e Bureau says that it makes its forecasts irrespective of such factors as prices d probable overproduction in some States. It certainly must be the purpose the forecasts to bring about a balancing of supply with demand and when that done that fixes the price. I will attempt to show that the forecasts have not ly brought supply and demand in balance, but have actually encouraged and ought about a reduction in stocks on hand, resulting in the balance swinging e other way, making demand higher than supply and thus raising prices. On this subject this same third forecast has a paragraph under the subheading tocks" reading: "Total stocks of finished and unfinished gasoline on June 30, 1935, amounted - 59,507,000 barrels. According to data of the American Petroleum Institute, ly about 2,000,000 barrels of gasoline was withdrawn from storage in July, ompared with a contemplated decrease of 3,900,000 barrels. It is too early to y as to whether the contemplated decline of 3,200,000 barrels for August will e reached, but it is apparent that if the objective of just over 51,000,000 barrels or September 30 is to be attained, withdrawals in September should be heavier ian first estimated. The withdrawal for September has, accordingly, been inreased to 2,600,000 barrels." The report goes on to cover crude-oil production, stocks (mainly withdrawals), nd ends with a break-down of the recommendatory levels of required production y States for September, compared with August and another break-down of the emand for motor fuel into domestic demand; exports and total demand, a similar reak-down of supply of motor fuel and one of crude-oil requirements. I do not know in what way groups in the production and refining end of the oil usiness have cooperated with the Bureau of Mines in the preparation of these orecasts. Suffice it to point out that several extra pages of explanation are ttached to Forecast No. 6, issued November 21, 1935, and covering forecast for he month of December 1935, because the Bureau found itself in disagreement with n emergency curtailment committee of independent oil producers of California. Beginning in Forecast No. 7 and continuing to date the Forecasts have gone ven further in breaking down gasoline production. To quote the paragraph from his report: "Deducting 'direct' sales of 700,000 barrels from the total demand, and adding he stock increase, gives 36,390,000 barrels as the required production of finished and unfinished gasoline in January 1936. The break-down of this total by districts s as follows (thousands of barrels): East coast, 6,380; Appalachian, 1,450; Indiana-Illinois, 5,810; Oklahoma, 2,340; Kansas and Missouri, 2,270; Texas (inland), 2,580; Texas (Gulf), 7,500; Louisiana (Gulf), 1,350; Arkansas and Louisiana (inland), 660; Rocky Mountain, 710; California, 5,340." What finer blue print of operations could be given the oil-refining industry than the above break-down. Conspiracy to violate the antitrust laws by restricting the amount of oil produced and refined are rendered unnecessary by this gesture by the Bureau of Mines. And this practice of breaking down the figures has continued to date. The pattern finally adopted in Forecast No. 7, has been followed to the present time. A change in headings is noted beginning with Forecast No. 11 of April 24, 1936. From that time forward they are styled "Forecast of demand for Motor Fuel and Crude Oil." Each month one of these Forecasts appear to guide the major oil companies in their monopolistic control of the oil industry. It is recommended that members of the committee secure a complete set of the Forecasts (nos. 1 to 22, inclusive) and note the way in which the operations of the oil industry are so carefully planned to keep supply below demand and thus raise prices. To make the chain of control complete-that is, as a follow-up of the Connally Act, the State Compact Act and the issuance of these Forecasts-the refiners then combined together to pick up any refined products that might possibly be instrumental in making a partial competitive market. The latter combination was obviously in violation of the antitrust laws of the United States. Your attention is respectfully invited to the indictments returned by Federal grand juries at Madison, Wis., against the major oil companies and their officers for carrying on this very activity. They are as follows: United States of America v. Standard Oil Co. (Indiana) et al. (no. 11, 296) filed July 28, 1936; United States of America v. Standard Oil Co. (Indiana) et al. (no. 11365) filed December 22, 1936; United States of America v. Socony-Vacuum Oil Co. et al. (no. 11342) filed November 6, 1936; United States of America v. Socony-Vacuum Oil Co. et al. (no. 11364) filed December 22, 1936. Our reason for asking that the special appropriation for t eliminated and that in addition a prohibition be placed in bill now under consideration against future efforts of the D Interior along this line is simply that the Department undert-before it had statutory authority and for all we know, it n. a responsibility again. We believe that once and for ail the Forecasts should be stopped. So that the members of the committee will have before them present Forecasts issued by the Bureau of Mines of the Departr a copy of the latest, being no. 22 of March 24, 1937, covering t 1937, is submitted herewith, marked "Exhibit C." However the committee will secure copies of all of the Forecasts 18mleri Ic them carefully. EXHIBIT A Secretary of the Interior, Harold L. Ickes, announced todar på Saturday to telegrams received from Hon. Alfred M. Landon, Gen Reford Bond, chairman of the Oklahoma Corporation Comm. Terrell and Lon A. Smith of the Texas Railroad Comm w were made for statistical calculations for consideration unde by the respective State authorities in determining the reaso”, for crude oil. at In replying to the requests, Secretary Ickes stated the calculat Department of the Interior, following the method which pres described to the conservation commissions of these States, indi barrels of gasoline would need to be manufactured at petrole United States during July; that the reasonable market dema : the United States would average 2,660,000 barrels daily; an i market demand for crude oil from Texas would average 1064 4 x) from Oklahoma, 517,400 barrels daily; and from Kansas, 1556 ×)) Comparison of the July calculations with those for Jeet average reasonable market demand for crude oil in the United barrels higher than the corresponding average for June, where States of Texas, Oklahoma, and Kansas will be 9,600 harmleh that the aggregate demand from the remaining o l-prod zeng will be approximately the same as that calculated previously fit Petroleum Administrator Harold L. Ickes today male p592) telegram which he sent to Governor E. W. Mariand of Ox ́al-1.a "Reference your letter July 5 requesting information protan oil demand and portion applicable to Oklahoma and other r calculations Interior Department indicate that net reasonste for crude oil in United States during August will average Same calculations indicate that net reasonable market dema oil during August will average 512,000 barrels daily, or 3 400 than in July. This determination reached on bass of Kansas or tion not to exceed 148,000 barrels daily or 7,600 barry is daily inst on account of fact that reports to Department show that at was oil held in the United States increased approximateiv 1OKKORA first 5 months this year and Texas crude-oil production n't to ex barrels daily or 40,000 barrels daily less than determinat J account of fact that reports to Department show that at was f held in the United States increased approximately 6,000,000 barre 5 months this year. Relative other States, above detern, nat California crude-oil production will not exceed 510 000 barres crude-oil production will not exceed 130.000 barrels da 'v, New M exceed 53,000 barrels daily and that crude oil production etter exceed the demand figures calculated for June, the total for te States being 223,200 barrels daily. Trust this information w EXHIBIT C. FORECAST OF DEMAND FOR MOTOR Fuel and Crude OIL, APRIL 1937 Summary. The daily average production of crude oil for April 1937, estimated by the Bureau of Mines to meet the demand, is 3,243,000 barrels, which is 84,000 barrels higher than the estimate for March 1937, and 227,000 barrels higher than he actual of April 1936. Current situation.-In the last 4 weeks for which complete data are available Feb. 6 to Mar. 6) the production of crude oil averaged 3,310,000 barrels, 131,000 arrels daily were added to domestic crude stocks, making an indicated market demand of 3,179,000 barrels. The Bureau's estimate of this demand was 3,088,000 barrels. The explanation of the apparent "deficiency of about 90,000 arrels lies principally in the fact that gasoline stocks increased about 7,500,000 barrels in the period, whereas the Bureau's estimate for this seasonal build-up, pased on normal gains, was only about 5,200,000 barrels. In terms of crude-oil demand the difference of 2,300,000 barrels is equivalent to about 185,000 barrels daily and more than accounts for the deficiency. Actual crude production in March is approximately closely the estimated daily average production required for the year. The best present estimate of crude required in 1937 represents an increase of about 8 percent over 1936 in the total demand for domestic crude and an increase of about 10 percent in required production, assuming no material changes in crude stocks during the year. Unless total demand substantially exceeds present estimates, the accumulation of about 6,000,000 barrels more gasoline stocks than was forecast for the first quarter of 1937, together with the recent substantial increase in crude stocks indicates sharper reductions in gasoline stocks and smaller increases in required production for succeeding months. MOTOR FUEL Domestic demand.-The domestic demand for motor fuel in April has been estimated as 42,700,000 barrels, or 10 percent above the actual of April 1936. Exports.-Exports of motor fuel for April have been estimated at 2,500,000 barrels which is 200,000 barrels more than the March estimate but approximately equivalent to the actual exports for April 1936. Stocks.-Stocks of finished and unfinished gasoline amounted to 71,416,000 barrels on January 31, an increase of 8,341,000 barrels over stocks on January 1. According to the American Petroleum Institute, stocks were further increased during February by about 8,000,000 barrels, and still further increased in the first 2 weeks of March, indicating that stocks on March 31 may exceed 82,000,000 barrels. (Due to a typographical error in the March forecast, the estimate of this total was erroneously shown as 72,000,000 barrels.) Such stocks appear high when compared with the totals of previous years. However, if the demand for gasoline in the coming season should exceed present estimates, this gasoline may be needed, particularly if the refineries cannot process more than 3,300,000 barrels daily as is the opinion of some authorities. Gasoline production.-Benzol and direct sales and losses of natural gasoline have been estimated as 800,000 barrels, making the estimated production of gasoline 43,660,000 barrels, which is distributed among the districts as follows (thousands of barrels): East coast, 6,340; Appalachian, 1,620; Indiana-Illinois, 7,490; Oklahoma, 2,910; Kansas-Missouri, 2,750; Texas-Inland, 3,450; Texas Gulf, 9,490; Louisiana Gulf, 1,600; North Louisiana-Arkansas, 900; Rocky Mountain, 1,020; California, 6,090. CRUDE PETROLEUM Runs to stills-Natural-gasoline consumption at refineries is estimated as 5.7 percent of the total gasoline required, or 2,490,000 barrels. The yield of straightrun and cracked gasoline is estimated as 44.32 percent, an increase of 0.73 percent over the March estimate. The application of this yield to the estimated straightrun and cracked production of 41,170,000 barrels gives 92,890,000 barrels as the crude required at refineries. Imports. Runs of foreign crude have been estimated as 2,800,000 barrels. Exports, fuel, and losses.-Exports of crude have been estimated as 4,100,000 barrels. The estimate for fuel and losses has been increased to 3,100,000 barrels to adjust it to an upward trend that has developed in this factor. Required production. The application of the usual methods to the total required production of crude oil gives the following break-down by States: TABLE I.-Recommendatory levels of required crude-oil production by States1 1 The recommendations in this table have been calculated as the requirements for the months stated are not intended to be calculations of daily average demand for the current year or for any period otse than the months stated. 1 The term "motor fuel" as used in this report includes gasoline, naphtha, and benzol used for all purposes but does not include heavier distillates used in the operation of tractors or burned in Diesel engines. * Increase. $ Imports. MAJOR OIL PRODUCERS Mr. LEAVY. You say the major oil producers; but will you tell me hom you include in the group as major producers? Mr. HADLICK. Well, generally when we speak of the major oil com- Mr. HADLICK. Yes, sir. We call those major companies. Mr. HADLICK. It is an association of independent oil jobbers loated in some 30 States in the country, all of them east of the Rocky fountains. OIL PRODUCTION Mr. LEAVY. Has it not been the contention that there is an overroduction of crude oil, and that it was allowed to be produced without imitation, and this is a waste? Mr. HADLICK. That is the contention. And, of course, there is ground for the statement that there was at one time overproduction of crude oil. In a nutshell, Mr. Chairman, our objection to these forecasts is that by reducing the amount going on the market below demand you raise the price. They had a stabilized production price up to January of this year of about a dollar a barrel. And nobody begrudged it. But it has now risen to $1.20 a barrel. LOWER COST OF GASOLINE Mr. LEAVY. Is it your contention that if this Government activity were discontinued that the consumer of the finished product, that is the consumer of the gasoline, would be able to purchase it at a less figure than he now pays for it? Mr. HADLICK. I believe that is correct. Mr. LEAVY. And that the Government is unconsciously making itself an agency in keeping up the price of gasoline by disseminating certain knowledge that is prejudicial to the small producer and of advantage of the big oil producer? Mr. HADLICK. I do not know that it is prejudicial to the independent producer. It is prejudicial to the independent marketer. I do know that. And I think it is prejudicial to the consumer. EFFECT ON JOBBERS Mr. O'NEAL. Just how does it affect the jobber? Mr. HADLICK. Ordinarily we buy from the refiners. Sometimes we buy from the same people who sell locally, or they may sell locally in one State but through jobbers in another State. The jobbers sell about 40 to 50 percent of the petroleum products in the country. Mr. O'NEAL. You buy from the big fellows as well as from the little fellows, do you? 139751-37-pt. 2—21 |