two developments alone
should be reflected in an upward
adjustment of about five cents a
barrel in crude oil prices which
have consistently Jagged behind in
creasing costs since World War
H." he said.
He said the need to offset higher
wage and steel costs "gives no con-
sideration to other cost increases
such as deeper drilling"
Wood hailed as "a sound step
in the right direction" price adjust
ments for gasoline and other re-
fined products made as result of
wage increases during the past
month. There is equal justifica-
ton for the same price policy for
crude OIL" he said.
The IPAA president said oil pro-
ducers would pay an average of
50 ton more for steel items. The
industry will use about 100000
tons of steel pipe easing, tubing
and drill pipe) in drilling about
230,000,0O0 feet of hole per year.
In addition, another 100000 tons
will be used in line pipe, structural
shapes, sheets, plates, bars, and
other steel materials required in
oil producing operations.
Total industry steel requirements
of 100000 tons or more yearly,
he said, indicate an increase of SO
ton in basic steel prices would
increase producers expenditures
for steel by about $50 million a
year."
"These cost increases come at
time when the domestic oil in
dustry in many areas is facing
loss of revenue due to pipeline and
purchaser proration and reduced
state (producing) allowables due
to the increasing flood Of foreign
OIL" Wood said.
Continued pressure from both
Of these factors, increasing costs
and dwindling revenues due to in
creasing imports, could bring about
the devastation Of the domestic in
dustry as it is known now and
wipe out thousands Of independent
producers" he said. "Our nation
could be rendered helplessly de-
pendent on uncertain sources Of
foreign OIL"
Hc,1dded:
"G46ernment action to bring
abous some relief from excessive
imports appears in sight. Relief
from increasing cost pressures,
however, can only be brought
about by the industry. To what
ever extent the industry delays
passing on these cost increases in
wages and steel, it merely increases
the amount needed at . later date
to provide adequate funds for ex-
ploration and development :. ;"
Woods comments were contained
in an editorial prepared for the
July issue Of IPAA's magazine,
the Independent Petroleum Month
", due out this week.