Show Changes In III Petroleum 4 Earlier this year ear two events event t r occurred the effects of oC which have had a major impact or on oil companies and the industry r t as a whole In May Maya a bulldozer caused a break in the major maim oil aU pipeline r run running u n ni n g f fro from r o m Saudi Arabia rabia on the Persian Gulf to Sidon Lebanon on the Mediterranean Before BeCore the break the line was delivering about barrels a day da for Cor tanker shipment to European European European Euro Euro- and U. U S S. S ports TilE THE BREAK is in Syria and that country has refused to permit repairs apparently in a move aimed at extracting higher oil transit royalties But this has had repercussions similar to those caused by closing of oC the Suez Canal in 1957 Now crude from Crom Saudi Arabia must make the long r journey around Africa to the marketplace Because of oC this lengthy voyage voyage voyage voy voy- age greater tanker capacity is required to ensure the same constant volume of oC oil for Cor European European European Eu Eu- ports The other burden burden burden bur bur- den placed on world crude suppliers was created when Libya ordered production cutbacks cutbacks cutbacks cut cut- backs in the name of oC conservation conservation conservation con This served to evaporate evaporate evaporate eva eva- another to barrels a day which had been ticketed largely for Cor European European European Eu Eu- refineries EVEN BEFORE these developments developments developments de de- de- de oil tanker capacity capacity capacity capac capac- ity was tight The added bUlden burden burden bur bur- den of oC providing nearly one million barrels daily mostly daily mostly by long haul haul has has now sent world charter rates for Cor tankers tankers tankers tank tank- ers soaring Historically crude oil from the has been landed on the U U. U S. S East Coast at prices far less than those for Cor our domestically produced oil TO PREVENT a flood of oC low cost low low- ost crude imports have been on a quota basis Now with freight rates alone on crude over 3 a barrel oil from Louisiana and Texas is competitive in price and import tickets have little value As enthusiasm for the expensive expensive sive imports wanes there is greater demand for domestic stocks And for Cor inland refiners the problem is compounded since most pipelines from Crom the Gulf Coast are now at capac capac- ity The bulldozer accident could change existing oil import regulations and could also revive incentives to increase domestic exploration and production pro pro- Owing to the higher price of oC imported crude the Texas Railroad Commission has raised its allowable production for Cor Texas wells toa to toa toa a record high Louisiana has taken similar action WHILE CHANGES in the industry in- in industry in are immediately evident evident evident evi evi- dent e o f C fe Ce c t s on individual companies are less so The extremely big internationals especially those with large owned company-owned tanker fleets are so diversified around the world that pressures on any segment of oC operations are generally generally gen gen- absorbed without dim dim- culty Integration in the cs es of oC petroleum activity particularly particularly particularly par par- where there is a high degree of sufficiency self in crude insulates these majors from much economic and political political political poli poli- heat A PRIME example which the Research Department of Babson's Reports is recommending recommending mending for Cor purchase is Standard Oil of oC California NYSE promising satisfactory satisfactory tory growth appreciation and income It accounts for Cor 6 of entire Free World oil output and owns or leases over 75 tankers many in the super class Even while authorities have been sounding the alarm over overcritical overcritical overcritical critical future shortages of oil drilling starts have been in a decline in this country The startling change in the status of what has hitherto been cheap foreign crude may bring about renewed domestic drilling activity both onshore and offshore THERE IS no question the incentive incentive in in- is there Among several several several sev sev- sev- sev eral favorably situated domestic domes domes- tic petroleum companies the Babson's Reports Research staff singles out Cities Service as an excellent prospect for Cor appreciation and as a good current purchase |