The petroleum industry of the United States utilizes about $I4, 500,000,000 of capital, representing the second largest investment of any United States industry. It gives employment to over 1,000,000 workers, constitutes a large customer for a wide range of other industries, and serves practically the entire economy with essential commodities. The industry annually contributes to the national economy a direct cash income estimated at $4,1s0,000, 000. This comprises salaries and wages to the industry's own people; royalties, rentals, and bonuses to land-owners, chiefly farmers; payments to other industries for equipment, supplies, and services; a payment to railroads which represents the largest single freight bill for transporting manufactured products; and a tremendous payment of taxes of more than 201 varieties to Fed eral, State, and local Governments. In its far-flung operations, the industry, with producing activities in 2 2 States, refining in 32 States, and marketing in all States, utilizes the talent and skill of practically every profession and trade.
The petroleum industry's bill for equipment and supplies adds up to an estimated $876,000,000 a year, as shown in Table XVII.
Co-ordination of flow from well to market, as well as the ever growing factor of technology applying to all the industry's opera tions, has tended to integrate corporate activities, and the expan sion of oil utilization itself has brought about great increase in size of the oil corporations as is the case with other expanding American industries. This applies to several former Standard Oil units split up by court decree in 1911 and also to several great independent corporations which have vied with them in size and scope of operations since the beginning of the Gasoline Age. In 1937 the 20 largest companies in the field of crude oil pro duction produced 56.2% of the nation's output, the individual companies ranging from 0.9% to 6.3%. The remaining 43.8% was produced by thousands of smaller enterprises ranging from a small fraction of 1% to 0.9%. For the same year, the 20 largest refiners processed 83.7% of the nation's total crude oil run to stills, ranging individually from o.6% to 12.3%, while the remain der was refined by several hundred smaller units. The 20 most highly integrated refiners produced 72.5% of their refinery re quirements, purchasing the remainder from others. About three quarters of the business of the petroleum industry is conducted by companies engaged in all branches of the business—production, transportation, refining, and marketing—while the rest is trans acted by units operating in only one or two divisions.
This scarcely reveals, however, the competitive set-up, with the separate large corporations, including former Standard Oil units, in active and intensive competition with each other, and dividual operating expenses. The steel industry, in 1937 alone, manufactured for petroleum producers and pipe line operators more than 1,250,000 gross tons of oil-country tubular goods. Every branch of the petroleum industry buys iron and steel prod ucts in many forms.
Achievements in the fields of scientific prospecting and pro duction engineering represent a combined factor that has contrib uted signally to the reduction of costs in production and the enlargement of available supplies, which in turn have gone far toward offsetting the physical losses engendered as a result of competitive drilling under the rule of capture. During the period of proration, 1927-38, the price of crude oil averaged per barrel, with a range in annual averages of $o.65 to $1.30 per barrel.
From Petroleum Facts and Figures, 1939, American Petroleum Institute. Authority: U.S. Bureau of Mines.
in competition with the vast number of smaller units operating in the various branches of the industry. Among the larger oil companies, integration varies and scope of operations such as marketing territory varies. Of the 23 largest companies, only two were shown to market gasoline in every State. One sold in as many as 45 States, and two in 44 States. All except six mar keted their products in more than ten States. In the producing fields there were between 7,50o and 9,000 large and small separate oil operators.
The growth of the American petroleum industry has been very rapid. In 1906 the investment in the industry was estimated at $750,000,000; in 1911 it had increased to over $2,000,000,000. Then came the motor car to challenge the industry to produce enough crude oil and gasoline for its omnivorous needs. Within the next 25 years the industry had to put $11,000,000,000 to $12,000,000,000 more into facilities to meet this and other chal lenges levelled at it by petroleum consumption agencies.
In 1937 two-fifths of the mineral wealth of the United States was derived from petroleum, and in 1936 oil added $1,000,000,000 to the income of the States as shown in Tables XVIII and XIX.
To meet the annual need for crude oil some 27,00o new wells must be drilled in the United States every year, and there are nearly 360,00o wells producing oil.