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MAY 1959 

\ / 

— *->>«x>v-!4,f 

Integrated Petroleum 



Farmer Cooperatives, 1950 and 1957 



by Anne L. Gessner 


J. Warren Mafher 



Farmer Cooperafive Service 
U.S. Department of Agriculture 


Joseph G. Knapp, Administrator 

The Farmer Cooperative Service conducts research studies 
and service activities of assistance to farmers in connection 
with cooperatives engaged in marketing farm products, 
purchasing farm supplies, and supplying business services. 
The work of the Service relates to problems of manage- 
ment, organization, policies, merchandising, product quality, 
costs, efficiency, financing, and membership. 

The Service publishes the results of such studies; confers 
and advises with officials of farmer cooperatives; and 
works with educational agencies, cooperatives, and others 
in the dissemination of information relating to cooperative 
principles and practices. 

This publication is a contribution from the Management 
Services Division, Kelsey B. Gardner, Director, and the 
Purchasing Division, Martin A. ^^brahamsen, Director. 



Highlights- - - — V 

Purpose of study-- — 1 

Method of study 2 

Retail distribution -- 3 

Cooperatives and facilities 3 

Volume distributed 4 

Wholesale distribution — 6 

Cooperatives and facilities 6 

Volume handled 7 

Refining and manufacturing 9 

Refineries operated — 9 

Capacities of refineries 9 

Crude oil processed 10 

Production of refined fuels 10 

Refining and blendir^ lubricating oil 12 

Manufacturing grease and other products 12 

Production of crude oil __.__ 13 

Producing oil wells 13 

Production operations 13 

Crude oil purchasing 15 

Transportation operations 15 

Tank trucks and highway motor transports 15 

Barges and tankers — ■'■ 16 

Pipelines- __...._.___„„._-. 16 

Appendix 18 


Farmer Cooperative Service made 
this study to determine the types and 
extent of integrated petroleum services 
provided for farmers by their coopera- 
tives in 1957 and to compare them with 
similar services performed in 1950. 
The Service gathered this information 
because of the increasing interest of 
farmer cooperatives in further economic 
integration. Through such integration 
the producer may be in a better position 
to acquire high quality petroleum prod- 
ucts at minimum cost. 

The progress of cooperatives in 
integrating their activities can only be 
measured for various periods by data on 
facilities owned or operated, quantities 
of products handled, and individual 
services and functions performed at 
primary levels of operation. Such data 
for 1957 were obtained from 36 regional 
cooperatives that handled petroleum 
products. They served over 2,200 local 
associations, or almost all those dis- 
tributing petroleum products throughout 
the United States. Comparative data 
for 1950 were available from a study 
published as FCA Circular C-139, 
"Petroleum Operations of Farmer 

The tables and chart at the end of 
these highlights summarize data on 
petroleum operations by cooperatives 
and the extent of integration in such 

Liquid Fuels 

Retailing . -- Estimates indicated that 
2,336 local cooperatives and 9 regional 

cooperatives provided liquid fuels di- 
rectly to farmers in 1957. This was an 
increase of about 5 percent over 1950. 

Cooperatives handled approximately 
1.96 billion gallons of liquid fuels at 
retail in 1957 -- an increase of 31 per- 
cent over 1950. 

Cooperatives distributed approxi- 
mately 20 percent of the liquid fuels 
used by farmers in 1957, compared with 
16 percent in 1950. Retail volume of 
cooperatives, however, accounted for only 
2.2 percent of all liquid fuels used in 
the domestic trade in the United States 
in 1957 and 2.3 percent in 1950. 

Wholesaling . -- Estimates indicated 
that approximately 95 percent of the re- 
tail volume of cooperatives was obtained 
through 30 wholesale cooperatives in 
both years covered by this study. How- 
ever, total cooperative wholesale volume 
of 2.2 billion gallons was 13 percent 
more than the retail volume in 1957 be- 
cause of excess production of some 
refineries owned by the wholesale asso- 

Gasoline represented about 64 per- 
cent of the wholesale volume in 1957 
compared with 68 percent in 1950; burn- 
ing or heating fuels increased to 27.5 
percent compared with 15 percent; and 
miscellaneous tractor fuels decreased 
from 17 percent to about 8.5 percent. 

Cooperatives owned 20 refined fuel 
terminals with a capacity of 155 million 
gallons in 1957, almost three times that 
for 1950. 

Refining. — Approximately 85 per- 
cent of the wholesale volume of cooper- 
atives was produced by 11 refineries 

owned by regional cooperatives in 1957. 
This was almost the same proportion as 
in 1950 when cooperatives operated 20 
oil refineries. 

Cooperatives modernized and en- 
larged their refineries during the period. 
The combined capacities of cooperative 
plants accounted for 1.2 to 1.9 percent 
of the crude oil distillation, thermal 
cracking, catalytic cracking, and catalytic 
reforming capacity of all refineries in 
the United States in 1957. 

Cooperatives processed over 138,000 
barrels of crude oil per day, or 1.7 per- 
cent of the total processed in the United 
States in 1957. 

During the 7-year period, coopera- 
tive refineries increased their yields of 
gasoline considerably and reduced yields 
of residual fuel oil markedly. 

Producing. -- About 31 percent of 
the crude oil cooperatives refined in 
1957 was produced by 12 associations 
on a gross basis; that is, before elimin- 
ating oil belonging to royalty owners and 
partners in jointly owned leases. The net 
ownership of cooperatives accounted for 
12.5 percent of the crude oil they refined. 

Transportation. --An estimated 95 
percent of total retail sales of liquid 
fuels was delivered in 1957 to patrons in 
5,361 tank trucks owned or operated by 

Almost 56 percent of the wholesale 
volume was hauled from refineries and 
terminals to local cooperatives by 431 
transports owned by cooperatives. 

Twenty-two percent of the fuels 
moved from refineries to terminals in 
694 miles of pipelines that cooperatives 
owned, and another 8.4 percent was 
hauled in the 11 barges and 2 tankers 
they owned. 

Liquefied Petroleum Gas 

Retailing . -- Out of approximately 
708 cooperatives that distributed L. P. 
(liquefied petroleum) gas in 1957, 250 

delivered such fuel by tank truck from 
their bulk plants to patrons. 

Cooperatives distributed 90.7 million 
gallons of L. P. gas to patrons in 1957 
compared with about 15 million gallons 
in 1950. Data were not available as to 
the proportion this volume was of the 
total used by farmers in the United States 
in either year. 

Wholesaling. -- Approximately 98 
percent of the total retail volume was 
acquired through wholesale cooperatives 
in 1950 and 1957. 

Wholesale volume was 91.8 million 
gallons in 1957 compared with 15 million 
gallons 7 years earlier. 

Refining . -- Eighty-five percent of 
the wholesale cooperative volume was 
produced in refineries owned by cooper- 
atives in 1957, compared with 86 per- 
cent in 1950. 

Transportation . -- Estimates indi- 
cated that about 90 percent of the retail 
volume was delivered to patrons in 323 
tank trucks operated by cooperatives in 
1957. Also, over 14 percent of the 
cooperative wholesale volume was hauled 
to local associations by 11 highway 
transports owned by cooperatives. Such 
data were not available for 1950. 

Lubricating Oil and Grease 

Retailing. -- Estimates indicated that 
3,393 cooperatives distributed oil and 
grease at retail in 1957, with 1,048 of 
these local associations handling these 
items but not liquid fuels. 

Cooperatives distributed approxi- 
mately 21.3 million gallons of lubricating 
oil and 20. 1 million pounds of grease in 
1957. These volumes represented in- 
creases of 18 percent for oil and 10 per- 
cent for grease over those in 1950. 
Data were not available for determining 
the proportions of these products dis- 
tributed to farmers in either year. 

Wholesaling. -- About 85 percent of 
the total retail volume of lubricating oil 


and grease was acquired through whole- 
sale cooperatives compared with 80 
percent in 1950. However, total whole- 
sale volume of oil was 74 percent 
greater than the retail volume because 
of excess production of one lubricating 
oil refining facility. Likewise, the 
wholesale volume of grease exceeded the 
retail volume by 27 percent because of 
the excess production of one grease 
manufacturing plant. 

Manufacturing . -- One cooperative 
refinery produced approximately 18 
million gallons of lubricating oil in 1957. 
This output was equivalent to about 49 
percent of the total wholesale volume of 
oil for all cooperatives that year. The 
production of this plant in 1950 was 8.5 
million gallons. 

The regional cooperatives owned 10 
blending or compounding plants which 
blended 20. 2 million gallons of lubricating 
oil in 1957. This was equal to about 55 
percent of total wholesale cooperative 
volume that year, and an increase of 
about one-third over the volume blended 
in 1950. 

One cooperative grease plant manu- 
factured 6.7 million pounds of grease in 
1957 compared with 5.3 million pounds 
in 1950. Its output was equivalent to 
26 percent of total wholesale coopera- 
tive volume in 1957. 

Crude Oil 

Production . -- Twelve regional coop- 
eratives produced crude oil in both 1950 
and 1957. During the latter year they 
operated 3,318 oil wells on a gross 
basis. The number operated in 1950 
was 1,945. Cooperatives owned 1,691 
oil wells on a net basis in 1957 compared 
with 1,562 in 1950. 

Cooperatives produced 42, 653 barrels 
of crude oil a day on a gross basis in 
1957 compared with 29,400 barrels in 
1950. On a net basis their production 
was 17,339 barrels a day in 1957 com- 
pared with 15,292 barrels 7 years 
earlier. As mentioned, this gross pro- 
duction was equal to about 31 percent of 
the crude oil refined by cooperatives in 
1957, and the net production repre- 
sented only 12.5 percent of the amount 

Transpor tation. -- Cooperatives 
transported through 1,499 miles of their 
own gathering pipelines and 566 miles of 
trunk pipelines about 54 percent of the 
crude oil processed in their refineries 
in 1957. They moved 5 percent of the 
crude oil to their plants with 7 of their 
own barges, and another 3.7 percent 
with 25 highway transports which they 
owned. Data on the amounts transported 
were not obtained for 1950. 


Summary Table 1. - Record of cooperative petroleum operations , 1950 and 1957^ 

Retail distribution 



Local cooperatives handling: 

Liquid fuels 2,230 

Lubricating oil and grease only (2) 

Liquefied petroleum (L. P.) gas ^280 

Local bulk plants operated for 

liquid fuels 2,750 

Local bulk plants operated for L. P. gas... 42 

Local service stations operated ^1,837 

Sales of liquid refined fuels, gallons 1,486,650,000 

Percent of liquid fuels used by 

farmers 16.0 

Percent of total liquid fuels 

consumed in U . S 2.3 

Sales of liquefied petroleum gas, gallons.. 15,000,000 

Sales of lubricating oil, gallons 17,963,000 

Sales of grease, pounds 18,312,000 





3 250 





Wholesale distribution 

Regional cooperatives handling 

refined fuels 

Refined fuel terminals owned^ 

Storage capacity of terminals, gallons, 
Sales of liquid refined fuels, gallons . , 
Percent of total liquid fuel sales 
represented by: 

Gasoline , 


Diesel euid other tractor fuels...., 
Burning or heating fuels 

Total , 

Sales of liquefied petroleum 

gas, gallons^ 

Sales of lubricating oil, gallons^ , 

Sales of grease, pounds , 

Refining and manufacturing^ 




















25,53 9,000 

Refineries owned by regional cooperatives.. 
Regional cooperatives with ownership 

in refineries 

Crude oil distillation capacity, barrels 

pe r day 

Percent of U. S. distillation capacity... 











Refining and manufacturing (continued) 

Thermal cracking capacity, barrels per day 

Percent of U. S. thermal cracking 


Catalytic cracking capacity, barrels 

per day 

Percent of U. S. catalytic cracking 


Catalytic reforming capacity, barrels 

pe r day 

Percent of U. S. catalytic reforming 


Polymerization capacity, barrels per day.. 
Crude oil run or processed, barrels 

per day 

Percent of U. S. runs to stills 

Liquid fuels refined, barrels per day 

Quantity refined, total gallons 

Yields as a percent of crude oil run:^ 

Premium gasoline 

Regular gasoline 

Total gasoline 

Jet fuel 


Diesel fuel 

Other tractor fuels 

Heating, burner or furnace oils 

Total other liquid fuels 

Total liquid fuels 

Residual fuel oil 

Other products 


Lubricating oil refined (one plcint) , 


Lubricating oil blending plants owned, 
end of year 

Blending capacity, gallons per year 

Lubricating oil blended, gallons... 

Grease manufactured (one plant) , pounds. . . 












( 2) 


( 2) 


I 2) 










{ 2) 


I 2 ) 




( 2) 


( 2) 


( 2) 


( 2) 


( 2) 











9 13 

( 2 ) 








Regional cooperatives engaged in 


Oil wells operated, gross basis 

Oil wells owned, net basis 

Crude oil produced, gross basis, 

barrels per day 











Production (continued.) 

Crude oil produced, net, barrels per day.... 
Proven or producing oil lands, acres 

at year-end. 

Undeveloped or prospective oil lands, 

acres at year-end 

Estimated crude oil reserves, barrels, net.. 









I 2) 


( 2) 


Retail tank trucks operated by 
cooperatives for: 

Liquid fuels ^ 

L. P. gas 

Highway treinsports operated from terminals 

£Lnd refineries to local bulk plants for 

liquid fuels ■'■° 

Liquid fuel transported, gallons 

Highway transports operated for L. P. gas-"-*^. 

L. P. gas transported, gatlons 

Barges and tankers operated from refineries. 

to terminals for liquid fuels"'-''" 

Liquid fuels transported, barrels 

Product pipelines operated from refineries 

to terminals, miles 

Liquid fuels transported, barrels 

Crude oil gathering pipelines owned, miles. . 
Crude oil trunk pipelines owned, miles 

Crude oil transported, barrels"""^ 

Barges operated for crude oil"'""'" 

Crude oil transported, barrels 

Highway transports ■'"° operated for crude oil. 

Crude oil transported, barrels 



366 431 

(2i 1,235,715,000 

1 11 

(2) 13,171,300 



{ 2) 




( 2 ) 







( 2) 










jBased on data supplied by regional cooperatives. 

,Data not available or obtained. 



^Exclusive of refinery terminals. 

, Includes Interwtoolesale volume and sales to other oil companies. 

gAll data refer to barrels per calendar day using 365 days per year. 

□Data for 10 refineries. 
,QOne was not In operation at end of the year. 
j_^Owned and/or leased. 

Seven barges reported as transporting crude oil In 1957 were assumed to be used also for transporting 
j^^reflned products. Such data were not available for 1950. 

'T'otal transported excluding duplication between trunk and gathering lines. 

Summary Table 2. - Integration of cooperative petroleum operations , 1950 and 




Liquid fuels 

Retail volume purchased from own wholesales-'^ 

Wholesale volume produced in own refineries 

Refinery volume (crude oil processed basis) obtained: 

From gross crude oil produced 

From net crude oil produced 

L» P. Gas 

Retail volume purchased from own wholesale^ 

Wholesale volume refined in own plants 

Lubricating oil 

Retail volume purchased from own wholesales'^ 

Wholesale volume blended in own plants'^ 

Wholesale volume refined in own plants'* 


Retail volume purchased from own wholesales^ 

Wholesale volume manufactured in own plants^ 

Liquid fuels 

Retail volume delivered in own tank trucks 

Wholesale volume hauled in own highway transports. . 

Refinery volume transported in own pipelines 

Refinery volume hauled in own barges and tankers. . . 
L. P. Gas 

Retail volume delivered in own tank trucks^ 

Wholesale volume hauled in own highway transports. . 
Crude oil 

Crude oil processed moved by own pipelines 

Crude oil processed moved by own barges and tankers 

Crude oil processed moved by own highway transports 







































Estimated. Total vftiolesale volume was 109.5 and 112.9 percent of retail volume In 1950 and 1957 re- 
pectlvely. The vtoolesale volume In 1957 exceeded retail volume primarily because the refinery capac- 

„ltles were enlarged wiien recently modernized. 


^Not available or obtained. 
Estimated. Wholesale volume was 156.6 and 173.5 percent of retail volume in 1950 and 1957, respec- 
tively, because of excess production of one lube oil refinery. 

^Estimated. Total wftiolesale volume was 105.5 and 135.8 percent of retail volume in 1950 and 1957, re- 

^spectlvely, due to excess production of one grease plant. 
Estimated. Includes trucks owned or operated. 



Integration in Petroleum Operations of 
Farmer Cooperatives, 1950 and 1957 





After eliminating oil belonging to royalty owners and partners in jointly owned leases. 


Integrated Petroleum Operations Through Farmer Cooperatives, 

1950 and 1957 

by Anne L. Gessner^ 
and J. Warren Mather^ 

The continuing increase of mechaniza- 
tion in agriculture has been accom- 
panied by increased consumption of 
petroleum products on the farm. Farm- 
ers require large quantities of fuel to 
power the tractors, trucks, automobiles, 
conveyors, and many other types of 
motor-driven equipment now essential 
to farm operations. They also use many 
lubricants for such equipment and large 
quantities of fuel oil and liquefied petro- 
leum gas for home heating and other 

Many farmers formed cooperatives 
to provide themselves with high quality 
oil products at the lowest possible cost. 
These cooperatives represent a form of 
economic integration by farmers to 
procure needed production supplies. 

Over the years, petroleum coopera- 
tives have found it advisable to follow 
industry trends and to vertically inte- 
grate their operations further. Begin- 
ning first with retailing, they moved on 
to wholesaling and then on to refining 
and producing crude oil. Their own 
transportation services accompanied 
each step. This was consistent with the 
integrated activities of farmers in 
earlier days when they produced their 
own feed for horse and mule power. 

Purpose of Study 

The purpose of this study was to 
determine the status of cooperatives in 
handling petroleum products in 1957 and 

Chief, History and Statistics Branch, Management 

Services Division. 

Chief, Farm Supplies Branch, Purchasing Division. 

to measure trends since 1950. The 
study supplies information on the follow- 
ing: (1) numbers and types of petroleum 
facilities owned or operated by farmer 
cooperatives; (2) physical quantities of 
petroleum products cooperatives han- 
dled at various levels of operation; 

(3) numbers and kinds of services or 
functions cooperatives performed in 
processing and distributing petroleum 
products; and (4) extent to which farmer 
cooperatives had integrated their petro- 
leum operations. 

Annual statistics are available on the 
number of farmer cooperatives handling 
petroleum products and on the total 
sales value of these products. But these 
statistics are limited in a number of 
respects. They provide no information 
on how far the cooperatives have inte- 
grated primary petroleum services such 
as drilling oil wells, operating re- 
fineries, and acquiring pipelines, high- 
way transports, and other distribution 
facilities. Nor do they provide an 
accurate measure of the physical volumes 
of various petroleum products handled 
by cooperatives at different levels of 


There is increasing awareness that 
greater attention must be given to the 
possibilities of integrating the opera- 
tions of farmer cooperatives so that the 
producer maybe in a more advantageous 
position in acquiring production supplies, 
including petroleum products. Thus, 
cooperative management, in making 
policy decisions relating to integration, 
requires information on the relative 
importance of the major cooperative 
services and functions performed in the 
production, processing, and distribution 
of petroleum products. 

Detailed and comparable information 
compiled periodically on different levels 
of operation will provide the necessary 
benchmarks for measuring progress, 
growth, and relative importance of 
cooperatives in the petroleum field. 

Method of Study 

Information for 1957 was provided 
in a mail questionnaire by 36 regional 
cooperatives that handled petroleum 
products. These cooperatives supplied 
about 95 percent of the liquid fuels dis- 
tributed at retail to farmers by all coop- 
eratives. Thus, it was possible to 
develop estimates of total retail dis- 
tribution by all farmer cooperatives 
from data supplied by these regional 

The 36 regional cooperatives in- 
cluded all regionals performing one or 
more of the followir^ petroleum oper- 
ations: wholesaling, refining, and crude 
oil producing. 

Information for 1950 was obtained 
from 29 regional cooperatives for a study 
at that time to determine if cooperatives 
could further coordinate their petroleum 
operations. Data were later summarized 
and published, thus making it possible 
to indicate trends in various petroleum 
services and functions from 1950 to 

1957.^ However, comparisons could not 
be made on several operations because 
some 1950 records were incomplete. 

This report discusses the principal 
integrated functions of petroleum services 
in the following order: retail distribu- 
tion, wholesale distribution, refining 
and manufacturir^, crude oil production 
and purchasing, and transportation. 

The information is presented in this 
order because farmers first purchased 
petroleum products on a cooperative 
basis through retail associations. Then 
they began federating and integrating the 
operations of these cooperatives to in- 
clude wholesaling and later refining 
services. Finally they went all the way 
back in the integrating process by 
producing crude oil. Transportation 

^Mather, J. Warren, Petroleum Operations of Farmer 
Cooperatives, Farm Credit Administration, U. S. 
Dept. of Agr., Circular C-139 (now available from 
Farmer Cooperative Service). 

services they added were an intrinsic 
part of each operation. Farmers say 
their cooperatives become "basic" when 

the integrating process goes far enough 
back to produce raw materials required 
for a production supply item. 

Retail Distribution 

Farmers first organized local petro- 
leum retail cooperatives or added petro- 
leum departments to their marketing 
cooperatives in the mid-1920's. Since 
then, cooperative distribution of oil 
products has continued to increase each 
year throughout the country. These local 
petroleum service agencies, therefore, 
are the foundation for all integrated 
petroleum operations of farmers. 

Cooperatives and Facilities 

Liquid Fuels 

In the fiscal year 1957, 2,336 local 
cooperatives and branches of 9 regional 
cooperatives operated 2,779 bulk plants 
to provide liquid fuels for farmers. This 
was a slight increase in plants over 
1950. Most of this increase was in New 
York and the South. 

The 2,336 local cooperatives had 
2,691 bulk plants in 1957. Of this total, 
2,221 locals with 2,571 bulk plants ob- 
tained their fuels from wholesale cooper- 
atives. The other 115 local cooperatives 
with approximately 120 bulk plants ob- 
tained liquid fuels from other than 
cooperative sources. Local cooperatives 
included both specialized petroleum 
associations andmarketii^ associations, 
particularly grain cooperatives, that 
operated petroleum departments. The 
information available did not permit a 
breakdown of these associations by 
commodity types. 

Local cooperatives delivering oil 
products to farmers were located pri- 
marily in the central part of the United 
States where farming was highly mechan- 
ized. These central States were Ohio, 

Indiana, Michigan, Illinois, Iowa, 
Wisconsin, Missouri, Minnesota, Kansas, 
and Nebraska. They accounted for 
approximately 85 percent of the local 
cooperative bulk plants that were sup- 
plied by regional wholesale cooperatives 
in 1957. 

The diversification and mechaniza- 
tion of cotton and other farming opera- 
tions, however, is gradually increasing 
the cooperative purchasing of farm 
supplies in the South. While farm con- 
sumption of fuels is large in California, 
cooperatives have given little attention 
to the distribution of petroleum products. 
However, some general farm organiza- 
tions and regional cooperatives bargain 
with major oil companies for year- 
end brokerages or volume discounts 
on refined fuels sold direct to their 

Besides the 2,691 bulk plants oper- 
ated by the local cooperatives, 88 addi- 
tional bulk plants operated by 9 branches 
of regional wholesale cooperatives were 
serving farmers in 1957. 

Local and regional cooperatives 
operated a total of 5,361 tank trucks for 
the retail distribution of liquid fuels in 
1957. Local associations affiliated with 
regional cooperatives operated 5,211 
liquid fuel tank trucks --an average of 
2.3 per association and 2 per bulk plant. 
Another 150 tank trucks were operated 
by nonaffiliated cooperatives. 

A number of local petroleum coop- 
eratives also owned highway transports 
that had a capacity of over 2,000 gallons 
for hauling fuel from refineries and 
terminals to their bulk plants. Some 
local cooperatives in Nebraska, North 
Dakota, South Dakota, and Minnesota 

formed cooperative transport associa- 
tions for this purpose. A discussion of 
the transportation of petroleum products 
by cooperatives appears in the last 
section of this report starting on page 15. 

Cooperatives operated an estimated 
1,964 service stations in 1957 compared 
with 1,837 in 1950. Of this total, local 
cooperatives affiliated with regional 
wholesale associations operated 1,895 
retail filling stations, and unaffiliated 
local associations operated approxi- 
mately 50 of such stations in 1957. In 
addition, 7 regional wholesale coopera- 
tives through their branches operated 
19 retail filling stations. 

Few cooperatives east of Illinois had 
service stations. Only 18, or less than 
1 percent of the cooperative total, were 
operated in the eastern States in 1957. 

Lubricating Oil and Grease 

Approximately 3,393 cooperatives 
distributed motor oil and grease at 
retail in 1957.^* All of the local and 
regional cooperatives handling liquid 
fuels at retail also sold oil and grease. 
To these were added another 1,048 local 
associations which regionals reported 
supplying with oil and grease but not 
liquid fuels. Similar data were not 
available in 1950. 

Liquefied Petroleum Gas 

A total of 708 local cooperatives 
distributed liquefied petroleum gas 
(L. P. gas), such as propane and butane, 
in 1957. This represents a substantial 
increase over the 280 cooperatives that 
reported handling this product in 1950. 

This number is somewhat higher than the 2,794 
associations which reported sales of petroleiim 
products to Farmer Cooperative Service in 1956-57. 
The fact that oil and grease were included as 
"miscellaneous supplies" by some of the associa- 
tions may explain some of the difference. Also, 
a few locals may have been obtaining oil and 
grease from more than one regional cooperative. 

In 1957 approximately 250 of the 
708 associations operated L. P. gas 
bulk plants with 323 delivery tank 
trucks. The other 458 cooperatives 
handled "bottled" gas. In 1950, only 42 
of the 280 associations reported oper- 
ating L. P. gas bulk plants and trucks. 
Later information, however, indicated 
that data on number of plants were in- 

Volume Distributed 

Liquid Fuels 

The total volume of liquid fuels dis- 
tributed at retail by farmer cooperatives 
in the fiscal year 1957 was approxi- 
mately 1.96 billion gallons, or 46.6 mil- 
lion barrels (figure 1). This was an 
increase of 31 percent over the 1.49 
billion gallons, or 35.4 million barrels, 
distributed by cooperatives in 1950. 
Their volume in 1957, however, was 
equivalent to only 2.2 percent of total 
liquid fuels (gasoline, kerosene, and 
distillates) used in the domestic trade 
in the United States. This compares 
with 2.3 percent in 1950. Data for the 
petroleum industry in the United States 
are shown for 1950 and 1957 in the 

After deducting amounts sold to non- 
farmer patrons, cooperatives distributed 
about 20 percent of the liquid fuels used 
by farmers in 1957. Their proportion 
was around 16 percent in 1950. 

About 95 percent of the liquid fuels 
distributed from bulk plants of cooper- 
atives in 1957 were hauled to patrons 
in 5,361 tank trucks owned by the asso- 
ciations or by their commission sales- 
men. Patrons hauled very little fuel 
from the plants with their own trucks 
and drums. Also, the cooperatives 
hauled some fuel from their bulk plants 
to their service stations with their tank 
trucks. In 1950, cooperatives operated 
5,370 tank trucks. 



Retail Distribution of Liquid Fuels by 
Farmer Cooperatives, 1950 and 1957 



20 30 




Liquefied Petroleum Gas 

Cooperatives distributed 90.7 million 
gallons of liquefied petroleum gas to 
their patrons in 1957. This was an 
important development during the past 
7 years, because cooperatives handled 
only about 15 million gallons in 1950. 
Data were not available for determining 
the proportion of this product distributed 
to farmers in either 1950 or 1957. 

All L. P. gas distributed from bulk 
plants in 1957, or about 90 percent of 
the cooperative retail volume, was hauled 
in the cooperatives' 323 tank trucks. 

li- 1950, they operated 70 tank trucks 
for L. P. gas. 

Lubricating Oil and Grease 

Cooperatives in 1957 retailed more 
than 21.2 million gallons of lubricating 
oil and more than 20.1 pounds of grease. 
The increases were 18 percent for oil 
and 10 percent for grease over those in 
1950. Data were not available for 
determining the proportions of these 
products distributed to farmers in 1950 
or 1957. 

wholesale Distribution 

The formation of wholesale associa- 
tions to supply cooperative retail outlets 
was the first step farmers took in 
vertical integration of petroleum services 
beyond the retail level. Several were 
established in the late 1920's. The locals 
soon saw that by pooling their purchasing 
power they could gain in two ways: They 
could realize additional savings from 
wholesale operations, including trans- 
portation, and they could help assure a 
more dependable supply of quality 

Cooperatives and Facilities 

In 1957, 30 regional cooperatives 
were supplying refined fuels, lubricating 
oil, and grease at wholesale to 2,221 
affiliated local cooperatives. This was 
approximately the same number of re- 
gional wholesale cooperatives as in 
1950. As mentioned, these regionals 
supplied practically all the liquid fuels 
distributed by 95 percent of the local 
farmer cooperatives with bulk oil plants 
in the country. 

Four additional regional coopera- 
tives either supplied their centralized 
farmer membership direct or bargained 
with oil companies for volume discounts 
or brokerages on purchases made by 
their farmer members direct from 
facilities of these companies. One other 
regional cooperative handled only 
lubricating oils and greases for its 
patrons. One jointly owned regional 
cooperative that operated a refinery did 
not distribute at wholesale. 

Eight of the 30 regional wholesale 
associations supplied L. P. gas to locals 
at wholesale. 

The number of local cooperatives 
and bulk plants the regionals served 
with liquid fuels varied widely. Some 
served only a small number of local 

cooperatives in a limited area, others 
served an entire State, and some served 
several States. In the beginning some 
of the regionals were controlled by 
Statewide affiliates of general farm 
organizations. At the time of this study, 
most were independent organizations, 
although some retained in their names 
an identification with these Statewide 
affiliates and maintained close relations 
with them. 

Most regional cooperatives that 
performed a wholesale petroleum service 
were diversified and purchased various 
other supplies and equipment for local 
cooperatives. However, out of the 30 
wholesale cooperatives, petroleum 
products represented more than one-half 
the dollar volume of 14, almost one-half 
the volume of 2, and between one-half 
and one-third of the volume of 3. Nine 
associations had varying percentages 
that were under one-third of their total 
volumes. Only two regionals were 
specialized petroleum cooperatives. 

One of the first ways regional coop- 
eratives integrated their operations was 
by acquiring highway motor transports 
for hauling refined fuels from terminals 
to local bulk plants. This was under- 
taken in some cases to realize net 
savings over rail transportation, and in 
others to provide better service to local 
affiliated cooperatives. 

In 1957, 18 regional wholesale coop- 
eratives operated 263 highway transports 
to haul refined fuels from refineries 
and terminals to local bulk plants. 
These transports hauled about 754 mil- 
lion gallons, or 34 percent of the whole- 
sale volume. In 1950, regionals operated 
214 highway transports for this purpose. 

In 1957, regionals had 11 highway 
transports for hauling liquefied petro- 
leum gas compared with 1 in 1950. 
They hauled about 13 million gallons, or 

14 percent of the wholesale volume, in 
1957. Similar data for 1950 were not 
available. Further comments on these 
operations are included in the discussion 
on transportation. 

Another early form of integration 
by regional wholesale cooperatives was 
the operation of marine storage termi- 
nals. Later they acquired a few pipe- 
line terminals. Cooperatives obtained 
these facilities for various reasons: to 
aid them in handling open-market pur- 
chases; to permit purchases of petro- 
leum from barge and pipeline facilities; 
to maintain year-round deliveries in 
their territories; and to supplement 
refining operations. 

In 1957, 11 regionals owned 20 
storage terminals with a capacity of 
3,692,857 barrels, or 155.1 million 
gallons. One of these also operated 4 
other pipeline and 1 deep water terminal. 
In 1950, 10 regionals owned 12 terminals 
with a capacity of 1,326,190 barrels, or 
55.7 million gallons, and leased 4 ter- 
minals with a capacity of 476, 190 barrels, 
or 20 million gallons. 

Kerosene and "tractor fuels" consisting 
mostly of diesel fuel declined in im- 

An analysis of these sales of liquid 
fuels at wholesale in 1957 indicates that 
more than 1.7 billion gallons, or 77 per- 
cent, were supplied to affiliated local 
cooperatives; about 80 million gallons, 
or 4 percent, went to smaller regional 
cooperatives; and the balance of 424 
million gallons, or 19 percent, went to 
other oil firms. Comparable data were 
not available for 1950. 

The volume of liquid fuels distributed 
at wholesale by regional cooperatives 
exceeded total retail volume by 13 per- 
cent in 1957. This situation resulted 
because most of the regionals enlarged 
the capacities of their refineries when 
they modernized them in recent years. 
Also, some exchanges may have been 
included in the reported data on volumes 
distributed to other oil firms by one or 
more regional cooperatives. In 1950 the 
wholesale volume of cooperatives ex- 
ceeded their retail volume of liquid fuels 
by almost 10 percent. 

Volume Handled 

L. P. Gas 

Liquid Fuels 

The 30 regional wholesale coopera- 
tives distributed 52.6 million barrels, 
or over 2.2 billion gallons, of liquid 
fuels in 1957 (figure 2). This repre- 
sented an increase of 35 percent over 
the 38.8 million barrels, or 1.6 billion 
gallons, sold in 1950. These wholesale 
volumes are exclusive of transfers to 
their own retail bulk plants and stations. 

The proportion of liquid fuels dis- 
tributed for home heating purposes in- 
creased markedly -- from 14.7 percent 
in 1950 to 27. 5 percent in 1957. Gasoline 
remained near two-thirds of the total -- 
accounting for 63.8 percent in 1957 
compared with 68.1 percent in 1950. 

Eight regional cooperatives had a 
total wholesale volume of liquefied 
petroleum gas of 91.8 million gallons in 
1957, with 93.8 percent distributed to 
affiliated locals. Another 1.6 percent 
was distributed to smaller regional 
cooperatives, and the balance of 4.6 per- 
cent went to other firms. Total volume 
in 19 50 was only about 15 million gallons. 
An estimated 98 percent of the total 
retail volume was acquired through 
wholesale cooperatives in 1950 and 1957. 

Lubricating Oil and Grease 

R^ional cooperatives distributed 
36.9 million gallons of lubricating oil at 


Wholesale Distribution of Liquid Fuels by 
Farmer Cooperatives, 1950 and 1957 




20 30 




wholesale in 1957. This was an increase 
of 31 percent over the 28.1 million gal- 
lons sold in 1950. These regionals dis- 
tributed 52.8 percent of the 1957 sales 
to affiliated local cooperatives, 21.3 
to smaller wholesale cooperatives, and 
the remaining 25.9 percent to other 
firms. Estimates indicate that about 
85 percent of the total cooperative 
retail volume of oil and grease was 
obtained through wholesale cooperatives 
in 1957, compared with 80 percent in 

In 1957, regional wholesale cooper- 
atives sold 25. 5 million pounds of grease. 
Of these sales, they distributed 71.2 

percent to affiliated local cooperatives, 
22.2 percent to smaller regionals, and 
6.6 percent to other firms. These sales 
represented an increase of 32 percent 
over the 19.3 million pounds sold in 

The volumes of lube oil and grease 
distributed at wholesale exceeded those 
distributed at retail by 74 and 27 per- 
cent, respectively. This situation 
occurred because of the lube oil refining 
and grease manufacturing operations of 
the regionals. A substantial amount of 
these products were supplied to other 
regional cooperatives and other oil 


Refining and Manufacturing 

The first cooperative refinery was 
built in 1939. With the advent of World 
War II, the decline in the supply of 
petroleum fuels for farming use became 
critical. As a result, several regional 
cooperatives purchased refineries to 
assure a dependable source of supply at 
reasonable prices. Acquiring such 
plants represented a major development 
of cooperatives in integrating their petro- 
leum operations. It marked their first 
real excursion into h^hly technical 
manufacturing operations. 

Refineries Operated 

In 1957, 13 regional cooperatives 
operated 11 refineries. Six of the 13 
associations each owned one refinery; 
one operated three refineries; three of 
the preceding associations along with 
three other regionals jointly owned one 
plant; and three other regionals in the 
East jointly owned one large refinery. 
Thus, there has been more coordination 
among regionals in the ownership of 
refineries than in any other phase of 
their petroleum operations. Also, re- 
fined fuels were exchanged among these 
regionals whenever mutually advan- 

In 1950, 14 regional cooperatives had 
ownership in 20 petroleum refineries. 
The number of refineries has declined 
since then as supplies of fuel became 
adequate, and as the high cost of modern- 
izing refineries and keeping them up to 
date has increased. Also, some of the 
plants were not located for the most 
efficient transportation of fuels to the 
regionals' distribution areas. 

Capacities of Refineries 

The total crude oil distillation 
capacity of the 11 cooperative oil re- 

fineries in 1957 was reported to be 
155,700 barrels a calendar day. This 
compared with 144,500 barrels a day for 
the 20 cooperative oil refineries oper- 
ated in 1950. Capacity of the cooperative 
plants was equivalent to approximately 
1.6 percent of the capacity reported for 
all refineries in the United States in 
1957 compared with 2.0 percent of the 
total in 1950. 

The 11 cooperative refineries had 
the following capacities: 3 had 20,000 
barrels or more a day; 5 had between 
10,000 and 20,000 barrels a day; 2 had 
between 5,000 and 10,000 barrels a day; 
and 1 had less than 5,000 barrels a day. 

The total thermal cracking capacity 
of these refineries was 25,925 barrels 
a day in 1957, representing 1.2 percent 
of the total thermal cracking capacity in 
the United States, based upon barrels per 
stream-day input or charge capacity. 
Two refineries did not have such units. 

In 1950, thermal cracking capacity 
of the 17 refineries with such units was 
47,800 barrels a day. This was 1.7 per- 
cent of the total thermal cracking input 
or charge capacity in the United States. 
Thermal processing by two refineries 
included delayed coking equipment with a 
capacity of 19,000 barrels a stream day. 

The catalytic cracking capacity on 
an input or charge basis of eight coop- 
erative refineries with such units in 
1957 was 64,500 barrels a day. This 
represented 1.5 percent of the total 
catalytic cracking input a stream day or 
charge capacity in the United States. In 
1950 only four cooperative refineries 
had catalytic cracking equipment. Their 
capacity totaled only 21,300 barrels a 
day, or 1.0 percent of total capacity in 
the United States. 

Catalytic reforming capacity of eight 
cooperative refineries in 1957 was 
29,530barrelsaday. Thiswas equivalent 

to 1.9 percent of the total catalytic re- 
forming capacity in the United States 
based on barrels per stream-day input. 
Most of these facilities were platforming 
units. Such data were not obtained for 
the cooperatives in 1950. 

Catalytic hydrogenation by three 
refineries included unifining units 
with a capacity of 8,500 barrels a 

Polymerization capacity reported in 
1957 by eight cooperative refineries 
was 6,845 barrels a day. This was 
equivalent to 4.6 percent of the total 
per stream day of production for the 
United States. 

Other facilities included the follow- 
ing: coke production at 400 tons a 
stream day by two plants; asphalt pro- 
duction at 6,350 barrels a stream day by 
three plants; an alkylation unit with a 
capacity of 1,500 barrels a day; and a 
light petroleum gas unit for the manu- 
facture of propane. 

Cooperatives found it necessary to 
add these modernized facilities because 
of increases in octane requirements and 
relatively low prices available for 
residual fuel oil in some years. Such 
improvements enabled the plants to 
produce a larger percentage of higher 
octane gasoline and heating fuels, a 
smaller percentage of residual fuel 
oil, and additional products such as 
asphalt and coke where those units were 

The potential production capacity 
of all cooperative refineries was about 
2.4 billion gallons of refined liquid 
fuels in 1957. Such a volume would 
have been about 22 percent more than 
that distributed at wholesale by the 
cooperatives that owned refineries, 
and 8 percent more than the total 
wholesale volume of all coopera- 
tives. In 1950, potential production 
capacity of refineries exceeded whole- 
sale volume of all cooperatives by 36 

Crude Oil Processed 

Cooperative refineries processed 
50.5 million barrels of crude oil during 
their 1957 fiscal year (figure 3). This 
amounted to 138,369 barrels a calendar 
day. They operated, therefore, at about 
89 percent of capacity. 

In 1950, cooperatives processed 
106,900 barrels a day. The total quantity 
of crude oil processed by cooperatives 
in 1957 was equivalent to 1.74 percent 
of the total barrels processed by 289 
refineries operated in the United States 
in 1957. Cooperatives refined 1.86 per- 
cent of the total barrels processed by 
325 refineries operating in this country 
in 1950. 

Cooperatives with refineries trans- 
ported more than 28.3 million barrels 
of crude oil through 1,499 miles of crude 
oil gathering pipelines and 566 miles of 
trunk lines in 1957. Thus, with their 
own pipelines they moved into their re- 
fineries 53.5 percent of the crude oil 
they processed. They had seven barges 
that hauled 2.5 million barrels of crude 
oil, or 5 percent of that processed, to 
the refineries. Also, 25 highway trans- 
ports hauled 1.9 million barrels, or 3.7 
percent of the amount processed, to the 

Production of Refined Fuels 

The production of liquid fuels by 
cooperative refineries in 1957 totaled 
44,603,300 barrels, or 122,200 barrels a 
calendar day(f^ure3). This was almost 
1.9 billion gallons, or about the same 
quantity that was distributed at retail by 
affiliated local cooperatives and retail 
bulk plants and stations owned by the 
regionals. This output was equal to al- 
most 85 percent of the total wholesale 
volume distributed by all regional 

Production of refined fuels in 1950 
was 33.3 million barrels, or 91,300 



Petroleum Refining Operations of 
Farmer Cooperatives, 1950 and 1957 



20 30 




Crude oil moved to refineries 

By own pipe lines. 

^^Crude oil processed 


"^ By own barges & tankers 
|Tr- By own highway transports 


IvX-By own •:;•;•;• 

':':, pipelines >>> 

Liquid fuels produced 

By own barges & tankers 




I Products moved 
I-* — to terminals — 

20 30 





barrels a day. This was 1.4 billion 
gallons, or a little less than the quantity 
distributed at retail by all cooperatives, 
and equivalent to 86 percent of the total 
wholesale volume of cooperatives that 

Using the total barrels of crude oil 
processed as the base, product yields of 
10 cooperative refineries in 1957 were 
as follows: 50.8 percent was gasoline; 
31.3 percent was other light ends or 
intermediates (including jet fuel, kero- 

sene, diesel fuel, other tractor fuel, and 
heating, burner, or furnace oils); 9.1 
percent was residual fuel oil; and 7.1 
percent was other products such as 
lubricating oil, asphalt, coke, and L. P. 
gas. The remaining 1.7 percent repre- 
sented losses. (Data on one large re- 
finery were excluded in these calculations 
because it processed a considerable 
amount of stocks other than crude oil.) 

Gasoline yields from most plants in 
1957 were 50 to 55 percent of the total 


compared with 40 to 45 percent in 1950. 
Other light ends or intermediates were 
from 25 to 30 percent in both years. 
Residual fuel oils and other products 
accounted for 15 to 20 percent compared 
with 25 to 30 percent in 1950. This in- 
crease in gasoline and the reduction in 
yield of heavy ends reflected the oper- 
ation of new cracking facilities added 
during the period. The residual fuel oil 
and other byproducts were sold to com- 
mercial outlets because farmers cannot 
use them. 

Data were not obtained on storage 
facilities at cooperative refineries in 
1957. In 1949, however, cooperative 
refineries had storage facilities for 
2,585,000 barrels of crude oil and 
5,260,000 barrels of refined products. 

Cooperatives owned 694 miles of 
product pipelines in 1957, which trans- 
ported almost 10 million barrels of 
liquid fuels from refineries to terminals. 
This represented about 22 percent of the 
total refined. Almost 95 percent of these 
liquid fuels were transported for dis- 
tribution by the cooperatives, with only 
5 percent transported for other com- 
panies. In 1950, cooperatives owned 
258 miles of product pipelines, but data 
on quantity of liquid fuels transported in 
them are not available. 

Cooperatives operated 11 barges and 
2 tankers for hauling liquid fuels in 
1957. These facilities transported for 
the cooperatives that owned them approx- 
imately 3.8 million barrels, or 8.5 per- 
cent of total quantities refined by all 
cooperatives. Seven of the barges also 
transported crude oil as well as liquid 

Refining and Blending 
Lubricating Oil 

Only one regional cooperative pro- 
duced or refined lubricating oil. This 
association has refining equipment with 
a capacity of approximately 20 million 
gallons, or 476,190 barrels, of lubri- 

cating oil annually. In 1957, its pro- 
duction was 18 million gallons compared 
with 8.5 million gallons in 1950. The 
output for 1957 was equivalent to about 
85 percent of the total gallons distributed 
at retail and to 49 percent of the total 
sold at wholesale by all cooperatives. 

An early step taken by regional 
cooperatives to integrate their petroleum 
operations was blending or compounding 
motor oils. These early efforts to 
integrate were prompted by difficulties 
in obtaining for members uniform lubri- 
cating oils which would withstand motor 
heat. Attempts by one regional cooper- 
ative to buy oils from manufacturers on 
guaranteed specifications resulted in its 
building a compounding plant. Later, 
other regionals joined with this cooper- 
ative to form a separate association 
which is now operating two oil-blending 
plants and providing wholesale services 
on a national basis for a large number of 

In 1957, 6 regional cooperatives 
operated 10 blending, or compounding, 
plants with a rated capacity of 41.1 mil- 
lion gallons a year. The volume of 
lubricating oil compounded by these 
plants in 1957, however, was only 20.2 
million gallons. This was slightly less 
than the 21.2 million gallons distributed 
by all local cooperatives in that year. 
A few of the smaller regional coopera- 
tives bought bulk lubricating oil from 
other regional cooperatives and barreled 
or packaged it under their own trade- 
marks in their own oil barreling plants. 

In 1950, the total volume of lubri- 
cating oil compounded by 13 cooperative 
plants was 15.7 million gallons compared 
with about 18 million gallons distributed 
at retail that year. 

Manfacturing Grease and 
Other Products 

Only one regional cooperative oper- 
ated a grease manufacturing plant. It 


produced 6.8 million pounds in 1957 
compared with 5.3 million pounds in 
1950. Some of this was supplied to other 
wholesale cooperatives. 

Other finished products produced by 

cooperative refineries in 1957 were as 
follows: coke, 120,900 tons by two 
plants; asphalt, 1,504,511 barrels by two 
plants; and liquefied petroleum gas, 
676,442 barrels by five plants. 

Production of Crude Oil 

Cooperatives began production of 
crude oil soon after acquirii^ re- 
fineries — thus taking another major 
step in vertical integration. They did 
this primarily because they wished to 
provide themselves with a more depend- 
able supply of crude oil for their re- 
fining operations. Also, they believed 
production would give them additional 
savings which would be especially helpful 
in years when savings from refining 
were abnormally small. 

Producing Oil Wells 

In 1957, 10 cooperatives representing 
12 regional cooperatives were producing 
crude oil. They owned 3,318 producing 
oil wells on a gross basis and 1,691 
producing wells on a net basis. ^ In 
1950, 10 cooperatives representing 12 
regionals owned 1,945 gross producing 
oil wells and 1,562 net producing wells. 

The gross producing oil wells owned 
by cooperatives increased substantially 
between 1950 and 1957, but they repre- 
sented only 0.6 percent of the total 
producing oil wells in the United States 
in 1957 compared with 0.4 percent in 
1950. Most cooperatives have purchased 
rather than drilled producing wells to 
secure an immediate supply of oil and to 
avoid the risks in drilling wildcat wells. 

At the end of 1950, 12 cooperatives 
representing 14 regionals held under 

■"Gross basis Includes wells in which a cooperative 
shared ownership with other companies, and net 
basis represents the equivalent to wholly owned 
oil wells. 

lease 63,488 net acres of producing 
leaseholds, includir^ acreage of royalties 
and mineral rights. They also had 
310,032 acres of nonproducing or pro- 
spective leaseholds, royalties, and 
mineral rights. Estimated crude oil 
reserves of eight of these r^ionals with 
largest holdings totaled 32,250,000 net 
barrels in 1950. Comparable data on 
acreages and reserves were not obtained 
in 1957. 

Production Operations 

Crude oil production by cooperatives 
involved the operation and maintenance 
of equipment necessary to lift the crude 
oil and place it in storage tanks. It also 
included cleaning out and conditioning 
wells so that the highest possible re- 
covery of crude oil from the oil sand is 
ultimately obtained. 

In 1957, 10 cooperatives produced 
15,568,492 barrels of crude oil, an 
average of 42,653 barrels a calendar 
day on a gross basis; that is, before 
eliminating oil belonging to royalty 
owners and partners in jointly owned 
leases (figure 4). The net ownership of 
the cooperatives was equivalent to 
6,328,612 barrels, or 17,339 barrels a 
calendar day, and represented 40.6 per- 
cent of the total. 

In 1950, 10 cooperatives produced 
10,731,000 barrels, an average of 29,400 
barrels a calendar day on a gross basis, 
and produced 5,581,580 barrels, or an 
average of 15,292 barrels a day, on a 
net basis. 



Production of Crude Oil by 
Farmer Cooperatives, 1950 and 1957 







Amount own 

■/// by others 





"Gross" Includes total production from wholly owned and partially owned oil wells. "Net" represents 
cooperatives' portion of gross production after eliminating oil belonging to royalty owners and part- 
ners in jointly owned leases. 

Two of the cooperatives with re- 
fineries had no crude oil production. 
Three cooperatives with crude oil pro- 
duction had no refineries of their own 
at the end of 1957, but one had started 
construction on the first phase of a 
petroleum refinery late in 1958. 

The gross production of crude oil 
by the 10 cooperatives with oil wells in 
1957 represented 30.8 percent of the 
crude oil processed by all cooperative 
refineries in that year. In 1950, 10 
cooperatives produced crude oil on a 
gross basis equivalent to 27.5 percent 
of the crude oil processed by all coop- 
erative refineries in that year. 

In 1957, gross crude oil production 
of seven cooperatives that had both 

crude oil production and refineries was 
equal to 36.7 percent of the crude oil 
they refined. In 1950, gross crude oil 
production of the 10 organizations with 
both crude oil production and refining 
operations was 31.4 percent of the total 
quantity they refined. 

Two associations each had gross 
production of crude oil ranging from 55 
to 60 percent of their crude oil runs to 
stills (barrels processed); one each of 
three associations had gross production 
equivalent to 43 percent, 21 percent, and 
15 percent, respectively; and two each 
had gross production equal to less than 
10 percent in 1957. 

Gross production was equal to 27.4 
percent of the crude oil distillation 


capacity of all cooperatives in 1957 
compared with 20.3 percent in 1950. 

The net production of crude oil by 
the 10 cooperatives with oil wells re- 
presented 12.5 percent of the crude oil 
processed by all cooperative refineries 
in 1957. This compares with 14.3 per- 
cent in 1950. Seven cooperatives both 
produced and refined crude oil, and in 
1957 their net production of crude oil 
was equal to 14.7 percent of the crude 
oil they processed. Net production in 
1950 by those cooperatives that both 
produced and refined oil was equal to 
14.5 percent of the crude oil they proc- 

One cooperative had net production 
equivalent to 22 percent of runs to stills; 
four others had net production of 15 to 
20 percent; and two each had less than 
5 percent. 

Net production of all cooperatives in 
the United States was equal to 11.1 per- 
cent of the crude oil distillation capacity 
of all cooperative refineries in 1957 
compared with 10.7 percent in 1950. 

The production of crude oil from all 
oil wells in the United States in 1957 was 
equal to 76.2 percent of the crude dis- 
tillation refining capacity of the 289 
refineries in operation. This was equal 
to 90.5 percent of the total crude oil run 
to stills. Both the gross and net pro- 
duction of cooperatives in relation to 

their runs to stills was, therefore, much 
smaller than that of the petroleum in- 
dustry as a whole. 

Crude Oil Purchasing 

Since cooperatives do not produce 
the necessary quantities of crude oil for 
their refinery use, they buy additional 
amounts from royalty interest holders, 
independent producers, and other re- 
finers. They buy mostly from independent 
producers at posted prices on a contract 
basis, although some long-term contracts 
have been used. 

Some cooperatives, in addition to 
having access to the total or gross crude 
oil produced jointly with other part- 
owners, control additional amounts 
through their own pipeline gathering 
operations and by having first call to 
purchase various amounts. 

Cooperatives handle their crude oil 
purchasing activities along with their 
pipeline, barge, and other crude oil 
transportation operations. Most of the 
crude oil moves to refineries by pipe- 
lines. In addition to gathering oil pro- 
duced by the cooperatives, these pipelines 
receive from other carriers crude oil 
which has been purchased by the cooper- 
atives. Purchasing and exchanging of 
crude oil among regionals has occurred 
in small amounts. 

Transportation Operations 

Transportation is important in all 
phases of petroleum operations. To 
provide efficient, dependable trans- 
portation service, cooperatives now own 
tank trucks, highway motor transports, 
towboats, barges, tankers, and pipelines. 

While the various transportation 
services of cooperatives have already 
been discussed under each major type of 
integrated operation, they are all 

brought together and discussed in greater 
detail in this section of the report 

Tank Trucks and Highway 
Motor Transports 

Local cooperatives and branch sta- 
tions of regional associations operated 
a total of 5,684 retail tank trucks in 
1957, with 323 used for hauling liquefied 


petroleum gas and the remainder used 
for liquid fuels. In 1950, cooperatives 
operated 5,440 retail tank trucks, in- 
cluding 70 for liquefied petroleum gas. 

The cooperatives owned more than 
half of the truck chassis in 1957. The 
salesmen employed by the cooperatives 
on a commission basis owned the re- 
mainder. Many of the truck tanks for 
liquid fuels had increased in capacity 
from 800 to 1,000 gallons in 1950 to 
1,200 to 1,500 gallons in 1957. 

In 1950 and earlier, tank trucks were 
equipped with mechanical unloading 
pump and meter, and in 1957 a large 
number had dual sets of such equipment. 

About 95 percent of all liquid fuels 
sold at retail by cooperatives in 1957 
was hauled in their tank trucks. This 
included bulk deliveries to patrons and 
some gasoline hauled from bulk plants 
of local cooperatives to their own service 
stations. Many service stations, however, 
received fuel direct from highway trans- 
ports that loaded from refinery or other 
storage terminals. The cooperatives 
delivered to patrons about 90 percent of 
their L. P, gas volume in association 
tank trucks, with the remaining amount 
handled in ''botUes." 

In 1957, 18 regional cooperatives 
operated 299 highway transports, in- 
cluding 11 for hauling liquefied petroleum 
gas and 25 for transporting crude oil. 
Local cooperatives operated 168 highway 
transports, thus making a total of 467 
highway transports operated by cooper- 
atives in 1957. 

In 1950, cooperatives operated 375 
highway transports -- 250 by regionals 
and 125 by locals. Most of these trans- 
ports had a capacity of 5,000 gallons or 
more with several truck-trailers having 
a capacity of 7,500 gallons or more. 

In 1957, cooperatives transported 
approximately 1.2 billion gallons of 
liquid fuels, or 56 percent of cooperative 
wholesale volume, from terminals and 
refineries in 431 highway transports. 

They hauled over 13 million gallons, or 
14 percent, of the wholesale volume of 
L. P. gas in 11 of their transports. 
Also, 25 highway transports hauled 
1,864,155 barrels of crude oil, or 3.7 
percent of that processed, to coopera- 
tive refineries. Such data were not 
available for 1950. 

Barges and Tankers 

Cooperatives operated 11 barges and 
2 tankers for liquid fuels in 1957. The 
cooperatives owning these facilities 
used them to transport approximately 
3.8 million barrels. This represented 
8.4 percent of the liquid fuels refined by 
cooperative plants that year. None was 
hauled for other companies. 

Cooperatives operated seven barges 
for transporting crude oil. It was as- 
sumed that these facilities also were 
included in those reported as hauling 
liquid fuels and, therefore, used for 
both purposes. The barges hauled 
2,503,000 barrels of crude oil, or 5 per- 
cent of that processed, to the coopera- 
tive refineries. 

In 1950, cooperatives operated 21 
barges used primarily for transporting 
refined fuels, and 4 towboats and 3 
ocean-going tankers used for crude oil 
and refined products. Data were not 
obtained on quantities hauled that year. 


Seven of the 13 cooperatives oper- 
ating refineries owned 1,499 miles of 
crude oil gathering pipelines and 566 
miles of crude oil trimk lines in 1957. 
This mileage was equivalent to 2 percent 
of the total miles of crude oil gathering 
lines and to 0.7 percent of the crude 
trunk lines in the United States. Coop- 
eratives thus owned less crude oil pipe- 
lines than in 1950 when they had 1,765 
miles of gathering pipelines and 610 
miles of trunk lines. 


In addition to transporting crude oil 
produced and purchased for cooperative 
refineries, these pipelines gathered and 
made deliveries for other oil companies 
and also delivered crude oil to other 
carriers for accounts of the cooper- 
atives. Some of the cooperative pipelines 
were classified as common carriers, 
subject to regulations of the Interstate 
Commerce Commission. 

Cooperatives delivered more than 
28.3 million barrels of crude oil by 
pipelines in 1957. Approximately 95 per- 
cent of this crude oil was for their own 
refineries. Cooperatives, therefore, 
transported with their own pipelines 
about 53.5 percent of the crude oil they 
processed in their own refineries. The 
pipelines of one cooperative delivered 
11.6 million barrels of crude oil to its 
refineries of which 6.5 million barrels 

were gathered directly from wells. 
Data were not obtained on crude oil 
storage at refineries, pipeline stations, 
and wells. 

Cooperatives reported operating 
694 miles of products pipelines in 1957, 
which represented 1.9 percent of the 
total products pipeline mileage in the 
United States. The cooperative lines 
transported almost 10 million barrels 
of liquid fuels from refineries to ter- 
minals in 1957 with almost 95 percent 
transported for distribution by the 
cooperatives. The quantity moved 
through these pipelines was 22.3 percent 
of the liquid fuels refined by coopera- 

In 1950, cooperatives owned only 
258 miles of product pipelines, but data 
were not obtained on the quantity they 
moved that year. 



Data on petroleum industry in United States. 1950 and 1957^ 




Domestic demand for: 



Refineries operated 
Refineries shut down 

Capacities (as of December 31)3 
Crude distillation capacity 
Thermal cracking capacity - input'* 
Thermal cracking capacity - output 
Catalytic cracking capacity - input^ 
Catalytic cracking capacity - output 
Reforming capacity - input"* 
Reforming capacity - output 

Crude oil run to stills (processed) 


Producing oil wells 

Crude oil produced 


Crude oil gathering pipelines 
Crude oil trunk pipelines 
Product pipelines 

Crude oil transported in pipelines^ 
Products transported in pipelines 

Barrels a calendar day 

2,724,000 3,817,000 

323,000 295,000 

1,082,000 1,691,000 






Barrels a calendar day 
6,963,644 " "" 




5,739,000 7,919,000 

465,870 569,273 

Barrels a calendar day 
5,407,000 7,169,000 

Number of miles 
47,593 573 ^526 

64,622 ^78,594 

16,374 ^36,420 

Barrels a calendar day 

4,223,000 5,850,000 
1,094,000 2,471,000 

^Source: Oil and Gas Division, U. S. Department of Interior, except as otherwise Indicated. 

,A11 data are on basis of a calendar day except those for Input or charge capacity Indicated by footnote 4. 

^Includes operating and shutdown plants. 

Barrels a stream day calculated at 0.95 of a calendar day basis, or 347 days per year, as reported In 
,011 and Gas Journal, March 4, 1958. 
^As of January 1, 1956 - the last survey made. 

Quantities received at refineries via pipelines. Additional quantities moved by pipelines from pro- 
'duclng fields to gulf coast ports.