Suez Aftermath

The U.S. oil industry, which is having its full share of recession troubles, last week added still another, left over from a time of shortage. In Alexandria, Va., a federal grand jury indicted 29 of the industry's companies--among them: Standard Oil (N.J.), Socony-Mobil, Shell Oil, Gulf, Tidewater, Phillips Petroleum--for allegedly using the Suez crisis 19 months ago to fix prices of crude oil and gasoline, accused them of violating Section 1 of the Sherman Antitrust Act by conspiring to restrain trade. It was the first large-scale criminal price-fixing case against the industry in more than 20 years, and one that oilmen promised to fight to the bitter end.

Though President Eisenhower gave the industry special permission to cooperate during the Suez shutdown, the Justice Department charged that oilmen had gone far beyond that. In early January 1957, prices of Texas crude oil rose generally by 35-c- per bbl.; shortly thereafter, gasoline, home-heating oil and other refined products went up in most markets by about 1-c- per gal. Said the Justice Department: "For the purpose and with the intent of raising, fixing and stabilizing prices of crude oil and automotive gasoline, each defendant . . . would increase its posted price of crude oil . . . and each defendant engaged in the marketing of automotive gasoline would increase its prices throughout its marketing area.''

No sooner was the indictment out than the oil companies stepped up, one by one, to deny the charges. To many companies, in fact, the indictment came as a double blow. They pointed out that when everyone was crying for oil during Suez, the industry was actually forced to boost the prices it paid well operators before they would increase production. Then, when production was roaring along, the bottom dropped out of the market leaving the industry holding a heavy surplus of oil that it has been trying to get rid of ever since.

This file is automatically generated by a robot program, so reader's discretion is required.