The Development of American Petroleum Pipelines: A Study in Private Enterprise and Public Policy, 1862-1906

By Arthur Menzies Johnson | Go to book overview

II
Pipeline Combination and Public Policy, 1872-1875

DURING the years 1872-1875 a pattern of intra-industry conflict involving pipelines and public policy was established. The petroleum industry felt the full impact of the depression which then gripped the whole American economy, and pipelines became increasingly important as competitive weapons of producers, transporters, and refiners of crude oil. In the face of falling oil prices and relentless competitive tactics, pipelines grew in mileage and value and manifested the same trend toward consolidation that appeared in other sectors of the petroleum industry. The producers found themselves tightly squeezed between lower and lower oil prices and the pressures of powerful transportation and refining units. Unable to check oil production or to maintain a united front against other groups, the embattled producers turned again to the Pennsylvania legislature for aid. Encouraged by the precedent set in the free pipe law of 1872, they demanded laws which they believed would offset to some extent the power of the organized groups that confronted them. Although the attempt to extend the provisions of the 1872 act failed, the producers' proposals formed the basis of their legislative efforts for more than a decade to come. Their case was somewhat strengthened by the enactment in 1874 of one law which recognized

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