The decline in the price of creosote oil and of other products of coal tar during the latter part of 1929 and 1930 resulted in lower prices for tar and, consequently, in a lower cost of production for creosote oil. This was true both in the United States and in the United Kingdom. Table 16 shows the comparative cost figures for the individual years. In 1928 the domestic cost, including delivery, was 1.26 cents below the foreign cost. There was an excess of domestic over foreign cost in 1929 amounting to 0.14 cent, and in 1930 amounting to 0.36 cent. TABLE 16.-Comparative domestic and British costs of creosote oil 1 Not computed separately for each year; figures not always for the 3-year period. In addition to comparing domestic and British costs of creosote oil on the basis set forth, the commission has made a calculation of the costs on a different basis regarding the value of tar used as material. Instead of using the item of cost of tar as it appears on the books of the several producers of creosote oil, representing in some instances the fuel value, the prevailing price of tar sold for distillation in the several tar-producing areas has been substituted. This procedure increases both the domestic and the foreign costs of creosote oil, but the increase is greater in the domestic cost. In appraising the significance of a cost comparison on this basis, consideration should be given to the fact that in the United States during the period covered by the investigation large quantities of tar were burned as fuel by the producers and that if this tar had been sold for distillation the price of tar to distillers would probably have been lower than it actually was. For the 3-year period 1928-1930, this method of calculation shows an average domestic cost of creosote oil, including delivery to the selected markets, of 13.78 cents per gallon, and an average British cost of creosote oil made for export to the United States of 13.77 cents per gallon. For the individual years this method of cost comparison shows in 1928 an excess of foreign over domestic costs amounting to 1.46 cents per gallon, in 1929 an excess of domestic over foreign costs of 0.73 cent, and in 1930 an excess of domestic over foreign costs of 1.29 cents. In addition to the calculation of British costs of creosote oil produced for export to the United States, a calculation has been made on the basis of the total output of creosote oil by the British concerns covered by the investigation. As already stated, during part of this period, on account of the unfavorable market condi tions in the United States, the British producers used or sold a considerable part of the creosote produced, for fuel. When this creosote is taken into consideration, along with that exported, a change occurs in the allocation of the cost of tar and general conversion expenses among the several products, a relatively smaller proportion being assigned to creosote oil, with a consequent lower total cost of that product. In appraising the significance of this method of calculating British costs, consideration should be given to the fact that, if the usual proportion of the creosote oil produced in the United Kingdom had been exported to the United States throughout this period, the result might have been to reduce the price both of British creosote and domestic creosote in the American market with a consequent readjustment, under the method of allocating costs, of the cost of creosote oil in both countries; moreover, the price of tar in both countries might have been affected, with a further resulting change in the costs of creosote oil, both domestic and foreign. The average cost of all grades of British creosote oil during the period 1928-1930, computed on the basis of the cost of tar as carried on the books of the several companies, was 12.25 cents per gallon, including delivery to the selected markets in the United States. The domestic cost computed by this method, as already stated, was 13.01 cents per gallon. The domestic cost represents a product averaging somewhat higher in grade than the foreign cost, since the grades of creosote oil used in the United Kingdom, whether for fuel or other purposes, are, on the whole, somewhat lower than the grades made for export to the United States, whereas the latter are comparable with the domestic product. CREOSOTE OIL PRODUCED AT DIFFERENT COST LEVELS The cost of creosote oil differs materially for different producing concerns. In the United States the range is particularly great because, as already stated, some concerns in their accounts carry the cost of tar at fuel value and others at the price paid for it, which is usually much higher. Table 17 shows the costs in the United States for concerns divided into six groups ranging from those with the lowest to those with the highest cost. The classification is based on cost at works, exclusive of transportation, but the table also shows for each group the cost of transportation, not to all the markets supplied by the group but to the selected markets used in the general cost comparison. (See p. 20.) It also separates the British concerns into two groups; to carry the classification further would result in disclosing individual operations, but it may be stated that the great bulk of the output in the second group distinguished (with a cost exceeding 9 cents per gallon) was at a cost of less than 12 cents. The British costs shown in this table relate only to the grades produced for export to the United States. The cost calculations are made by the same methods as for Table 15. TABLE 17.--Costs of production of creosote oil for plants classified according to average unit cost at works, average for the period 1928–1930 This table shows that nearly one-fifth of the domestic product was produced at a cost, according to the methods of tar valuation used by the producers themselves, of less than 9 cents per gallon at works. For this group, which includes chiefly producers who carry the cost of tar at its fuel value, the average cost of tar is very much lower than for the other groups, most producers in which buy tar or carry it in their costs at its market value. The bulk of the production in the United States is at costs ranging from 10 to 13 cents at works. A much smaller proportion of the British than of the American product is produced at a cost at works under 9 cents, but on the other hand, as already stated, very little is produced at a cost exceeding 12 cents per gallon. DOMESTIC COSTS BY DISTRICTS Table 18 shows the cost of creosote oil produced in the several regions of the United States distinguished on page 10. These costs are based on the same methods as were used for the general cost comparison in Table 15. TABLE 18.-Costs of production of creosote oil in the United States, by producing regions, average for the period 1928-1930 It will be seen that the cost is lowest in District 2 (western Pennsylvania, eastern Ohio, and northern West Virginia) and that this fact is wholly attributable to the low cost of tar in that district; this low cost in turn is explained by the fact that certain of the producers of creosote oil in that district are themselves producers of tar and carry the tar in their costs at its fuel value. |