Drilling for Black Gold in the Standard Oil Bulletin, January 1925

by Paul R. Spitzzeri

One of the more hotly contested California state government policies is a commitment to achieve “carbon neutrality,” defined by its Office of Land Use and Climate Innovation as an effort to achieve “significant reductions in greenhouse gas emissions and removal of carbon dioxide from the atmosphere, including sequestration in forests, soils, and other natural landscapes,” though “a just and equitable transition” by 2045. This goal was established by Senate Bill 100, passed and signed in 2018 and which “requires that the transition to a 100% renewable and zero-carbon electricity does not cause or contribute to increases of greenhouse gas emissions elsewhere in the western electricity grid.”

The Department noted that “transportation emissions present the State’s biggest hurdle to achieving carbon neutrality” and that these “account for about 50% of total statewide GHG emissions. It also remarked that an important component of the plan was addressing how “measuring vehicle miles traveled (VMT) helps communities across the state plan for a future that increases access to destinations and services all while reducing greenhouse gas emissions.”

The question of using VMT as a means for developing policy to reduce greenhouse gas emissions has also generated considerable debate, with the state’s Department of Transportation tracking this since 2001, but concerns about how to significantly reduce the amount of miles Californians travel in their vehicles are growing. Much of this involves a “Vehicle Miles Traveled Fund,” implemented this year, which is a fee, or to opponents a tax, collected from developers to pay for housing and infrastructure near mass transit centers, though critics charge that it penalizes companies developing houses and apartments not near these or major job locations with costs passed on to home buyers and renters.

Given these current controversies, it is interesting and instructive to look back at the featured artifact from the Homestead’s collection for this post, the January 1925 issue of the Standard Oil Bulletin, a monthly magazine which was intended by The Standard Oil Company (California), now Chevron, “to furnish first hand and authoritatively to the Company stockholders, employees, patrons, as well as the general public, facts concerning the Company’s business and its methods.” To that end, most specifically, are editorials that comprised the first page of the publication and this one was titled “GASOLINE TAX SIX CENTS A GALLON!”

The Bulletin took umbrage with “the astounding suggestion” from the state of Oregon “that the state gasoline tax of three cents a gallon be doubled—increased to six cents a gallon” because it “wants more funds for highway construction” due to the fact that “those desiring such funds look to the motorist and his gasoline as a convenient source of revenue.” It was added that the Beaver State was the first in the nation to implement a gas tax, setting a rate of a penny per gallon a half-dozen years earlier. It was doubled in 1921 and another penny tacked on two years later.

Meanwhile, the idea was adopted by other western states, with Arizona and Washington setting one-cent tax rates in 1921 and Nevada and California established two-cent rates in 1923, with the Golden State doing this by vote, which the Bulletin did not state, focusing instead on legislative action, which in California meant (and means) putting initiatives on the ballot. In fact, the editors pondered what would happen if the legislature met annually instead of biennially and they remarked,

The trend of events clearly indicates that dangerous lengths to which this business of gasoline taxes may be carried, and the great burdens which may be loaded upon the already heavily taxed motorist and upon the marketer of gasoline.

The piece continued that there was no way to know whether or not legislators would “make it,” rather than propose for voters to decide, higher each session, though there was “no guarantee except the fact that the motoring public is no longer apathetic about its taxes,” even though it approved the creation of the state levy to begin with, “and that henceforth it will register is objections,” not just from two to three cents per gallon, “but against any increase whatever.”

The Bulletin asserted that the real question was whether a tax was necessary for collecting the revenue for road building. The estimate was $300 million for this, divided roughly into equal amounts for county projects, old road maintenance by the state and new state highways, with an average of $30 million per year. With revenue standing at $21 million, this was the argument for a tax increase, accompanied by a $2 increase in car registration fees and a truck fee raised by about two-thirds.

Yet, the editorial commented, “an important factor has been left out of consideration,” namely, that “the great increases in revenue which will come from the normal increase in registration of automobiles and the consumption of gasoline.” One wonders if state officials and planners took future growth of the number of cars and trucks and the resulting jump in the use of fuel in California as part of its calculations, but, if so, this was not mentioned in the piece. What it did say, though, was,

This Company has been engaged in the oil business many years [including the break-up of the massive and incredibly powerful Standard controlled by founder John D. Rockefeller as a result of anti-trust legislation by Congress in 1911, the year California implemented the voter initiative], and from its inception the most vital things about the business has been an unceasing study of the future . . . calculated with great care . . . to keep apace, or even ahead, of the growing population and the growing demand.

It was observed that vehicle registration jumped more than 25% each year since the onset of the Roaring Twenties and that the new year was likely to include 20% more gasoline use than in 1924, while it was anticipated that there would be about 15% more consumption in 1926 with 10% each for the two succeeding years. Beyond 1928, it went on, “the future becomes more hazy” (who could imagine the devastation of the Great Depression?) but conservative estimates involved growth of 5% annually through 1935 in the firm’s forecast.

Using this projection, it was asserted that the total revenue, without an increase in the gas tax, would amount to $400 million, “which is considerably in excess of the sum said to be needed.” If, however, if the proposed increases in levies was to be approved by voters, the sums gathered in ten years would aggregate between $600 and 650 million and it was added, “these are huge sums, all coming from the motorists, and they come on top of previous great increases.”

In considering gas tax rates of three to six cents per gallon, it is worth noting what motorists paid at the pump, as a prior post here examined through an editorial in the March 1925 number of the Bulletin. Notably, retail prices at filling stations were increased throughout the country during January, so that they were generally 17-20 cents per gallon. Taking the lower amount, a three-cent tax was about 18% of that price.

Today, the current regional average is about $4.37 per gallon, the lowest price in five years, and the state gas tax, increased by a 2017 state law preserved when voters rejected its repeal the following year, is 61.2 cents, which is about 14%. There are also a state sales tax, federal tax of 18 cents (this began in 1934) and other levies include an environmental program fee that involves a cap-and-trade program and a Low Carbon Fuel Standard, on top of special blends required in California to reduce pollution. Prices at the pump are also affected by other factors as explained by the federal Energy Information Administration.

In comparing conditions now to a century ago, of course, there are many aspects to consider in terms of the much greater complexity of our road and highway infrastructure (better construction entailing greater expense, higher resulting maintenance costs, reduced pollution as an improvement to public health, effects on businesses and those with lower incomes, etc.) So, as with many public issues, there is more to the matter than dollars and cents as qualitative elements weigh heavily, especially as the state continues its move toward that 2045 carbon neutrality goal.

With respect to concerns that the state received half of the gas tax revenue in 1925, the other 50% going to counties, and that the law required those funds to go to repairs and maintenance, but not new construction, the Bulletin suggested amending the statutes to allow for the latter as it argued that “very soon the present law will be producing far more than can be spent merely for maintenance.” The editorial ended with an admonition that sounds very familiar at virtually any time,

To tax the motorists for permanent public improvements is economically unsound, as well as a radical departure from California’s highway-building policy. To saddle huge taxes on a single commodity is grossly unfair to one of the greatest industries in California.

Other articles in the issue concern the “island farms” of the California delta region as well as “The Glorification of the Potato” through Potato Days at Stockton, with both highlighting the “Rindge Tract” northwest of the San Joaquin Valley city and north of the San Joaquin River. This island was the property of the family of Frederick H. Rindge, heir to a $2 million fortune from his father and whose poor health, as was the case with so many migrants, led him to Los Angeles in 1887 during the Boom of the Eighties when William H. Workman was the Angel City’s mayor.

Married to Rhoda May Knight, Rindge acquired the Rancho Topanga Malibu Sequit, as well as invested heavily in many businesses, including Standard’s competitor, Union Oil, Southern California Edison, a life insurance company he founded and more. He died in 1905, but the Tract became widely known for its potatoes and other crops. His widow fought so sedulously to keep the Malibu Ranch free from any incursion, including railroads, highways and other public access that she dissipated the family fortune and ended up a bankrupt.

The newly opened Standard Oil Building, at Tenth (soon renamed Olympic Boulevard for the 1932 summer games held in the city) and Hope streets, was also featured. It was designed by George W. Kelham, who mainly worked in the San Francisco Bay area, including Standard’s main headquarters, but also was the supervising architect for the University of California, including at the Berkeley and Los Angeles campuses.

The 8-story (9 if one looks at the top floor as double height) edifice was described by the Los Angeles Times as of the “Spanish Renaissance” style, though others have used Italian Renaissance Revival and it was one of many commercial structures built in downtown Los Angeles at the time, including the Great Republic Life and National City Bank buildings, in which Walter P. Temple, owner of the Homestead, was a major investor.

The Bulletin remarked that “it is a curious fact . . . that cities and towns are prone to grow to the southwest, when topographical conditions” allowed and, for downtown Los Angeles, this was certainly the case. The piece continued that, “starting from the plaza the course of its progress is monumented by such of the old-time buildings as have not yet been displaced,” though among these was the Temple Block, built by Walter’s uncle and father between 1857-1871, and which, in 1926, was razed for the new City Hall.

The older edifices, however, which were just south and west of the original core of Los Angeles and which were objects of admiration for their modernity when they were two to four stories “have long since ceased to be objects of local pride.” Instead, readers were advised,

Go eight or ten city blocks to the southwest from this section of the city and you find yourself in a region of modern skyscrapers—the newer metropolitan business district of Los Angeles. And here, at Tenth and Hope streets, on the northwest corner, stands the new Standard Oil Building, now headquarters for our Los Angeles Main Station Sales Agency, and the southern California Producing, Pipe Line, Manufacturing, Right-of-Way, Purchasing, Traffic, and other departments of the Company.

The Bulletin boasted that “our new Los Angeles home itself is a latter-day manifestation of the development of the southwest” and, until late November, the sales agency operated out of a three-story edifice, still standing, on North Spring Street near the Los Angeles River and next to the firm’s plant and storage facilities—this location being Standard’s local headquarters for more than three decades. The old campus, however, was remodeled to include warehousing for company products. Meanwhile, other departments were situated in the Higgins Building, which still exists at the southwest corner of Main and Second streets, and relocated to the new edifice.

The piece was particularly pleased to note the way that the move was effected, mainly over a weekend, so that there was almost no disruption to operations and “efficiency thrust down disruption and able direction thwarted turmoil, so hat the conduct of sales activities went on almost unruffled, even in the midst of this tremendous undertaken.” The article concluded with the summary that “our new building . . . reflects the prosperity of the region ‘south of the Tehachapi’ of the Company, and the growth of the city of Los Angeles.”

After discussing a new Standard plant on the shore of Lake Union in Seattle, the last article in the edition concerned “Los Angeles in 1800” and it quoted extensively from Charles Dwight Willard and his “History of Los Angeles” from the publication “Wonder City of America.” It was recorded that “Los Angeles at the end of the eighteenth century consisted of about thirty small adobe houses, twelve of which were clustered around an open square, and the remainder huddled in the vicinity, without much system as to location.” The clustering was for community and protection, it was said, against the indigenous people.

Willard added that “most of the new houses were to the southwest of the plaza, where are now Buena Vista and Castelar streets,” today these are Broadway and Hill Street, respectively, in what is now Chinatown. Northeast were lands for the pueblo dwellers and structures like the granary, jail, barracks for a small detachment of soldiers and what would be the equivalent of a city hall. The small dwellings had roofs of poles and thatch plastered with mud until the La Brea tar pits to the west were sourced. There was no glass, so the few windows had shutters and “the few pieces of furniture were crudely constructed of poles and strips of rawhide.”

Continuing the dismal description, Willard added that the yards were never “in decent sanitary condition” nor was there any beauty in terms of flowers or trees for shade, save for some sycamores not cut down for firewood or any wildflowers in the spring. Animals were slaughtered in these areas next to the house and carcasses left for birds, chickens and dogs, while dust was abundant in the hot summers. Fruit trees were planted late in the century, while the zanja, or water ditch, was not well tended and he added that indigenous people did most of the labor, “which gave the settlers plenty of time to attend cock-fights and play the guitar.”

Schools did not exist, mail service only monthly but this adequate because few residents could read, and Willard remarked that the priests at Mission San Gabriel, the nearest of these institutions, “complained bitterly of the idle and worthless lives led by most of their parishioners.” He added, “there was a good deal of disorder of a mild type—drunkenness, quarreling and occasional fights—but murder seems not to have been frequent.” Because Spain’s policy was to ban foreign contact, trade was essentially non-existent, other than with México proper and handled by the missionaries. Willard concluded,

This description seems to be carrying us back into the Middle Ages, and yet it was only one hundred years ago, in the administrations of Washington and of John Adams, the time of Pitt and Burke, and of Napoleon and Goethe.

Yet, there was no attempt to contextualize remote, isolated California, the rapid decay of the Spanish empire (soon to be seized by Napoleon), the fact that about 30 years after colonization, California was probably not all that much different, compared to the conditions of 1925, than what the early English settlements on the East Coast were three decades after their establishment, and so on.

Moreover, the Bulletin did not comment much, other than to remark that its article on the new Standard Oil Building “observed that the measure of a municipality’s progress becomes more apparent when one glances back to its beginnings.” Willard’s “word-picture” was deemed enough for a mid-Twenties reader to understand and appreciate what the last 125 years and, really, the last four decades, involved with respect to the Angel City’s astounding (miraculous) growth into “The Wonder City of America,” the subtext being that American enterprise, ingenuity, innovation and skill was a direct, obvious and stark contrast to the malaise of Los Angeles as the 19th century dawned.

Willard’s comparison of Spanish California to the recently independent United States (some two decades along), in fact, is a notable way to end this post as 2026 marks the 250th anniversary of the Declaration of Independence and the Homestead will offer programs that will examine that foundational document and its ramifications through our interpretive period of 1830 to 1930.