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Friday, 14 May 1920


Mr RILEY (South Sydney) . - Like most other honorable members, I desire the discovery of oil in this country. We have done our best to find oil in Papua and in other parts of the Commonwealth, and I still 'have great hopes of success ; but, until that success has been obtained, we shall be in the clutches of those who at present supply this community with oil, that is, unless we can make some arrangement which may free us from them. At the present time, the Vacuum Oil Company, and other oil companies, have a complete monopoly of this market. They could, if they liked, stop our supplies ; and they could also increase the price of oil. We are entirely dependent upon them. The Government, how ever, have invited the Anglo-Persian Oil Company to erect refineries here for the treatment of the crude oil which they will import. Personally, I do not object to this arrangement. In my opinion, to establish refineries here is a step in the right direction, no matter by whom taken. I would, of course, prefer to see the refineries erected by the Government, but the agreement that we are discussing creates a partnership 'between the Commonwealth and the Anglo-Persian Oil Company ; and, ultimately, if we desire to take over these refineries, we shall be able to do so. As we have not yet found oil in this country, crude oil must be imported for treatment. I should like to know why provision is being made for the refining of only 200,000 tons of crude oil per annum, seeing that the Commonwealth needs nearly double that quantity. Is- the company prepared to erect refineries which eventually will be capable of wholly supplying our needs ? If it or the Government will do that, I shall be very pleased. The objection has been raised that, by making this agreement, we are playing into the hands of a monopoly. But, even if that be so, the monopoly will not be so dangerous as that which at present exists. We are really entering into a partnership with the British Government and the AngloPeTsian Oil Company, and are at worst choosing the lesser of two evils. Having read the evidence given by officials of the Vacuum Oil Company before Boards of Inquiry and the Inter-State Commission, to justify applications for permission to increase the price of oil, I am astonished that some of these men are not now behind the *bars of a gaol. According to Judge Edmunds, of New South Wales, they have made statements which are untrue, and have falsified their books. On the last occasion when the Vacuum Oil Company applied for permission to make an increase in the price of kerosene, the Judge said he would not hear tho case. His mind was made up that tho Vacuum Oil Company had so misled the Court, and so falsified its books, that he would not hear the case at all. He was prejudiced against the concern. When Judge Rolin was appointed to inquire into the matter of kerosene supply, he made certain very strong remarks. It is interesting to know how this company has extended its operations and interests. The report of the Inter-State Commission dealing with kerosene, benzine, oils, &c, contains highly entertaining statistics. The Vacuum Oil Company, by the way, has seven-eighths of its interests in America, while only one share is held in Australia. I invite honorable members' to study these figures: -

It will be noted that the capital of the company in 1915 had reached £800,000 - which was purely a book entry - and that in 1917 the paid-up capital amounted to £1,600,000. According to the remarks of the Judge that, also, was a book entry. The figures above reveal at a glance the enormous profits made by the "Vacuum Oil Company within a very brief period. While the public was called upon to pay prices which were soaring rapidly higher and higher, this company was piling up enormous returns. It had made its own arrangements, of course, and there was no competition. Since August, 1914, the price of kerosene has risen from 6s. lid. to 14s. 6d. per case - an increase of more than 100 per cent. The price of benzine since that same year has risen from 13s. 4d. to 23s. 8d. per case - an increase representing more than 77 per cent. "We are consumers of oil in this country to the extent of about £4,000,000 per annum. "Wc can realize what our position will shortly become if we are compelled to continue to pay the increased rates demanded by the monopoly. The. Government are endeavouring to bring into the Australian market another competitor. The Vacuum Oil Company has taken good care to pass every risk on to the consumer . During 1915 and 1916, on a capital and reserves averaging £1,500,000, the company made a net profit of £981,000. Honorable members will be impressed with these particulars -

It will be noted- that in two years the profit per case on both kerosene and benzine increased by about 150 per cent. The Inter-State Commission, in summing up, stated that the transactions of the Vacuum Oil Company constituted profiteering. While we have been paying enormously high prices for our oil commodities, the same, precisely, have been sold in the United States of America at considerably less. Without the shadow of doubt, we are in the hands of a complete monopoly, and we are justified in trying to secure resources of our own. In entering into th s contract with the AngloPersian Oil Company, we are to have a controlling number of shares. Activities will not be carried on in some far part of the world, but within our own borders. We shall have our own representatives upon the directorship, and we shall know everything that is taking place. The honorable member for Capricornia (Mr. Higgs) proposes an amendment; to insure that the Government shall insist that so many thousand pounds per annum shall be expended in developing our own resources, with the object of securing raw crude oil from some part or another of Australia. I have had the pleasure of visiting STew Guinea for about six weeks, and from what I saw and learned, I should say that there are good prospects of commercial oil being discovered there.1 It does not matter how much money the Government may spend in trying to discover and develop oil prospects nowadays there appears to be some influence at work to militate against success. Whether it is purely fortuitous, or whether it may bedue to the influence of the Vacuum Oil'. Company, or- some other company, withthe object of stifling competition, I do not know; but there is certainly some malign influence at work to prevent this country from investigating and develop-' ing its' own resources. I hail with pleasure, therefore, the establishment of a company, backed by the British and Com-1 monwealth Governments, and having its expert knowledge and appliances availablein our interests. I would like to see the Government control the whole concern, thus making of it a national monopoly. But when we have reached the stage of producing our own oil requirements - as I hope we shall do ere long - we shall be in the position of partners in the refining process ; and it will then be open for Parliament to take over the whole activity, if so desired, and to run it entirely in the interests of the people.

I trust that a Select Committee will be appointed to make exhaustive investigation. If refineries are to be erected, the most suitable sites should be chosen - centres where there is abundance of coal and adequate shipping facilities, and which will not be unreasonably far from the sources of oil supply. The refineries should be erected in various localities rather than that the whole work should be concentrated in one spot. They should not necessarily be established either in Melbourne or in Sydney, if the inquiries of the Select Committee can show that there are more suitable sites in other parts of the Commonwealth.

What is the outcome of thebonus which the Commonwealth pays for the production of crude oil? When the Act came into force, we were hopeful that it would have the effect of relieving the pressure in the matter of Australia's oil requirements. To-day, oil is being produced from shale; but what good is that to the Commonwealth ?


Mr McWilliams - What will be the position of the shale oil industry under this agreement?


Mr RILEY - That is onequestion which might well be considered by a Select Committee. We are not refining into kerosene the crude oil upon which we pay a bonus to-day; we are not securing any of its by-products. Messrs. John Fell and Company are supplying their crude product to the North Sydney and Sydney Gasworks, and to the Auckland and Christchurch Gasworks. The Commonwealth is paying a bonus to John Fell and Company, but the firm is selling its product to gas companies which could well afford to buy coal for the production of their gas. Meanwhile, despite the bonus, we are neglecting to develop our oil resources.


Mr McWILLIAMS (FRANKLIN, TASMANIA) - The matter of the oil bonus was very similar to the present position respecting this agreement: we do not know too much about it.


Mr RILEY - We know that our bonus is not bavins the effect of developing the Australian oil industry. Before we enter into an agreement to bind the Commonwealth over for fifteen years, and involve ourselves in the outlay of a large sum of money, there should be the fullest possible inquiry. I welcome the agreement itself, and I welcome the prospect of the erection of refineries. I trust, however, that the Government will not object to the appointment of a Select Committee, so that the agreement may be made most acceptable to the people of Australia.







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