And on page 175: (1) price increase. advances in crude petroleum have been followed by gasoline It is difficut to see how Mr. Franklin fell into his error. Mr. Franklin admits, and we quite agree, that crude and fuel oil prices would increase; but how Mr. Franklin can argue that gasoline prices would not advance we can not understand. Surely Mr. Franklin can not believe that he and other producers will receive a higher price for their crude oil and have buying companies absorb this higher price as a part of their cost without passing it on to the public. Mr. Lewis, of your committee, brought up the question of the effect of the drawback provisions of the proposed tariff act, as affecting the proposed income from crude oil. There is no question but that all crude imported would receive the drawback, since we export, Atlantic bound, vastly more gasoline and fuel oil, its derivatives, than we import in crude. As a revenue measure the proposal will be futile. 5. The Tariff Commission report does not show a difference of $1.03 per barrel between the cost of foreign and domestic oils as stated by Mr. Franklin. It actually shows, if crude only is taken into consideration without giving value to derivatives of crude or comparative cost of the derivatives from the crude, a difference of 0.6467 cents per barrel. As is actually the case, figures can be interpreted with a semblance of truth, and in this instance Mr. Franklin has taken the average cost of all domestic crude oil and compared it with the cost of only one foreign-produced oil instead of taking the average of all foreign crude oil as he did in the case of Americanproduced oil. We might as easily make a comparison with the average cost of all foreign-produced oil with the lowest cost of domestic-produced oil. By actually taking the average cost stated by the Tariff Commission you arrive at the difference of 0.6467 cent per barrel. I have here a statement which is taken from the Tariff Commission's figures which shows that the actual difference as shown by their report is only 0.06 cent per barrel in favor of foreignproduced oil. I ask the permission of the committee to have this statement spread on the record. (The statement is as follows:) Tariff Commission's figures to show profit per barrel on domestic crude oil against foreign crude oil, both refined on Atlantic seaboard, year 1930 This figure is arrived at by taking the market value of the derivatives of each of the two crudes deducting therefrom the cost of the crude oil and cost of refining. But the commission states in their report that these figures are not fair to foreign producers on account of the fact that they were not able to determine the actual cost of pipe-line transportation and that it was necessary for them to take the published pipe-line tariffs in the United States. That, on the other hand, in determining the cost of transportation for foreign produced crude they were able to secure the actual bare cost of transportation. which was applied. The pipe-line companies for the year 1930, and. as a matter of fact, in every year of operation, reported material earnings and again we go to the Interstate Commerce Commission's report on operation for the year 1930 for all pipe-line companies in the United States, as published July, 1931. I ask the permission of the committee to have this statement spread on the record. (The statement is as follows:) Pipe-line companies (common carriers) 1930 Financial and operating data from Interstate Commerce Commission, Bureau of Statistics, statement No. 3170, dated Washington, June, 1931, of all commoncarrier pipe-line companies, filing reports and includes not only the transportation of crude oil, but also of refined products: Miles operated: Trunk lines Gathering lines__. Pipe-line operating revenue_ Investment in pipe lines Accrued depreciation---- Investment less depreciation--. Ratio: Operating expenses to operating revenues, per cent.. Operating expenses plus taxes to operating revenue, per cent_ Operating expenses, taxes, and 6 per cent on depreciated value to operating revenue, per cent--- Operating expenses include depreciation. Mr. CRISP. The time of the witness has expired. Mr. WALKER. I withdraw in favor of Mr. Stewart. 41.8 48.8 60.0 You Mr. CRISP. Is there objection to Mr. Stewart having the 10 minutes that would be allotted to Mr. Walker? The chair hears none. may proceed, Mr. Stewart. Mr. STEWART. They show that from the total revenues received by the pipe-line companies only 60 per cent of these revenues represented costs and that these costs include depreciation and 6 per cent interest on investment, leaving it reasonable to assume that they must have shown a 40 per cent profit. It would be easy, therefore, to determine that this 0.06 cent per barrel representing the difference in cost between domestic as against foreign-produced oil is offset three times by the 18 cents per barrel profit which was made on a 45-cent pipe-line rate included in the cost of American crude for 1930. 16 per cent equals $46,362,655. 26 per cent equals $26,616,111. If imported crude oils from Venezuela or anywhere else are more profitable to the refiner on the Atlantic coast, they would be bought and processed in those refineries in preference to domestic oils. They are not. Except for refineries operated by the importing companies themselves, not a single Atlantic refinery uses the foreign oils for production of refined oils other than asphalt and its by-products. There is no advantage to-day in cost of production and transport of imported oils, and there was none in 1930, on the face of the Tariff Commission's report. I will leave to Mr. Cooke a full analysis of the meaning of the United States Tariff Commission's statement which covers the years 1929-30-year before last. I am happy to learn that the committee has requested the Tariff Commission to bring the report down to date and include the year 1931. Mr. Franklin made the remarkable statement that 300,000 men were unemployed in the oil industry. In these times the thoughts of all turn toward the problem of unemployment. The oil industry, like all other industries, has made certain reductions in personnel in an effort to effect economy in its operations, but some reductions do not even approach figures given your committee by Mr. Franklin. His inconsistency is shown by his further statement that there has been an actual increase in the quantity of gasoline refined and marketed in the United States in the years 1930 and 1931. Surely, with an increase in refining and marketing the industry could not reduce the number of men employed in these two departments of the industry, and these two departments represent at least 90 per cent of the total men employed in the oil industry. There was a reduction in the number of wells completed in the years 1930 and 1931. The number of wells completed in the United States in 1929 was 26,356. The number of wells completed in the United States in 1930 was 21,165, and in 1931 was 12,200. Assuming that the average drilling crew completed 4 wells during the year, the average wells drilling would be 6,389 in 1929, 5,291 in 1930, and 3,050 during 1931. There is, incident to the drilling of any well, about 10 men, including teamsters, etc. Therefore, the average number of men employed in production in the year 1929 should be approximately 65,890, in 1930 approximately 52,910, and 1931 approximately 30,500, which shows an increase of unemployment of approximately 35,390. This is a wide departure from the figure of 300,000 men out of employment which was given to this committee last week. There are many more than 35,000 American working men and operatives in the fields of Mexico, Colombia, and Venezuela, and in American industry, including shipping, dependent on imported fuel oil, who would lose their jobs if this measure were adopted. Mr. Franklin continually reverted to the efforts of domestic producers to curtail their production to within temperate limits, and attributed the present unsatisfacory condition of the oil industry to the flood of imports. Permit me to say that the opposite is the case. Imports began from our and other American companies' holdings in Mexico and Venezuela long before the present prolific and overdrilled American fields were known. In the 11 years, 1921 to 1931, American production has increased 80 per cent. Imports have fallen 35 per cent and more. May I distribute this chart and supporting figures and ask to have it made a part of the record? (The chart and figures are as follows:) Millions of Barrels 1,000 Crude petroleum production, exports all oils, imports all oils and bunker oil laden on vessels engaged in foreign trade Domestic production of crude petroleum and imports of crude petroleum and refined petroleum products by years, 1921–1931 American production from 1921 has increased 70 per cent. All figures from Department of Commerce, Bureau of Mines, or Bureau of Foreign and Domestic Commerce. Imports have been curtailed by American companies producing and importing oils 19 per cent in 1931 from 1930. Domestic production has fallen only 5 per cent. On April 9, 1931, at the invitation of the Oil Conservation Board, a meeting was held in Washington, at which Government officials sought the cooperation of domestic producers and American importers in curtailing their operations. An agreement was arrived at. Since April 30, 1931, imports have fallen over 13 per cent, and domestic production has increased 5 per cent. May I distribute this statement and ask to have it spread on the record? (The statement is as follows:) Comparison of domestic production of crude petroleum with imports of crude petroleum and refined petroleum products, January 1 to April 30, 1931; May 1 to December 31, 1931 In the month of April conference was held to the end of curtailing domestic production and imports. Production has actually increased since that date. |