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The one ‘great rule of composition is to speak the truth’. Thoreau rxas Otistrurr We will serve no group or party but will hew hard to the truth as we find it and the right as we see it. 1. An Independent Liberal Weekly Newspaper Vol. 48 TEXAS, APRIL 25, 1956 10c per copy No. I Oil: Price-Fixing or Conservation? The -Texas. Railroad Commission The Agency Limits the ProduCing Days, But Is It Decision Or an Announcement? Murray Defends Commission \(First of a series of articles an vari014S aspects of the Texas Railroad’ . AUSTIN Here, unheralded, is housed one –erf the most powerful government ag -encies in the. Nrorld. Monthly it declares, in fine, how much oil the United States shall produce. But is it free in this declaration,. or is it controlled by an industry device known as “pipeline proration” by which the oil companies refuse to refine more oil than., they want produced? Does the Texas Railroad Commission conserve oilor help to maintain prites? Does it limit production for the oil companies, or in the public interest, or both? The issue is seldom debated in Texas. The three commissioners usually avoid discussing it, explaining they are merely enforcing Texas law and aren’t economists. It is hot a subject likely to attract voters to politicians. But it does affect every car driver in the country, the profits of the oil industry, and the security of the United States. –The agency that makes the decisions, or the announcements, as the case may be, is the Texas Railroad Commission. The Texas Railroad Commission, it should be explained, is not the Texas railroad commission. It is a Texas oil, gas, and transportation Commission, its historical name out . of joint with its manifold modern functions.. Created by Governor Jim Hogg to regulate railroads before the turn of the century, it Was later given the task .of limiting and controlling oil production in Texas for the stated purpose of conservation. The oil Texas produces is half of what the nation produces. When the Texas commission sets a production limit, the 20-odd other states of the Interstate Oil Compact generally follow ‘suit. In oil, therefore, as Texas goes, so goes the nation.. THE MOST SERIOUS charge against the proration system is that it amounts to a price-filing scheme for the oil industry. For instance, Paul Hadlick, who is general counsel of the National Oil Oilman’s Lament DALLAS The oilmen are worried about their public relations. Jake Ha:mon, board chairman of the American Petroleum Institute, says he and his colleagues must dispel the public opinion that ;Texas oil producers are “a bunch of rich, overbearing braggarts with a tax gimmick.”In a speech during the convention of the Texas Independent Producers and Royalty Owners Assn., Eamon said: We must face the fact that we Texas in.. dependent oil producers are pretty unpopular everywhere in the United States —–outside of our, own. oil patches. I know oil men are good family men, civic workers, and citizens, but … the rest of the United States has an entirely aifferent opinion. We have a bad habit of liking to get our names in the papers, showing off our airplanes, our houses ; our horses, our red coats, our fine bulls, and our swimming pools. Perils we like to picture Texas as the land fif the big rich. Whatever the cause, the 4fect is snowballing into bigger proportions. Marketers’ Assn., last January called the proration law of Texas a great “hoax” being perpetrated on American’ consumers. Through the law, “under the guise of conservation,” Hadlick charged, the big oil companies “control market demand and prices.” It is now generally agreed that it is wise to control oil production from any given field to get as much oil as possible out of -the pool. \(The commission bases such . control on an “MER” factormaximum efficient tion per well is based on the MER for the field. But Hadlick’s accusation is that by going further and limiting production, even at the maximum efficient rate, to about half the days in the month, the commission is helping -the industry to AUSTIN The people speak Saturday week to settle one of the most spirited preconvention Democratic struggles of Texas record. , Lyndon Johnson, seeking a presidential . nomination = and the Texas delegation chairmanship, was endorsed by more of his Senate colleagues, formed a broad-based committee of 183, and opened headquarters within a few days last week. Allan Shivers, contesting for the chairmanship, toured the state appealing for money and workers. In Dallas the Shivers forces -won a party machinery testand in -Houston the loyalists .won. Meanwhile, Speaker Sam Rayburn, who proposed Johnson for both posts in the first place, was named permanent chairman of the national convention in Chicago Aug. 13, and the national committee’s credentials commit tee announced plans to send investigators into states with contesting delegations to ChiCago before the national convention opens. Mrs. Hilda Weinert of Seguin sought to advance the idea in Washington that Johnson should withdraw’ from candidacy for the delegation for the chairmanship, ‘but Johnson made like newsmen must have misunderstood the national committeewoman from Texas, and Rayburn simply nixed the possibility. Ben Ramsey of San Augustine, the national committeeman, who is also facing a hard re-election fight for his lieutenant governorship, said he will let it be known before the state convention May 22 whether he will stand for re-election to the party post: Sens. Harry Byrd and Willis Robertson of Virginia stated that Johnson is “of presidential stature,” joining other senators in a Southern move toward Johnson in preference to Adlai Stevenson, Estes Kefauver, or Averell Harriman. Others who have indicated they will back Johnson Sens. Walter George and Richard Russell of Georgia, George Smathers of Florida, . Strom ,Thurmond of South Carolina, create an artificially short supply of oil. To this General Ernest a Thompson of the commission has replied: “You’ve never seen any shortage of oil.” In an Observer interview last week, the present chairman of the commission, Bill Murray, said that the commission stays “ors the threshold of pipeline proration all the time.” Pipeline proration means the rerefusal . of pipelines to take more oil than the big refineries will accept from them. In other words, Murray was saying, the oil companies have in mind a production maximum, above which they will refuse crude at their refineries. The Railroad. Commission sets the number of days the wells will produce as near this maximum as they can. There prevails in the oilfields what and Russell Long of Louisiana, in addition to Alan Bible of Nevada. Meanwhile, an anti-Johnson, antiShivers movement to name Mrs. Minnie Fisher Cunningham favorite daughter and delegation chairman chose its statewide leaders. Turnouts at the precinct conventions May 5 and the county conventions May 8 will probably decide the outcome of the May 22 state convention in Dallas. Shivers is riot opposing Johnson for the favorite sonship but wants the delegation chairmanship, which Johnson is also seeking. Johnson wants,a delegation pledged to him as favorite son and to support of the Shivers & Brownell AUSTIN The Attorney General of the United States, Herbert Brownell, visited Governor Allan Shivers at his Woodville home weekend before last. Shivers, asked about it, confirmed that Brownell had flown from Houston to Woodville in a private plane Saturday, April 14, with Mrs. Brownell. They spent the weekend with the Governor and his’ wife. The Brownell flight from Houston to Woodville was kept a strict secret, but it leaked out late last week. Speculation naturally arose about what the two men talked about. From Washington, Marshall McNeil, Scripps-Howard writer, commented on the Brownell-Shivers visit: Some Democrats apparently believe that the GOP is working for Shivers for chairman of the Texas delegation to the party’s. Chicago convention in. the hope that he eventually will bolt again and work once more for the election of President Eisenhower. This was the Shivers strategy in 1952. It succeeded. A Washington report by Sarah McClendon maintained Brownell proposed that if Shivers would deliver 100 electoral votes to Eisenhower, he would get a place on the Eisenhower ticket or a cabinet. position. Weldon Hart, the Governor’s press aide, called the story a “complete fabrication” and a “plant,” is usually called a “uniform .posted field price” for crude oil per barrel. There are small differentials in fieldto-field prices because of such factors as different oil gravities and transportation costs, but the industry has ironed out actual price competition in the fields. When it is thus considered that the refineries control the level of production through the club of “pipeline proration” over the Railroad Commission, and that at least some of the potential price competition is eliminated by the use of the uniform posted field price, it can be seen that the “market demand” on which the commission baSes its decisions on monthly producing days is defined by what the industffy, .s tays it is, within very narrow limits. . M URRAY would certainly ‘ differ with the ‘Imposition that the commission is party to a price-fixing scheme,-but, he told the Observer last week, .”A person would be naive to say that market demand proration doesn’t have an effect on price.” convention’s’ nominees ; Shivers Nvalifs a delegation that is not instructed to any ‘ candidate. Shivers conferred, with U.S. Atty. Gen. Herbert Brownell in Woodville –The Governor has indicated he Will Support Eisenhower as he did ‘in 1952 if the Democrats don’t nominate someone acceptable. to him. J OHNSON sent out thousands of letters last week urging “an effective delegation which can do a real job for Texas and speak with a united voice that willbe accorded a respectful hearing.” He said the alter. native, “to use the delegation as a vehicle for carrying on personal fights and old political grudges,” will result in a delegation “weak, disunited, and largely disregarded.” . Johnson distributed a reproduction of his recent TV speech prefaced by Sen. Russell’s recent remarks that it would be “impossible” to prevent other delegations from adopting John:-son as their favorite son if Texas so names him. Other signs .pointed to the conclusion that Johnson intends a serious bid for the presidency. In endorsing his -candidacy,’ former U.S. Rep. Lloyd Ramsey, Brown & Root Suit ATisTIN Long-smoldering charges burst into a court of law Tuesday when C. T. Johnson, running for lieutenant governor, filed a suit against Brown & Root, Inc., Lt. Gov. Ben Ramsey, and Austin printer David Gannaway asking $65,000 damages and legal fees for alleged unreported campaign expenditures by Brawn & Root for Ramsey. The petition said Brown & Root made $25,000 in cash available to Ramsey sin June, 1954, and that the sum was spent by Ramsey; his cam, paign.aides, and Brown & Root agents in the furtherance of Ramsey’s candidacy. Gannaway is charged with “knowingly and wilfully” conspiring with them by receiving at least $12,000 of the cash. SHOWDOWN at the PRECINCTS