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Petroleum Spirit Supplies from the East.

11th January 1906
Page 8
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Page 8, 11th January 1906 — Petroleum Spirit Supplies from the East.
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Which of the following most accurately describes the problem?

Late Rise in Prices to be Maintained. Large Prospective Shipments.

Interview with the Managing Director oT the Asiatic Petroleum Company.

By the courtesy of the general manager of the General Petroleum Company, Limited, Mr. F. P. S. Harris, an interview was arranged for us last week with Mr. H. NV, A. Deterding, managing director of the Asiatic Petroleum Company, Limited, who is one of the greatest acknowledged commercial and statistical experts on the question of petroleum spirit supplies. His associations and intimacy with the business conduct of the Royal Dutch Company, of The Hague, the Shell Transport and Trading Company, Limited, and with Messrs. Rothschild's petroleum interests, are such as to command the greatest respect for his utterances. Mr. Deterding's connections are, admittedly, those of the Borneo, Sumatra, and Roumania fields, but his reputation for breadth of view, which is recognised to the full both in London and throughout Europe, is such that his important statements may be regarded as judicial in their nature.

We opened the interview by pointing out that members of the motor industry, as much as users of commercial motors, were ANXIOUS TO KNOW THE REAL FACTS

about available and prospective supplies of petroleum spirit, and we began by pointing out that -there would be it consumption of o,mo,000 gallons for Greater London's motor omnibus services alone in the year 1907. Taking that fact as a mere indication of developments, we requested Mr. Deterding's views as to the likelihood of a petroleum spirit famine.

" At the present time," he answered,'' we are obliged to burn 3o,000,000 gallons of petroleum spirit a year under the stills and in the open, in Borneo and Sumatra. Whilst our total exports from the fields in question reach only 27,000,000 gallons, the total possible production from these fields may be taken at 90,000,000 gallons per annum. As Great Britain's total consumption for the year 1905 was only about 13,000,00o gallons, which was derived from all parts of the world, the great margin of supplies which are visible from the East alone makes it clear, to my mind, that there is no practical risk of shortage."

" Why then, Mr. Deterding, has it been necessary to impose the recent advance in wholesale prices of lid. per gallon? Consumers, not unnaturally, fear that this is only the first of several upward movements of ai similar character, and I am anxious to know how this can be dispelled." A smile made itself evident on Mr. Deterding's face at this question, but the reply was given without hesitation. " A few months ago," he said, " I was prepared to book contracts ahead for several years at bottom prices—say, lid, per gallon. These prices were artificially low, owing to the fact that opposing petroleum interests had thought they might possibly upset our programme by the process knOwn as under-cutting." The best guarantee I can give of the bona-fides of our intentions is this—I am willing to

MAKE CONTRACTS TO-DAY FOR THREE YEARS forward at 7id. per gallon ex-store in steel barrels, or 8-411. per gallon in 2-gallon cans. There is absolutely no intention on our part to force prices up. We might easily get much bigger prices now than we are asking, but it is no part of our policy to do this."

In response to our request, Mr. Deterding cited numerous practical reasons against any appreciable upward movement in prices. Of these we will quote the principal ones in Mr. Deterding's own words—" The line of action we took in Germany a few years ago will be followed in England. We had the entire control of available spirit for that market, at a time when current prices there were IS marks per Too litres. What did we do when, after a severe fight, prices went down as low as marks? Did we take advantage of consumers when peace ruled afterwards, or did we remain satisfied with a reasonable trade margin? I am glad in say that, largely on mv own recommendation, and looking to the future rather than for any immediate profit, we s:dd our spirit at half the price it stood before, and gave every re

finer in Germany a guarantee that prices would not exceed 65 per cent, of those previously obtaining before we came into the market. That policy has been highly successful, and German consumers have benefited accordingly. It is one which we intend to follow in Great Britain. Taking the price in England at is. per gallon, which was the case before our influence began to assert itself, large buyers may regard 65 to 75 per cent, of the old price as the maximum—so far as human foresight can be relied upon—that they will experience again. It must be remembered that new factors have now to be reckoned with. An enormous number of stationary engines, aggregating many hundreds of thousands of horse-power, more particularly in Germany, which have been using petroleum spirit, are being ADAPTED TO USE PRODUCER GAS made from low-grade fuel, and this releases a not inconsiderable annual bulk of the spirit, whilst also curtailing demand which had been anticipated. Another important controlling factor is that the cleaning and dyeing trades, which are largely consumers of petroleum spirit, when prices remain low, immediately change over to coal-tar derivatives and other substitutes when the price goes up, and this serves as it direct check upon undue increases. It is, in fact, merely the old and well-proved truism that you cannot artificially upset the laws of supply and demand more than temporarily: We know that our supplies from the East and from Roumania arc sufficient for all contingencies."

" But what about the quality and the gravity?" we de.. manded. " Ah," remarked Mr. Deterding with alacrity, "I do hope you will send home the point that specific gravity is not a correct measure of fuel efficiency. We apply the only proper test to our spirit, which is that it shall contain practically no constituent hydro-carbons which boil at a temperature higher than 300 degrees Fahrenheit. The old idea that spirit having a specific gravity of o.68o was the only admissible fuel clings to the motorist in an inexplicable manner. Four years ago there was something in this, because higher gravities almost invariably contained a relatively large percentage of kerosene. The real test is whether the fuel Is all spirit, and gravities as high as o.76o may be and are now successfully employed with ordinary or slightly adjusted carburetters, and with completely satisfactory evaporative results : this would have been scoffed at a few years ago as much by chemists as by motorcar owners. We ordinarily supply spirit ranging in gravity from 0.715 to 0.720, and our present possible production of this quality runs to something like 55,000,000 gallons a year. The other gravities, of which the boiling points are equally satisfactory to ensure complete evaporation and combustion, result in a large increase of that total. We will begin by putting these heavier classes of spirit on the market at a slightly lower price—not because they are inferior, but in order to strike the line of least resistance with even our most conservative buyers."

We then drew Mr. Deterding's attention to recent proposals in the Press for the development of fresh sources of supply by a company to be organised and controlled by the motor industry, and. his opinion of such a scheme is at least informing. " We have no occasion to fear such an undertaking," observed this master of his trade; " it would only mean a small increase to the competition we now have to face, and our experience of similar combinations is that it would conduct its business for its own ends. There are, of course, only two difficulties in the way once the fields are discovered; there is the long interval of time before spirit could be put on the market, and the risk that existing pro

ducers would put prices down to such a point that the new

company could not live: Every petroleum company in the world is on the alert to snap up any field of value, For example, friends of mine have spent at least 4:i oo,000 during the last twelve months in prospecting tracts of country which were rumoured to be oil hearing and suitably located. I do not say, for one moment, that there are no good fields undiscovered, because the whole history of the petroleum trade is a record of fresh discoveries made as often as there was any imminent or even supposed risk of a failure in yield, or of the demand exceeding the supply. Had anybody forecasted to the original pioneers of the petroleum industry, 45 years ago, the enormous quantities of crude oil which now go to swell the world's production, they would have been REGARDED AS LUNATICS,

to say the least of it. My argument is that we can, by analogy, hope for similar discoveries of suitable petroleum spirit fields of the same character as those in Borneo and Sumatra. Before leaving this question of supplies and prices," continued Mr. Deterding, " I must remind YOU of the outrageous restrictions which are placed upon the movement of spirit in this country. Were barge transport allowed up the Thames, as it is up the rivers Elbe and Rhine, the fuel could be delivered to suitable stores for the omnibus companies at id. a gallon less than it is to-day. It costs us as much, owing to the regulations of the Thames Conservancy, to bring supplies from our store at Thatueshaven to Hanunersmith as it does to cover the whole transportation from the oil fields in the East to England, but we find the London County Council more reasonable now, as regards carting and storing." Our following question was addressed to Mr. Deterding with a view to obtaining his opinion on the relative position of Great Britain and other countries in this matter of fuel supplies. " That is a very important point," came the reply. " English people seem to forget that the greatstrides made by the motor movement in this country during the last five years constitute a relatively small addition to the world's consumption. It is not a question of hundreds per cent., the world over, although it may be so for this country alone. Europe has taken approximately 9o,o0o,000 gallons of petroleum spirit from all sources during the past year, and out of this England has taken only one-seventh. Onequarter of the whole quantity has been derived from Borneo and Sumatra, and three-quarters from other fields. The total European consumption has not increased by more than 25 per cent. in the last two years, and contemporaneous developments in the sources of supply have more than kept pace with that advance. This cannot be otherwise, or prices, instead of ruling as they now are, would be ranging in the neighbourhood of 25. per gallon; compared with the es. per gallon which was the starting point of the downward mcveinent. There must always be a degree of uncertainty as to prices in all trades. Many


at the present time that they are not booked at the lowest prices of 19o5, but I can only ask how many other trades are willing to book forward contracts, as I am, for a period of three years? I regard that offer, coupled with the loss of trade we would suffer in other directions from any marked increase, as the hest reply to the critics who say that there are, first of all, petroleum monopolists, and secondly, that these alleged monopolists will kill the motor industry." One parting question suggested itself to us, arising from statements which one not infrequently hears, and we accordingly asked Mr. Deterding whether there was any truth in the report that an agreement had been come to on the subject of prices between, his company and the Standard Oil Company of America. There was no ambiguity about Mr. Deterding's reply. " No such agreement exists " was his emphatic statement, and it appears to us only reasonable that buyers of petroleum spirit should be ready to take Borneo and Sumatra spirit, in large quantities, in recognition of the considerable opposition its importers have brought about. We do not feel that our interview with Mr. Deterding has upset the opinion that users should forge ahead with any proposals which aim at securing for them the control of their own sources of supply at the earliest possible moment. A period of three years is, admittedly, a long time for a merchant to sell forward, but the motor industry cannot rest while there is a risk that, even three years hence, it will be in a worse position than it is to-day in reference to prices for fuel.


People: A. Deterding
Locations: The Hague, London

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