Claude News (Claude, Tex.), Vol. 50, No. 52, Ed. 1 Friday, August 25, 1939 Page: 2 of 4
This newspaper is part of the collection entitled: Texas Digital Newspaper Program and was provided to The Portal to Texas History by the Richard S. and Leah Morris Memorial Library.
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WHY
Humble Oil &. Refining Co.
Reduced the Price of Crude
This statement is published as a paid advertisement by Humble Oil
& Refining Company for the benefit of those who are Interested and
not acquainted with the facts.
On August 11 the Humble Company posted reduc-
tions in the prices at which it purchased crude oil in
Texas and New Mexico by amounts ranging from 5c
to 32c per barrel, and averaging 18.5c per barrel. In
view of the fact that this action on our part has been
severely criticized before the public, we outline below
the facts and reasons on which it was based:
1. On August 1 the quantities of crude oil listed
below, aggregating 218,920 barrels daily in Texas,
Louisiana and Arkansas, were moving to market at
prices substantially below the Humble's postings for
similar crudes:
AREA BBLS. DAY
Texas—
West Central 37,000
Gulf Coast . 22,600
Southwest 16,9C<
East Central 12,800
East Texas Field. 6,850
Panhandle 1,500
Total Texas 97,650
South Louisiana 81,920
North Louisiana and Arkansas 39,350
Total 218,920
2. The amount of crude moving below Humble's
postings was greatly increased when on August 10 the
Sinclair-Prairie Company posted a reduction of 20c
per barrel affecting the oil produced and purchased by
it in Texas, New Mexico, Oklahoma and Kansas, which
action was followed immediately by reductions in the
price made by a number of smaller purchasers. These
reductions applied to more than 150,000 barrels of oil.
This, added to that mentioned in the preceding para-
graph, equals 368,000 barrels. In the three States in
which Humble operates, Texas, New Mexico, and
Louisiana, the aggregate volume of oil moving below
Humble's prices approximated 17Vi% of the total cur-
rent production in those States.
3. The movement of constantly increasing quantities
over the past year or more of crude produced in the
new Illinois fields, reaching a total of 300,000 barrels
daily on August 1, on a price basis substantially lower
than Humble's postings in its territory, exerted a pro-
gressively depressing effect on the crude oil market.
The effect was felt in Texas; and actually since April
1 Humble has lost 10,000 barrels per day of business
absorbed by Illinois crude. This loss of business was
in addition to that lost by Humble as a result of the
movement of crude at low prices in the territory where
we operate.
4. On August 11, therefore, the total volume of oil
moving at prices below those of the Humble was ap-
proximately 668,000 barrels.
5. The crude oil market has been under pressure for
more than a year. The price adjustments made last
October did not remove fully the disparity between
Humble's prices and those of some oil moving in its
markets. Since that time the volumes of crude moving
below our prices have increased steadily, with the result
that when the reductions of Sinclair-Prairie and others
came on August 10, affecting approximately 150,000
barrels of crude per day, conditions were so bad that
we were compelled to reduce our prices to meet this
competition. In no case are our new postings lower than
the Sinclair-Prairie postings for similar crudes.
6. The Humble Company is primarily a producer
of oil. Its crude oil properties constitute its principal
asset. Its net production averages 133,000 barrels a
day. We are also crude oil merchants and purchase,
at our posted prices, 251,000 barrels of crude oil daily
in Texas and New Mexico. These prices also govern
the price at which we sell the oil which we produce.
Because of our large production we are vitally inter-
ested in the maintenance of fair prices.
Our refineries consume something near the amount
of oil which we produce. As a consequence, with re-
spect to our purchases we are in the same position as
a merchant dealing in any commodity. To continue in
business, we can not over a long period of time pay
higher prices than our competitors. We are compelled
to meet competition. The price of oil, like that of other
commodities, is subject to change with market condi-
tions. These are simple and fundamental business prin-
ciples. We were reluctant to cut the price of crude,
not alone because of its adverse effect on our own earn-
ings, but also because of its effect on our customers
and upon the industry and the state at large. Under
these circumstances, we could not continue to pay the
prices we had been paying.
7. As a matter of policy the Humble Compcny
maintains stocks of crude oil very slightly in excess of
the amount required as working stocks to carry on
operations. We do not believe in storage of oil above
ground but in production of oil currently as required
for market. We do not speculate in oil. We have na
desire to buy oil at any price to accumulate for storage.
8. We think the price for oil brought about by the
competitive conditions above mentioned is lower than
should be realized. In our opinion the flood of oil
from Illinois and Louisiana, most of which is being
produced wastefully, in violation of conservation prin-
ciples, is primarily responsible for the market condi-
tions which necessitated our price reductions. It is our
hope that these conditions will be corrected and that
the market will improve.
% -
H. C. WIESS, President
HUMBLE OU. ft REFINING CO.
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Waggoner, Thomas T. Claude News (Claude, Tex.), Vol. 50, No. 52, Ed. 1 Friday, August 25, 1939, newspaper, August 25, 1939; (https://texashistory.unt.edu/ark:/67531/metapth348572/m1/2/: accessed April 22, 2024), University of North Texas Libraries, The Portal to Texas History, https://texashistory.unt.edu; crediting Richard S. and Leah Morris Memorial Library.