PETROL PRICE INCREASE.
Page 18
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The Shell Co.'s Official Explanation.
Following upon a number of rumours and much preparatory information concerning petrol costs, a statement on petrol prices has now been issued by the Shell Marketing Co., Ltd., under the date of a covering letter of February 4th, front which it is to be inferred that, the increase came into force on that date—as was expected.
Theincrease of 8d. per gallon in the price of petrol is, imperative, according to the directors of the Shell Marketing Co., if Britain is to be assured adequate supplies of this indispensable accessory el transport and commerce.
We have always felt, the Shell Marketing Co.'s directors write, that the first need of the motor industry is to be amerced a permanent and maple supply of fuel, without which cam would 'be-come mere scrap. ' The next desideratum is to get petrol as cheaply as possible.
So overwhelmingly 13, America the largestproducer of motor spirit in the world that the market price'must necessarily be dominated by the price at which petrol can be purchased in that country. Indeed, were the Dutch East Indies, Persia, Burnish, Rumania, Reesia, and all ether producing countries to give -away their entire output of petrel for nothing., it would not have the slightest effect upon the price which the markets of the world would have to pay for the much larger quantity of motor
• spirit Which would etiBehave to be drawn from America.
Consequently, any attempt to keep the price of petrol below that at which it can be imported from America would be rendering a great diseervice, not only to the mace industry, but to British commerce generally. With every country in the world an eager buyerof petrol, and some almost on the verge of petrol 030
famine, they have to face either the payment of the market price or all acute
petrol shortage, which, with the restriction it would inflict Upon transportation and industry, would be nothing short of a national catastrophe.
The present wholesale buying price of meter spirit of a grade from 10 per cent.
to 20 per cent, lower than Shell is approximately 25 cents per American gallon f.o.b. New York. (The British imperial gallon, it should be noted, is one
fifth larger than the American gallon). At the peesent rate of exchange this is
the equivalent of is. 80. per imperial gallon in America before it is put on hoard _ship. Since British petrol prices were }eat reduced we have been faced with a loss on the American exchange representing
no less than 44a. per gallon. In addition to this, the market price of petrol in
America has gone up, and ocean freight age has advanced-enormously. The rate following the Armistice was in the neigh bourhood of 50s. to 60s. per ton; the last freight paid for exactly the same voyage was 230s. per ton, which represents ap proximately a cost of 90. per gallon for bringing petrol from New York to Britain! In the new price Only half this figure is allowed for freight, as the petrel companies feel that the excessive freight at the moment must be temporary. Thus, the present oast of petrol is made up as shown at the end of this statement.
The public: will net overlook the fact, the Shell Marketing Co. points out, that:" when the Armistice put an end to the submarine menace and so brought about a decrease of ocean freight rates, they promptly game the motorist the advantage, and on three occasions substantially reduced prices. Ocean freightage and high markets in America, now operate in precisely the opposite direction, and they have no option but to increase the prices if they are to remain in a position to buy petrol in the keen world markets of to-day.
The great suceeee of the Shell group having been a.sseciated by some sections of the Press with the present unavoidable increase of petrol prices, the directors of the parent company, hell Transport and Trading Ce., Ltd., take this eppertnnity, in the interests of their shareholders. of correcting this misstatement. "Whilst the directors highly appreciate the large measure of British business they enjoy, they are in a position to say that, far from their company's success being accountable to sales of motor spirit in the United Kingdom, Shell dividends would not be adversely effected if this department of their business ceased altogether, the company's profits being derived as to 95 per 'cent. from oil produced and marketed outside the British Empire.
Per gallon_ 6. d.
Cost. f.o.b. New York ... 1 81 Ocean freight (taken at half current rates) 44 Average cost. of railway freight and distribution as esta blished by accountants ... 0 7 06
Garage profit .........041
3 64 5 per cent profit to distributors 02 3 84