The History of the Standard Oil Company/Volume 2/Appendix/Number 49

by Ida Tarbell

NUMBER 49 (See page 120)

A STATEMENT FROM AN OIL-PRODUCER'S STAND-POINT FOR 1886

[Circular used in the campaign against the Billingsley Bill.]

Total production for the year, 25,145,088 barrels.

Average price per barrel, .71½.

The gross income from the entire Oil Regions, based on these figures, $17,978,237.

The cost of producing the above amount of oil was as follows:

Wells drilled, 3,525—at an average cost of $3,000 each ....................................................................................................................................................................................................................................................

$10,575,000

Cost of pumping and raising the oil to the surface and keeping rigs and wells in repair, estimated at .25 per barrel of production ....................................................................................................................................................................................................................................................

6,286,272

Add estimated cost of royalty, one-eighth ....................................................................................................................................................................................................................................................

2,247,342

Total expenditures ....................................................................................................................................................................................................................................................

$19,108,614

Deduct total income of the entire Oil Regions ....................................................................................................................................................................................................................................................

17,978,737

Net loss to oil producers during the year ....................................................................................................................................................................................................................................................

$1,129,877

If the estimated value of the one-eighth royalty be not added, then the value of five acres of land should be added to the cost of each well and the result would be practically the same.

The daily production January 1, 1886, was 59,603 barrels, valued at $750 per barrel ....................................................................................................................................................................................................................................................

$44,702,250

The daily production January 1, 1887, was 66,383 barrels, valued at $500 per barrel ....................................................................................................................................................................................................................................................

33,191,500

Showing a shrinkage in value of the producing territory for the year 1886 to be ....................................................................................................................................................................................................................................................

$11,510,750

Note.—To make it more clear to the uninitiated, the foregoing means that producing territory was bought and sold in 1885 on the basis of $750 to each barrel of production, and in 1886 on the basis of $500. It is on this basis that the value of oil-producing territory is estimated. A well producing one barrel a day at the present time is valued at $500; one year ago it was worth $750.

The valuation of the stock of the Standard Oil Company at the present time is $150,000,000, or nearly five times as great as the entire Oil Region country valuation. The profits of the Standard Oil Company for the year 1886 were over $26,000,000.

Strangers may ask, Why is there no competition in pipage and storage of oil if the profits are so great? We answer, that with rebates, drawbacks, discrimination, and conspiracies the Standard Oil Company has been able to freeze out and suppress nearly every attempt at competition.

Does not the foregoing array of figures, showing as it does the terrible shrinkage which the property of the oil producers has sustained, amounting to nearly twenty-five per cent. in one year, demand such relief in pipage, storage, and shrinkage, as is contemplated by the Billingsley Bill, now before the Senate of Pennsylvania?