Petroleum Economics - Fuel Oil, The Safety Valve of the Petroleum Industry (With Discussion)

The purpose of this paper is to point out some features of the position of fuel oil and it's relationship to the economic balance and price structure of the petroleum industry. The term "fuel oil" as used in this paper includes crude used as fuel as well as refined gas oil and fuel oil. The period covered, from 1922 to date, may be characterized as the new normal era after the post-war inflation and deflation. In order to establish a proper perspective, the figures on consumption of the principal products of petroleum are shown in Table 1. This table shows that fuel oil and gasoline made up the bulk of the total demand in 1928 just as they did in 1922. There has been so much comment about the enormous increase in gasoline consumption that it may come as a surprise to some people to find that fuel oil is still at the head of the consumption list, in point of volume at least, and seems likely to hold that place for at least another year. Having established the fact that gasoline and fuel oil are by far the most important products, the remainder of this paper will deal almost entirely with these two items.