sumer price indexes shown on the chart should not be compared directly with wholesale figures. In the wholesale markets, the chart shows the large price increases for most goods, both during and after the war. Farm products rose from 61 percent of the 1926 base price in August 1939 just prior to the war in Europe to 95 percent when the United States entered the war; a further increase to 127 on VJ-day; and stood at 184 on March 15, 1947. For all commodities, the price index increased from 75 to 106 during the war period and to 148 by the middle of March. In contrast, the average price of crude petroleum was at the depressed level of 54 in 1939 prior to the war and had increased to only 64 percent by VJ-day—all of the increase taking place prior to our entrance into the war. No general increase in crude prices was permitted from 1941 to April 1946. Not a penny was allowed, as you well know. Adjustments in crude prices since April of last year brought the index up to 98 percent of the 1926 base on March 15, 1947. More recent price changes in California make the average price of crude oil in the United States equal to approximately $1.88 per barrel, or an index of 100 as compared with 1926. An increase of almost 50 percent would be needed before crude prices were on a parity with the general price index of all commodities. This would require an average price of approximately $2.80 per barrel for crude petroleum. Crude oil is one of the items which is included in the Bureau of Labor Statistics in its fuel and lighting materials which classification is reported at 98.8 as of March 15, 1947. It is obvious that petroleum and petroleum product prices have not advanced in relation to those of other commodities. Petroleum prices are still substantially below average for other commodities. Hourly wages have more than doubled since 1926 yet crude oil with all the recent advances has barely reached the 1926 level while petroleum products, particularly gasoline, are substantially below the 1926 level. The lower section of the chart compares gasoline prices with the principal items of consumer prices that enter into the cost of living. It will be noted that the average price index of all consumer items was equal to 99 percent of the 1935-39 base period when the war began in Europe. This index rose to 111 by December 1941 and to 129 by VJ-day. Since the war, consumer prices have risen to 153 early in 1947. In sharp contrast to these increases in cost of living, the retail price of gasoline (excluding sales taxes) increased from 96 to 102 during the war and, by the middle of March of this year, was only 116 percent of the 1935-39 level. The average gasoline price, excluding taxes, at the service stations was approximately 16.1 cents per gallon on March 15 of this year. An increase of about 5 cents per gallon would be needed to bring this price in line with all other items in the consumers' budget. In connection with the price of petroleum products, such as gasoline, it is important to remember what a small part they represent in the total cost of living. An increase of 1 cent in the price of gasoline, for example, would have an effect of less than one-tenth of 1 percent on the cost of living index prepared by the United States Department of Labor. In view of the subnormal level of petroleum prices as compared with prices of other goods and the fortunate position of the consumer in purchasing oil products, any criticism that present prices in the petroleum industry are excessive is entirely unwarranted. I have here also a chart from the "Wholesale and consumer price index" which was also prepared by the Independent Petroleum Association of America, and I would like to offer that, with the chairman's permission, for the record, and to say that the price increase has been an average of 15 percent against the very reasonable background which I have indicated here, and I do not think you could take any other commodity which you or I use and say that the price has increased only that amount. It has been an extremely moderate increase. PRICE STATISTICS EXCEPT AVERAGE AVERAGE PRICE INDEXES FROM U.S. BUREAU OF LABOR PREPARED BY THE INDEPENDENT PETROLEUM Mr. BATES. You know, there is one thing in connection with this gasoline price and petroleum products increase that I just do not understand; that is the disposition of these pipe lines. I had a good deal to do with it, and had a good deal to say regarding the original installation of those pipe lines. And here we have recently disposed of those pipe lines for natural-gas purposes. When it was made clear to us that we could transport these petroleum products, crude oil at the rate of 18 cents a barrel, and lighter type oil at probably 16 or 17 cents a barrel, and we are paying 40 cents a barrel to transport the same petroleum products by tank ship from the Gulf Coast to the eastern seaboard, and according to the basis of computation, that I have made for myself, on the basis of information I received from War Shipping, of the cost of transporting this oil on the basis of 500,000 barrels a day, we could save $125,000 a day on transportation cost alone. And multiplying that by 52 weeks a year, we could save $37,000,000. Now, I do not know whether I should draw you into this thing or not, but I naturally would want to ask the question of somebody, why the petroleum industry is charging 40 cents for tanker transportation when they could acquire the pipe lines with proper capitalization and write-offs, amortization, and produce oil here in the eastern seaboard for one-half the cost of transportation that the consumers here must pay now. You are familiar with that, I presume? Mr. KELLER. Yes, generally; but I am sorry I am not prepared to give you a detailed answer. But I do not believe you have the proper cost of the transportation per barrel of crude. Mr. BATES. The only information I have is directly from the War Shipping Administration, who certainly have the correct figures. Mr. KELLER. Well, if the Chairman would like, I would be glad, in my own little way, to get you what information I could on that. Mr. BATES. I wrote an article for the Committee on Interstate and Foreign Commerce on this particular project, because I was very much disturbed at the Government getting such a small price. They were not giving them away, but they got a good price; but certainly when we are thinking about drafting legislation widening channels for the purpose of aiding seagoing vessels, particularly tankers in and out of oil centers to the consuming centers, for the purpose of reducing. we are told, the consumer cost, by that economic justification of approving an expenditure of millions of dollars, then throwing away what we have spent, when we have an opportunity to save thirty-odd millions of dollars a year in transporting through the pipe lines. that is a very peculiar situation. Mr. KELLER. I Would like to say this on that point, Mr. Chairman. that the lines, the Big Inch and the Little Big Inch, were both offered twice on public bids. The first thing the War Assets Administrator took the position that he could dispose of them only for petroleum service, and then subsequently changed his position and submitted a supplemental report to Congress; and they were thrown open for open bidding, and all of the economists, the best economists in the industry, felt that the use which was made of the lines in the final disposition of them was the most economic for the lines, having in mind the surplus tanker facilities and the pattern of transportation which had been established under that system. Mr. BATES. But the facts are that we are paying today twice as much for the transportation of crude oil and gasoline, and light oils from the oil fields to the eastern seaboard than we would have had to pay through the pipe lines. Mr. KELLER. Well, Mr. Chairman, I am not informed on that, but I would be glad to get what information I can on that. Mr. BATES. Please do that, and give it to me personally, and see how it checks with the information I got from other sources. Now, Captain Whitehurst, do you wish to be heard again? STATEMENT OF HERBERT C. WHITEHURST, DIRECTOR OF HIGHWAYS, ENGINEER DEPARTMENT, DISTRICT OF COLUMBIA Mr. WHITEHURST. Yes, sir. I have some documents that I would like to leave with you, and in addition, I would like to have you hear Mr. Harrison. Mr. BATES. Yes, sir. Mr. WHITEHURST. First, Mr. Chairman, I would like to file with the committee, so that there will be no misunderstanding of them having it, this statement which gives, on page 68, the immediate program and the postwar highway program which runs to 1949, together with the detailed list, and other schedules to the future, and attached on the last two pages, marked Exhibit A, is a list of projects beyond the postwar years which we have labeled "1950 to 1955." (The document was filed for the information of the committee.) Mr. WHITEHURST. We also would like to file with the committee directly this statement of the Highway Department showing all of its financial transactions with a forecast of estimates including revenues and expenditures, through the year 1955. Mr. BATES. This gives your estimates? Mr. WHITEHURST. Yes, sir, gives everything in there. There are several additional copies of this. (The document was filed for the information of the committee.) Mr. BATES. I think you have probably provided us with the information, and it got into the hands of the Senate Committee, and I sort of lost track of it. Mr. WHITEHURST. We would also like to file the action the Commissioners have taken on April 4 with respect to this highway program. I would like to leave two copies of that also. (The document was filed for the information of the committee.) Mr. WHITEHURST. Now, while Mr. Keller and his associates seem to be excellent figurers, I am prone to say that I do not think that they thoroughly understand the situation. He referred to not having taken a holiday during the war years in certain minor capital improvements, and the fact that we had so much money appropriated. I would like to say to you, Mr. Chairman, that the reason we had these balances that we carried over that Mr. Keller spoke of, was due to war work, which was authorized and directed by Congress in a supplemental estimate in 1941 and 1942, and the Highway Fund was in the red to the extent of very nearly $2,000,000. On paper, of course. We deliberately canceled the majority of the local improvements that Congress had authorized in the 1942 and 1943 appropriation bills |