Railroads: Rates and RegulationsRipley, William Zebina
History
Railroads: Rates and Regulations
Ripley, William Zebina
Railroads -- Freight -- Rates -- United States; Railroads and state -- United States
The reason for the persistent pressure for low rates on petroleum
products is, of course, that the cost of manufacture is so low
relatively to the expense of transportation. An ample manufacturing
profit is one-half cent per gallon of crude oil; and the average cost
of refining does not exceed that amount. Yet a half cent will scarcely
pay freight for more than one hundred miles. Hence it follows that
for distances greater than this, the question of profit or loss may
entirely depend upon the delicate adjustment of the freight rate. In
this regard, a great company shipping all over the country has a great
advantage over smaller competitors with a strictly local market, in
that it can play off one rate against another. Thus, in one notable
case, cited by the Bureau of Corporations, the Burlington road gave
an absolutely unremunerative rate from the Standard refinery at
Whiting near Chicago to East St. Louis, thereby enabling troublesome
competition to be subdued; but it was recompensed by the payment of
heavier charges on shipments to other points on the Burlington system,
where, there being no competition, the high freight rate could be
shifted on to the consumer. The Commissioner of Corporations gives
one instance on the Northwestern road of a carload rate from Whiting
to Milwaukee in order to meet water competition from independents at
Toledo, which netted the carrier just ninety-two cents for the carriage
of 24,000 pounds of oil a distance of eighty-five miles, with free
return of the empty car.
Public-domain text, read in full here on John Shaqi.
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