Refined and Crude: “Again the Price of Gasoline” in Standard Oil Bulletin, March 1925

by Paul R. Spitzzeri

It is really something to see, as I noticed today for the first time, local gasoline prices topping $6.00 per gallon. The question of pricing is obviously a complex one and also filled with political disputes, so it is interesting and instructive to look back nearly a century at the March 1925 issue of Standard Oil Bulletin, the magazine issued to stockholders of the powerful Standard Oil Company (California), and peruse its essay “Again The Price of Gasoline” and compare and contrast its content to contemporary discussion about inflation and the dramatically rising price of oil and gasoline now, especially given the Russian invasion of Ukraine.

The article began with a quote from Senator James W. Wadsworth, Jr, of New York, son of the former state controller and grandson of a Union general during the Civil War. Wadsworth had a career of nearly three decades in Congress from 1915 to 1951 (excepting the period from 1927 to 1933 because he lost reelection). He was perhaps best known for being one of the few Republicans in the Senate to vote against the Prohibition constitutional amendment because of his staunch opposition to federal intervention in the private affairs of citizens and he was featured on the cover of TIME magazine at the end of 1925 because of his views.

In this case, however, the senator was quoted in a speech given on the Senate floor on 17 February concerning calls for the investigation of rising gas prices:

I am somewhat puzzled about this powerful monopoly [said to be behind machinations of the market]. If there is a monopoly which is all powerful to do anything it wants to do with the price of oil and gasoline, why did that monopoly permit the price of gasoline to fall from 27 or 28 cents a gallon down to 12 or 13 cents.

Those prices seem ludicrous to us now, though those of us of a certain age can recall gas prices not that far off from 28 cents decades ago! Regardless, Standard Oil found that Senator Wadsworth “appears to have uttered a most pertinent inquiry” and asked “what, indeed, becomes of the force which arbitrarily runs prices up, when prices start to fall?” and “Why does not this force compel prices to stay up, to its own greater profit?” The company then averred that “if there is such a force it has been unaccountably absent many, many times in the history of oil.”

The piece continued that consumers on the west coast well knew the reality and it observed that that the peak price at San Francisco was 27 cents a gallon five years before, but, by 1922, it was almost half at 14 cents. The company stated that “through monopoly price control of a commodity is possible, but no one can say there is monopoly in the oil industry” and this was because “never were there so many producers of crude oil as today, never so many refiners, never so many marketers.”

It added that no American industry saw such growth in the number of firms as in oil and recorded that there were 70 merchants peddling their petroleum product to consumers in the Golden State in 1924. With respect to price, the editors of the Bulletin noted that, “discussion of a price . . . invariably leads to the query as to whether it is a reasonable price.” That quality of what was reasonable “always has wide ramifications, leading to questions of costs of raw products, transportation, manufacturing and marketing, as well as economic conditions of the market, national and international.”

Readers were advised to measure reasonable prices with a simple test: “to compare the price of one commodity with the prices of others in general use.” It offered that, given this, “gasoline prices are shown to be extraordinarily stable.” Notably, it pointed out that the influence of the First World War, though it ended seven years before, was such that “the year 1914 marks the beginning of a new economic period from which the world has not yet emerged.”

The problem was that discussions of gas and other prices inevitably led many to talk about “pre-war prices” and so the magazine continued that looking at commodity prices, including the general rise in them from 1913, and how they “rose to a peak, and then fell back in greater or lesser degree, is very interesting.”

The cover features a painting of the Makapu’u Lighthouse at the eastern extremity of Hawaiian island of O’ahu.

Statistics from the federal Bureau of Labor, now the Bureau of Labor Statistics, and which was created with the Department of Labor when it was established in 1913, provided “a comprehensive record . . . [of] the figures on food, cloths and clothing, building materials” and others, with a general “all commodities” category “being the average for all of the commodities on the Bureau’s long list.”

Included in the article are a chart and table showing the price differentials for the aforementioned items, including the general average and then gasoline between 1914 and 1924. The most dramatic change was in “cloths and clothing” which leapt nearly 200% through 1920, while “building materials” shot up some 164% and food jumped just about 120%. While the “all commodities” average was 126%, gasoline “only” became 74% more expensive during these intensively inflationary period.

The situation was certainly much less dramatic in terms of increase in the first five years of the Roaring Twenties, with “cloths and clothing” growing by 91%, “building materials” up 75% and food 44% more expensive, for a general “all commodities” upward swing of not quite 50%. Gasoline, however, only increased by 7%, which meant that “the actual figures on which the chart is based show that the price of gasoline has been not only more stable and subject to far less advance than any of the other commodities, but that the price or the year 1924 was relatively much lower, as compared to prewar prices, than any of the other prices.”

In its “Pioneering With The West” feature, the company discussed its half-century of existence, noting that “as population was spread and increased, the Company has tried always to be with the vanguard of progress, if not just a little ahead of it.” Moreover, it added that “as a pioneer, a seeker, and a creator of new markets for its products, the Company has gone to the outposts of civilization,” even as it offered that progress and the extent of globalization was such that such isolated outliers were, by then, long gone. Instead, it claimed, “there are still far places to penetrate and develop, and there still remains much of the romance of distance and inaccessibility.”

The piece went on that “stupendous irrigation projects” turned massive deserts into farms and orchards, towns popped up quickly, railroads “brought settlers into virgin territory abounding with natural opportunities” and “moribund villages have become busy cities [Los Angeles, perhaps, being one of these?].” With technological advances like the telephone and automobile, the disparate places on the planet were brought closer together, while industrial equipment and machinery advanced to the degree that agriculture, commerce, lumbering, manufacturing and mining were transformed.

Amid all of this and “through this great revolutionary period of advancement in the West, the petroleum industry has experienced a transition.” In the 1880s, Standard mostly sold candles, kerosene, grease and oils for harnesses, but, in the modern age, “gasoline, once a superfluous article on the market, distillate, and a long line of lubricants specially formulated and manufactured for the numerous mechanical requirements of the field comprise the backbone of the sales.”

It was also a far cry from the small warehouses, few sales representatives, shipments of cases and cans around South America on sailing ships, and local wagon deliveries of products, often on roads that were muddy bogs in winter and required sleds to navigate. Workers generally labored well beyond the eight-hour day that was standard in the 1920s and Sundays were devoted to cleaning and repair of equipment.

In modern life, petroleum products were vital in the “mastery of those regions of the Pacific Coast rich in agricultural possibilities and natural resources” and “great industries, hydro-electric projects, and other enterprises far removed from civilization must have gasoline, distillate, lubricating oils, and other products.” That meant that “the pioneering traditions of the Company exist today” albeit with modern facilities in “latter-day outposts” such as in Alaska and Hawaii, which were discussed in detail.

The centerfold featured a collage of photos of Standard activities in the Yosemite area, Nevada mining towns, eastern Washington and the corner of that state near the Canadian border. Another interesting little piece is about the Laughing Gas Station in the tiny hamlet of Salome, Arizona on what is now U.S. Highway 60 west of Phoenix. It talked about how proprietor Dick Wick Hall, a founder of the town, promised “A Smile with Every Gallon” through his Salome Sun pamphlet filled with folksy humor.

Another feature concerned the recent paving of over 36 miles of asphalt and concrete pavement on a road in Kern County that became State Highway 33 from Maricopa north through towns like Taft and Fellows. Because of the tremendous output of oil, an assessment district covering nearly 200,000 acres of land raised enough money for the state-of-the art resurfacing project.

Finally, there is the “Oil Field News” page showing production during January in two dozen fields in the state, with Long Beach the biggest producer at almost 3.8 million barrels per month, while Midway-Sunset in the San Joaquin Valley in second place at not quite 3.3 million. In a distant third was the Dominguez field at under 1.8 million, with Santa Fe Springs (1.536), Torrance (1.295), Huntington Beach (1.291) and Elk Hills (1.147), also in the central valley region, among the bigger producers.

Montebello, where the Temple family realized its small fortune on its 60-acres leased to Standard and which had been producing since summer 1917, was at just over 650,000 barrels per month, ranking it 10th. As for prices per barrel, the range was from $1.25 for the lowest gravity of 14 to 20 degrees to $1.85 for 35 degrees and above, though the Rosecrans-Athens field, south of Los Angeles, had the highest gravity with crude at 36 to 37 degrees bringing $1.92 per barrel and that of 42 degrees and higher generated $2.40.

This issue of Standard Oil Bulletin is notable for its discussion of gasoline prices, given current concerns in this area, as well as its reflection on 50 years of its history, California oil field production at the start of 1925 and other features and articles. With an extensive collection of issues of the publication from the 1910s and 1920s in its collection, the Homestead will continue sharing some of these in future posts, so be sure to check them out.

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