Cracking Pool

Separating crude oil into its several constituents is the function of the oil refinery. The crude oil is put into a still and heated. The molecularly lighter substances are given off, beginning with petroleum ether. Then comes natural gasoline, then the naphthas (from which come motor gasolines), then kerosene, then fuel oil, then gas oil, finally lubricating oil. Coke or asphalt are left as a residue.* Efficiency of the process, of course, depends upon the physical fact that the substances mixed in the crude oil come out separately in the distillation. Before the arrival of the automobile, the distillation process yielded ample gasoline for U. S. needs. But when gasoline supplanted oats as chief transportation fuel, oil men began to experiment on the problem of forcing still more gasoline out of the crude oil. It was found that gasoline is volatile because its molecules are small, that gas oil and fuel oil are less volatile because their molecules are larger. It was also discovered that a heat-and-pressure treatment would break down the large molecules of gas oil and fuel oil into small molecules of gasoline. From two gallons of gas oil and fuel oil so treated, approximately one gallon of gasoline could be produced. This breaking down or splitting of the molecules was called cracking. The cracking process was first (1910) commercially perfected by William M. Burton, Standard Oil of Indiana chemist. Later Texas Co. developed the Holmes-Manley process, Standard of New Jersey the tube-and-tank process, and Gasoline Products Corp. the Cross process. Other processes followed and the petroleum industry found itself in the midst of patent infringement litigation featured 'by a Texas v. Standard of Indiana suit. Therefore Standard of Indiana, Standard of New Jersey, Texas Co. and Gas Products formed a pool, commonly known as the Patent Club. In order to use any of the four basic cracking processes, independents had to get licenses from and pay royalties to the pool members. The U. S. government turned a suspicious eye toward the pool and its activities. In 1924, anti-trust proceedings were instituted against the Patent Club and 48 associated companies. In 1927 a Master in Chancery reported that the pool was necessary (and therefore legal) because overlapping patents compelled some pooling arrangement.* This report the U. S. District Court ignored and last week declared against the Patent Club. Three U. S. Federal judges in the Chicago district decided (2 t01) that the cracking patents were not overlapping, that the pool and its methods of operation represented an abuse of patent monopoly privileges, that the pool would have to dissolve. The court also held that in fixing the royalties which a licensee paid, the pool was essentially price-fixing and that in refusing to license certain independents the pool was acting in restraint of trade.

The oil companies, however, seemed little concerned. They will undoubtedly appeal the decision, which will presumably not be accepted by either side until the U. S. Supreme Court has passed upon it. Cracker William M. Burton went in 1889 from Johns Hopkins University to Standard Oil Co. of Indiana. His first job was getting pinholes out of kerosene cans. The kerosene, packed in five-gallon tins, ate through the containers. Dr. Burton's problem was to discover how to keep the acid in the kerosene from making the cans look like pepperbox tops while they were being shipped from refinery to user. Later he worked on a method of removing sulphur from oil. His oil-cracking process, while not an original discovery, was the first commercially practical method developed by the U. S. oil industry. In 1918 he became Standard of Indiana's President, resigned in 1927 to be succeeded by E. G. Seubert. When Colonel Robert E. Stewart was removed as Standard of Indiana's Chairman (TIME, March 18) Cracker Burton was one of the directors voted in by the victorious Rockefeller faction. He holds the Willard Gibbs medal (1918) from the American Chemical Society and the Perkins medal (1921) from the Society of Chemical Industry.

* Depending upon whether the crude oil is coke-petroleum or asphalt-petroleum. *The aviation industry has a patent pool; the radio industry is considering one, following recent (TIME, June 10) patent litigation by Kolster Corp.