Mr. HEALEY. All right, Mr. Scully.

Mr. HADLICK. I do not like to be precipitous, Mr. Chairman, but there seems to be a pretty interesting and important question that has not been brought out, and I believe the gentleman could answer this question, if the committee thinks it is proper, and that is the allegation that the gasoline that the members produce, or a great part of it, goes through Mr. Scully's hands and then is sold to the major oil companies, a matter which is before the grand jury, as I understand, on the west coast at the present time.

Mr. SCULLY. There is no grand jury there, Mr. Hadlick.

Mr. HADLICK. I read in the paper a judge had signed an order for it.

Mr. SCULLY. There was an order for a venire. That was not a grand jury.

Mr. HADLICK. It will be ordered, will it not?

Mr. SCULLY. Let us have the record straight on that, though.

Mr. HADLICK. I thought the question of where this gasoline goes is an important one, from these advertising questions that he has asked, and if the committee would like to clear that up, all right.

Mr. SCULLY. I will be very glad to make a statement on that. Mr. HEALEY. You mean the gas that is produced, oil that is produced at the independent well?

Mr. HADLICK. Mr. Brown said that a part of his gasoline went to the organization, of which Mr. Scully is the head, but he did not say where it went from that point on, and I am informed that it goes from that point on to the major companies, in order to hold the price at a higher level.

The Attorney General says in his statement to the press that that raises the price out there 4 cents a gallon.

Mr. HEALEY. Do you care to answer that question?

Mr. SCULLY. Yes; I would like to make a statement. But first of all, Mr. Hadlick has made some gratuitous statements about the west coast, and started in with the way the jobbers sell out there, and I would like to say that I do not know of any time that Mr. Hadlick has been on the west coast, nor has he been engaged in any of the west-coast operations, and Mr. Hadlick cannot sit in Washington, representing a group of jobbers in the Midwest, and tell this committee, with any semblance or color of creditability or of reasonableness, or of having knowledge of the facts, of what is the case on the west coast.

Now, if we are going to try the west-coast industry in the newspapers and statements made by people living in Washington, that is another matter.

Mr. HEALEY. We are only concerned with the facts.

Mr. SCULLY. Insofar as the operations of the Independent Refiners' Association are concerned, and the buying of gasoline, let me say this: The Independent Refiners' Association of California is a licensed broker of gasoline in the State of California, as is possible under the taxing law. There are certain members, who do not or are not able, through the lack of wide marketing distribution, to dispose of all of their products. They authorized the association, members of the association, who are authorized corporate entities of the association, to act as common selling agencies for such amount of gasoline, from time to time, as the individual members may wish to tender

to the association, and ask the association to act as a clearing house or selling agency for them, so that they might get the best price. That is not an unusual thing, at all.

The Appalachian Coal Company case in the United States Supreme Court says the very same thing. And so we do find a market, and, to a large extent, to the major companies, for some of this gasoline, which is tendered to us; and we have also sold to one of our large independent members, the Hancock Oil Co. The Hancock has bought gasoline from the Independent Refiners' Association, and although that is a comparatively large integrated company in the refinery group, in the membership of the association, it has a large production, it is able to, and desires, at times, to buy some of this gasoline from the association.

Mr. HEALEY. You also dispose of some of it to the major oil companies?

Mr. SCULLY. Yes; that is the best price, the best market that we can get for the members. It does not make any difference who buys it from us, if they will give us the price that we ask for it, they can get it.

Mr. HEALEY. Is that all?

Mr. BROWN. I might add this statement, Mr. Chairman: Roughly speaking, the independent refiners in southern California, at this time, are selling about 40,000,000 gallons, of which 25,000,000, approximately, is sold on the street, and not even through the association at all, and I think around 14,000,000 gallons is sold through the association, monthly. So the greater part of it-about twice as much is sold on the street as through the association.

Mr. HEALEY. All right, sir. Mr. Hadlick, do you wish to say something?

Mr. HADLICK. To answer the question brought out by the member. We have members in 30 States, including Utah and the State of Washington. We do learn a lot about this business over there in the State of Washington, as you members do.

I want to present Mr. William J. Kemnitzer, who is not a member or in any way connected with our association, but an eminent geologist who has written profusely on this subject of oil, and has made great study, and I am sure he will have something to help the committee on this matter.

Mr. HEALEY. You may proceed.

STATEMENT OF WILLIAM J. KEMNITZER, ECONOMIC GEOLOGIST

Mr. KEMNITZER. Mr. Chairman and members of the committee. my name is William J. Kemnitzer. I am an economic geologist, and I appear as an individual to give testimony in support of H. R.

2318.

Mr. HEALEY. Where do you reside?

Mr. KEMNITZER. My present residence is in Washington, D. C., where I am carrying on research work in this field. My native state is California.

Incidentally, before Mr. Scully and Mr. Brown have a chance to leave, if they have not already left, I would like to give the committee some information, as I see it, on this west-coast situation. I think it is important and bears directly on this bill. Mr. Scully made