Mr. VINSON. You referred to a statement of the Federal Trade Commission dealing with the price of gasoline in relation to the price of crude oil.

Mr. STEWART. Yes, sir.

Mr. VINSON. What year was that?

Mr. STEWART. That was for the year 1928, as I remember it.

Mr. VINSON. Did you turn to page 174 of that Federal Trade Commission report in that connection?

Mr. STEWART. No, sir.

Mr. VINSON. What page?

Mr. STEWART. We turned to page 3 of the commission's report, in which they say:

Gasoline prices were promptly advanced throughout the country when there was an increase in crude prices.

This report goes on for a period, I think, from 1922 to 1926. Then, again, on page 156, there is shown a chart for the years 1922 to 1927, inclusive, and this chart goes on to show that throughout the period covered by this report from 1922 through 1927 there is a direct relation between crude and gasoline prices.

Mr. VINSON. But you found in there many factors going to make up the price of gasoline to the consumer?

Mr. STEWART. There are many additional factors, of course.

Mr. VINSON. I will ask you to turn to page 175 of that same report, and I will ask you to state if it is not a fact that on June 30, 1926, in the West Virginia area, where the refining cost of crude petróleum was 10 cents a gallon, the retail price of gasoline was 25 cents a gallon, and, on that same page, where you have southern California, where the refining cost of crude petroleum was 32 cents a gallon, the price of gasoline was 2012 cents a gallon.

Mr. STEWART. That is very possible.

Mr. VINSON. And, further, on the Gulf coast, Texas, the first column on that chart, where you have a refining cost of crude petroleum at a little over 6 cents a gallon, the price of gasoline to the consumer was 29 cents a gallon.

Mr. STEWART. Which chart do you refer to?

Mr. VINSON. It is the same chart, opposite page 174.

Mr. STEWART. I do not have that chart here.

Mr. VINSON. Look at it; look at the first column there, where it says, "Gulf coast, Texas" and you have a little over 6 cents as the refining cost of crude petroleum, and run right up to the top, where it says "in cents per gallon of gasoline," and you have 29 cents.

Mr. STEWART. I wonder if the Trade Commission took into consideration the State tax?

Mr. VINSON. It certainly did. It gives it right there. Your legend shows the State tax, and shows that in California it is 3 cents, and in West Virginia, the one I gave you, it shows the State tax to be 2 cents.

Mr. STEWART. That would not necessarily affect the statement with reference to crude and gasoline prices.

Mr. VINSON. It does show conclusively that the price of gasoline does not go up or down exactly as the price of crude goes up or down.

Mr. STEWART. It may not in local sections of the country, but it is certainly a fundamental proposition that the refiner can not pay

more for his crude without getting a greater return for the finished product. It is utterly impossible to believe that, with the general showing of oil companies at this time, there can be any enormous profit obtainable between refinery prices and the price charged to the consumer.

Mr. VINSON. Here is another illustration taken from that same report. The price of midcontinent crude was increased from $1.55 per barrel in 1925 to $1.80 in February, 1926, and to $2.05 in May, and then it was reduced to $1.95 in November, and while the price of crude was going up $1.25 per barrel, gasoline in Chicago was raised 3 cents a gallon.

Mr. STEWART. That might be a fair proportion under the circumstances.

Mr. VINSON. Particularly for the producer of gasoline, but I am speaking of the consumer.

Mr. STEWART. I am speaking from the standpoint of the consumer as well, but I am referring to it on this basis, that we do not know what the local facts may have been that affected the price in the Chicago area. They may have had a competitive condition there where an unreasonable price obtained and, with the advance in the price of crude, that situation was corrected.

Mr. VINSON. Again referring to page 174 of that report, during the three and a half years from January 1, 1924, to June 30, 1927, crude petroleum prices were changed only six times, four price advances and two reductions. Gasoline, on the other hand, was increased twelve times and reduced ten times.

Mr. STEWART. That might again be entirely due to competitive conditions, because competitive conditions alter facts and figures. Mr. VINSON. But Chicago was given as sort of a central area. You would not refer to California as such, would you?

Mr. STEWART. I would not say that the State of California should be so classified any more than the city of Chicago might be, because I have seen many instances where the price in one city would be 3 or 4 cents less than the price in surrounding communities not distant more than 25 miles.

Mr. VINSON. But the Federal Trade Commission in this report in 1928 to which you refer and in this chart opposite page 174 in that report did not take any localized situation. They took a nationwide situation, didn't they?

Mr. STEWART. I think the Trade Commission in its general report tried to do that, but if we turn to this chart that covers these various elements that we are discussing, the chart on page 156, I think it is, it purports to show a condition averaging over a period of time. Mr. VINSON. Did you read that other chart pretty well?

Mr. STEWART. Yes.

Mr. VINSON. That one on page 156?

Mr. STEWART. I think if you will turn to page 174

Mr. VINSON. I am asking you about that chart on page 156.

Mr. STEWART. I have read that chart; yes. I want to turn to the chart on page 174, where they call attention to these discrepancies, calling your attention to the fact that that chart only purports to show the principal elements of gasoline prices, from the refiner's cost of the crude to the consumer on June 30, 1926.

Mr. VINSON. That is what I said.

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Mr. STEWART. Whereas their chart on page 156 purports to show a condition averaging from the year 1922 through 1927.

Mr. VINSON. This one on page 156 sets out a particular time, and it goes up or down, but it is harder to read; it is not quite as plain to the average eye as the other one.

Mr. STEWART. Except for this, that we can not take a condition applying in one month as a criterion upon which to establish a fact. Again I turn to the statement of the American Petroleum Institute, covering the same situation, where and I think you will find this in your record-it states:

Successive reductions in crude-oil prices have been fully met by compensating reductions in the service-station price realized by the industry.

As a matter of fact, the American Petroleum Institute, in order to refute that particular statement that has been made concerning the relation of gasoline to crude prices, has taken eight pages in explanation of that item, all of which is a matter of your record. That is accompanied by charts which show an average condition over a period of time to prove their point.

Mr. VINSON. Can you tell us what the average price of crude oil is to-day in this country?

Mr. STEWART. I can tell you the prevailing prices generally in the Midcontinent market.

Mr. VINSON. What is it?

Mr. STEWART. About 83 cents a barrel.

Mr. VINSON. What is Pennsylvania oil selling for?

Mr. STEWART. I do not know.

Mr. VINSON. Do you know approximately?

Mr. STEWART. No. I could not even tell you the approximate figure.

Mr. VINSON. Prices of other oils are based on the price of the Pennsylvania oil, are they not-on the price of Pennsylvania crude? Mr. STEWART. Not at all. I do not think they have any relation to each other, except in general sympathy.

Mr. VINSON. That is not what they tell us in Kentucky. When we want an increase on the Somerset oil, they do not tell us that.

Mr. STEWART. Doubtless the Somerset crude is very similar to the Pennsylvania, and is classified generally as a Pennsylvania crude. Mr. VINSON. Do you think Somerset has qualities something like the Pennsylvania crude?

Mr. STEWART. That would be my assumption from that fact. I am not familiar with the Kentucky crude.

Mr. VINSON. How about the relation in prices?

Mr. STEWART. I am not at all familiar with the relation in prices, nor do I know what the prevailing price in Kentucky might be. Mr. VINSON. I would like to have you insert in the record the peak price of oil in the last decade; that is, the highest price per barrel, average price, in this country. You can get that, I think, very easily. Then, on that day, I would like to have you insert in the record the average price of gasoline to the consumer. Then I would like for you to take the average price of crude to-day and the average price of gasoline to-day. I think that will demonstrate, at least to my mind, something of the relation of the price of gas to the price of crude oil.

Mr. STEWART. I do not agree with that conclusion, on account of the fact

Mr. VINSON. I have applied that conclusion to myself.

Mr. STEWART. That is, of course, perfectly reasonable, but the principal involved is this, that conditions affecting the relationship in the price might lead you entirely astray in your consideration of that particulor phase of the matter.

Mr. VINSON. Will you give us that information?

Mr. STEWART. I will try to get it for you. I think you have it here. It is in the record, in this exhibit that we have marked "A," and is the report of the American Petroleum Institute, and that will be found on this chart that you see on the second page.

Mr. VINSON. I can not read that chart.

Mr. STEWART. It is on page 2.

Mr. VINSON. You can read it.

Mr. STEWART. I will have to get a magnifying glass to read it. Mr. VINSON. That is what I thought, and I do not have one. Mr. STEWART. I can give it to you. You want the price of crude in 1929

Mr. VINSON. The peak price of oil and gasoline at that time, and the price of crude to-day and the price of gasoline to-day.

Mr. STEWART. We have not got the 1931 figures here. I think you had better secure those elsewhere.

Mr. VINSON. Mr. Ragon asked you about the fixed price of gasoline, and you said something about pipe lines purchasing the oil. Mr. STEWART. Yes, sir.

Mr. VINSON. Who fixes the price that the pipe lines pay for the oil?

Mr. STEWART. The various companies establish their own rate. The directors of those companies fix the price that they are going to pay for the crude.

Mr. VINSON. And no particular group fixes that price?

Mr. STEWART. No, sir; not as far as I know. I am confident of that, because I have seen instances where one pipe line company would raise the rate, and another pipe line company was offering a price less than theirs. It is simply a question of suppply and demand.

Mr. VINSON. But the posted price of a big pipe line has a material influence upon the posted price of the smaller pipe lines, does it not?

Mr. STEWART. Why, sure. If I offer a price for oil greater than somebody else will pay, obviously I will get the oil.

Mr. VINSON. But when they offer a lesser price

Mr. STEWART. It is largely then a matter at that time of the rating of a large pipe line operator. If he can afford to offer a lesser price for crude, it is because he is offered more crude than he wants to take.

Mr. VINSON. And the price of the smaller fellow comes down at the same time?

Mr. STEWART. It does if he has a sufficient quantity, but I have seen times when premiums were paid because of the scarcity. Mr. BACHARACH. Mr. Chairman.

Mr. CRISP. Mr. Bacharach.

Mr. BACHARACH. In the course of your remarks, and in answer to various questions, you have at times used the word "tariff" and at other times used the word "tax." Which do you think should be properly applied here?

Mr. STEWART. I am frank enough to say that I think this par ticular proposal at the present time is nothing but a tariff, regardless of the name applied to it.

Mr. BACHARACH. That is exactly my viewpoint, and I am glad that mw Democratic colleagues have now come over to the protective tariff principle.

Mr. McCORMACK. Mr. Chairman.

Mr. CRISP. May I say that I am recognizing the members of the committee alternatively and I feel that when one member has had an opportunity to interrogate, he should not be recognized again. Mr. McCORMACK. Mr. Stewart, you were asked a number of questions about the effect of the price of crude oil on gasoline, and you have referred to the report of the United States Tariff Commission. On page 5 of the report of the Tariff Commission, House Document No. 195, Seventy-second Congress, first session, it says that "the costs of the finished products depend largely on the price paid for crude oil." Now, the whole purpose of this is to try to hold the Atlantic market, is it not?

Mr. STEWART. Yes, sir; that is apparently the effort at which this is directed.

Mr. McCORMACK. That is the only place where the imported oil competes, in the main?

Mr. STEWART. Yes, sir.

Mr. McCORMACK. The question of the far West is not involved? Mr. STEWART. Not at all.

Mr. McCORMACK. Do they have their own market?

Mr. STEWART. Yes.

Mr. McCORMACK. Do imports get out to California?
Mr. STEWART. No, sir.

Mr. McCORMACK. They come into the Atlantic coast?

Mr. STEWART. Yes, sir.

Mr. McCORMACK. This, of course, is supposed to be a revenue measure, and you have answered Mr. Bacharach that, in your opinion, this would be in the nature of a tariff.

Mr. STEWART. Yes, sir.

Mr. McCORMACK. I agree with that.

What effect would the 2-cent tax per gallon on imported oil have upon the amount imported into the country?

Mr. STEWART. It would positively and absolutely prohibit imports. Mr. McCORMACK. So that, from a revenue angle, the tax would defeat the very purpose that we have in mind?

Mr. STEWART. Yes.

Mr. McCORMACK. What effect would that have upon the consumer of the domestic product-and the American consumer is what I am primarily interested in. How much effect would this tax of 2 cents per gallon on imported oil have upon the increased price to the American consumer, who must pay not only for the crude oil but all of its by-products?