COST OF PETROL.

Press, Volume LXIII, Issue 19153, 9 November 1927, Page 8

COST OF PETROL.

WHY IT IS LOW. EFFECT OF CRACKING PROCESS. Powerful economic fores hare been at work in the petroleum industry during the past few years, and they are bringing about changes v.-hieii have taken even the trade by surprise. The most important singk' factor is the "cracking" process of petrol production.. says the ''Autocar." Putting the subject in simple, untechnical language, it may be said that the general method of obtaining petrol hitherto has been by boiling or distilling crude petroleum, which is a highly complete mixture of hydrocarbon compounds. ranging from heavy oils to the highly volatile petroleum spirit. ■'Crude'' also produces other residuals outside the scope of these notes. Taking an average yield from refining good quality crude oil, we obtain the following percentage.; of main constituents having commercial value:—■ Distilled process yield: Petrol, 27 per cent.; kerosene (lamp oil), 10 per cent.; fuel oil, 43 per cent.; gas oil, 4 per cent. Yields vary considerably with the quality of the crude oil used. As heat is applied, the light spirit—-sui-h as ''aviation"—first boils off or separates itself by arising in the form of

vapour. Then the various grades of heavier constituents follow as the temperature rises. There is no absolutely hard and fast dividing line between the various grades, but within a certain range of boiling temperatures a general classification can be made of the main products as determined by experience.

The economic position for the oil re^

finer was -ormcrly that he had, say, a i'.j per cent, yield of a highly valuable commodity called petrol, for which there was a world-wide and ever-grow-ing demand; but when he had sold his 25 per cent, of petrol he had a 75 per cent, residue of less valuable products. Some of them were saleable in steady, but not growing, markets, and others fetched a few pence a gallon in limited markets. Beyond these was an unsaleable residue. Growth of the Industry.

Now, the amazingly rapid growth of motoring increased the demand for petrol abnormally; hence it increased the demand for crude oil. But, as there was only a brisk and growing market in that 25 per cent, portion of crude oil which we call petrol, it followed that in meeting this huge demand the -refiners were piling up a gigantic amount of slow selling or unsaleable residue. The oil industry has shown great enterprise in developing the use of lamp oil or kerosene for heating purposes, but here it has to compete with coal. So, too, fuel oil has been remarkably

developed for heating and steam raising instead of coal, aud also as a motor fuel in Diesel engines, where it is burned much as petrol is burned in the motor-car engine. But with all this competitive enterprise there was no expansion ocmparable to that in the petrol trade, and this was reflected in market prices, petrol being always the dearest (and most profitable) article sent out from the refineries. In these conditions the oil trade tended to pass under the influence of a few big groups, which could primarily regulate petrol prices and control output of the raw material, crude oil, to a very considerable extent. These powerful financial groups were able to carry big stocks of residual products, and spend large sums in gradually developing new markets for them. The profits from petrol kept the whole machine going smoothlv and lucratively-.

New competitors had not much chance, for though they might sell their petrol at a profit they had to carry the big residual burden. A well-timed cut in the price of petrol by the big organisations acting iu unison could put a new competitor in grave danger. Such a competitor found himself pitted against the world-wide system of distribution which the big groups have built up out of their petrol profits.

Revolutionary Change. Tt was at this juncture that the revolutionary change was wrought by the "cracking"' process, and it forms one of the most dramatic affairs in the world of commerce. Imagine an unknown man going up one day to a great oil magnate and telling him that he would buy his entire stock of fuel oil right away. The magnate might be puzzled and be curious as to what the fellow would do with it. But the magnate became really astonished when, for the first time, he discovered what had actually happened. The unknown man had a cracking installation. Ho bought fuel oil and other heavy residual oils from which all the petrol had been skimmed by distillation. By a new process he then extracted more petrol from this fuel oil than the refiner had won from the original crude! It was like buying egg shells and making new eggs out of them.

Trace the course of 100 gallons of crude oil of average quality. It yields: By distillation: Petrol, 25 gallons, fuel oil, 43 gallons. Now, the cracking process yields: Petrol obtained from 43 gallons of fuel oil, 21 gallons. Thus, comparing the new and the old methods we have:—

Distillation: Petrol yield, 25 per cent. Distillation and cracking: Petrol yield, 46 per cent. Taking it all round, and for reasons which are shown further on, the general application of cracking promised to double the world yield of petrol from a given output, of crude oil.

Here it may be explained what cracking is. 'Researc-h had shown that the constituents of crude petroleum were mainly compounds of hydrogen and carbon in various proportions. Nature has done the grouping in a very complex way, and though petrol is a compound of hydrogen and carbon, and heavy fuel oil is a compound of the same two elements, it has been found exceedingly difficult to reshuffle the proportions of the two constituents of fuel oil remaining after the process of distillation so as to give petrol.

But. eventually, methods have been arrived at in which, by subjecting fuel oil to great heat and pressure, it has been "cracked" or broken up chemically, so as to yi«>M a very high percentage of petrol.

Cracking Process Commercially Developed.

This has now been developed to the commercial stage, so that last year in America one-third of the total yield of petrol had been obtained by cracking. So far, in Great Britain, there has not been much production by cracking, but plant has been installed already which can give an output of over 100,000,000 gallons per annum. In every country producing or using petroleum the new method is bound to come into

use extensively to meet the universal demand for motor spirit. The situation is full of interest. Take the supply of raw material. The refiner gets his crude oil from the oil-field; but the "cracker" goes on to the open market, and buys the fuel oil and other heavy oils, which have been sold there at low prices by the refiner. Thus the cracker had his raw material brought to his very door by the refiner, and if any "war" arose between refiner and cracker the former could only hold up supplies of raw material by starving his own market in fuel oil and by accumulating vast reserves. , The cracker has also applied his process to poor quality crude oil, which hitherto has been almost worthless in that it had a very small yield of petrol by distillation. Assume the case of a crude which gave a per cent-, of petrol by distillation, but which by cracking yielded 30 per cent, of petrol. The refiner could not corner all this poor crude. In short, the rapid progress of the cracking industry cannot be stopped once it has placed production on a commercial basis.

A new industry has sprung up in making cracking plant machinery, and the people in this trade have shown a new road to wealth which has attracted fresh capital. The big American refiners have also taken to cracking, and so we have intensive petrol production, which, taking place with ail undiminished output of crude oil, means plentiful petrol and more competition in the petrol trade. There are many and far-reaching effects to follow from this development. Cracking has been applied to fuel oil, gas oil, and crude petroleum. It will undoubtedly be applied also on a commercial scale to coal oil, and here it should work a tremendous change. The yield of motor spirit, from the carbonisation of distillation of coal is ordinarily about two gallons per ton. By liquefacti on or other methods it is possible to get a yield of over 100 gallons of coal oil per ton. But this coal oil is not normally suitable for motor fuel. If however, this be cracked so that it 'vields from o0 to 40 gallons of motor spirit we shall see coal as a great alternative supply of motor fuel. One day Great Britain will assuredly obtain most of its motor spirit from coal. The cracking of heavy oils has opened a new line of development. No Fear of a Fuel Famine.

At the moment the outstanding economic feature is that without increasing crude petroleum output we arc on illg the P etrol y ield - Many oilfields hitherto neglected by

reason of the poor petrol content of their crude oil can become remunerative by selling the oil from cracking. Shale and many inferior grades of coal may also ]is used .to produce oils which can be cracked for a high motor spirit yield. The old bogey of a petrol famine is now absolutely killed, as supplies of crude oil can be conserved by reason of the vastly increased yield of petrol. The oils from coal and shale will also be available, and will serve as potential competitors to moderate the price of petrol should occasion arise.

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