OIL INDUSTRY

Hokitika Guardian, 10 June 1932, Page 6

OIL INDUSTRY

✓ PRESENT-DAY CONDITIONS. COMPETITION FROM RUSSIA. WELLINGTON, June 9. Observations on the present state of the oil industry throughout the world were made by Mr E. A. Beverly, of Sydney, managing director of the Texas Co. (Australasia), Ltd., in an interview yesterday afternoon. Mr Beverley said that the oil industry, in common with most industries, was /suffering by the fall in the available market and by price-cutting. Wlfufe there was still eomsiderahle business being done by those who went after it, the fact was that last year very few oil companies in the markets of the world made any trading profit, and the majority of the companies made a substantial trading loss.

This, he continued, had resulted in a number of producers, 1 refiners, as well as marketing companies, either failing or passing into.stronger hands. The fuel-oil industry had grown enormously during the last two years, on account of the cheapness of the fuel, and the fixed cost of production of coal. In 1929, there waft a large number of independent marketers in Australia and New Zealand, in the same wav as there were in other places in the world. The present unsatisfactory conditions prevailing in the oil industry had resulted in the majority of the smaller jobbers disappearing from the field, as they had not been able to operate at a profit. CAPITAL NOT ATTRACTED.

It was interesting to note; he .said, that in Australia the association of resellers and induSatriaif consumers of petrol formed a company, started the construction of tankage, and when completed nearly a year ago, the project was abandoned, as careful study of the. situation in Australia showed that they could not operate on a satisfactory basis, and that it was useless to complete the bulk receiving plant. Such instances -simply showed that under the present conditions there was apparently insufficient profit in the industry to attract new capital. On the other hand, due to unemployment relief works, considerable quantities of asphalt were,' being sold for road making, and the oil industry was developing new markets, and new u.>c. for petroleum products. It would appeal that those in the industry, were well organised and keenly active, would solve their own problems, and in a .reasonably satisfactory period n-" business would be encountered in the near future at fl lower margin of profit than had previously prevailed >n the industry. TAXATION OF PETROL.

! In Australia; like New Ze i Petroleum products were air imported, and the majority of the increase i [l exchange and duties hilve not be"n I fully reflected in selling costs. In the ’meantime, taxation and duties in a number of countries had materially increased, together with types oi taxation such as sales tax, primage, road taxes, and so forth. The original t/beory of taxation in most countries in respect to petrol taxation, was to .employ such revenue to road construction and maintenance. It appeared, however, that collecting taxes from this source was not particularly painful, and such duties and revenues * in several countries were now being employed to the consolidated revenue. In ”-0.--f of. the. large consuming markets of the world, motorists and those operating commercial vehicles had strougjly organised in protest against heavy and undue taxation of the petrol industry.

“til Continental Europe and E'-g.an.l, the oil industry is at grips not only with potential! markets, but also wit’a Russian petroleum products sold at ruinous prices.” Mr Beverly added. “As to whether the Engli-h and Continental markets can be made reasonable profitable con not he forecasted, ns Russian,, production i,s improving. Tlhe present tendency is that these pro. ducts are sold at whatever price that wiill turn over the volume of petroleum manufactured. In the same manner Russian butter and wheat- is 'affecting world market prices of these products.”