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Title: General notes on the production, marine transportation and taxation of Mexican petroleums
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Title: General notes on the production, marine transportation and taxation of Mexican petroleums
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Publication Date: 1921
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Full Text

. 4f1/


General Notes on the Pro-
duction, Marine Transpor-
tation and Taxation of
Mexican Petroleums

BY

VALENTIN R. GARFIAS,
New York, N. Y.



Paper of the American Institute of Mining
ond Metallurgical Engineers, No. 1054, issued
with MINING AND METALLURGY, February,
1921.



(New York Meeting, February, 1921)

NEW YORK, N. Y.
1921




Sc2 -


TRANSACTIONS OF THE AMERICAN INSTITUTE 'OF MINING AND METALLUR-
GICAL ENGINEERS







General Notes on the Production, Marine Transportation
and Taxation of Mexican Petroleums
BY VALENTIN R. GARFIAS,* NEW YORK, N. Y.
(New York Meeting, February, 1921)
PRODUCTION AND MARINE TRANSPORTATION
ALTHOUGH the work on which this paper is based was carried on by
the writer as Special Commissioner of the Petroleum Department of the
Mexican Government, the opinions expressed are only his personal views
for which the Mexican Government can in no way be held responsible.
Notwithstanding that the appointment covers all phases of the so-called
petroleum question, as the one question of immediate importance was
that relating to taxation, it was decided to devote all the time to this
phase of the work.
The present report has been divided into two closely related parts,
the first dealing with the production and marine transportation of Mexi-
can petroleum, and the second, with the Mexican taxation on petroleum
and its products.
The writer wishes to acknowledge the loyal cooperation rendered by
Mr. M. C. Ehlen, who had charge of the statistical work, and by Miss
S. Stern and Messrs. E. P. Heiles and J. E. Morrissey.
The aim throughout the work has been to pave the way for a thor-
ough understanding between the Mexican Government and the oil
operators and to present a true and clear statement of facts relating to the
questions at issue.

MEXICAN OIL FIELDS DEVELOPMENT
The salient features in the development of the Mexican oil fields may
be summarized as follows:
1901. First commercially productive well in Ebano field.
1902. Tehuantepec field came in; Diaz Government grants concession
'to Pearson & Son on practically all Federal lands along the Gulf of Mexico.
1907. First producing well in the Furbero field.
1908. Dos Bocas well caught fire, advertising tremendous produc-
tivity of Southern oil fields of Mexico.
Manager of Foreign Oil Department, Henry L. Doherty & Co.
Copyright, 1921, by the American Institute of Mining and Metallurgical Engineers, Inc.






2 PRODUCTION, TRANSPORTATION & TAXATION OF MEXICAN PETROLEUMS

1909. Tanhuijo field, discovery well.
1910. Discovery of oil in Juan Casiano, Potrero, Panuco, and Topila,
place Mexico as a leader in oil production.
1911. First shipment of Mexican oil made to United States, on
May 25.
1913. Alamo field of Penn-Mex Co., discovered.
1917. New Constitution of Mexico, establishing national ownership
of subsoil rights was enacted, May 1.
1917. Cerro Azul field discovered.
1918. Tepetate and Naranjos fields came in.
1919. Casiano, Tepetate, and Potrero fields went to water.
1920. Chinampa field shows water in August.
1920. Zacamixtle field comes in on Oct. 8.
1921. Naranjos field shows water, Feb.
Table 2 shows the holding companies and subsidiaries at present
operating in the fields and marketing Mexican oils.


TABLE 1.-Relative Daily Production per Well in Mexican and American
Oil Fields

Production
Producing Drilling Well Abandoned
Wells Wells Locations Wells
Field and State Daily Well
Daily

Mid-continent.
Oklahoma.................. 47,574 1,691 594 302,567 6.40
North and Central Texas.... 9,693 2,814 1,159 192,533 19.90
North Louisiana............. 2,694 488 333 103,867 38.50
Kansas.................... 13,708 368 113 i 6 4 a 117,166 8.50
Gulf Coast................... 3,252 462 184 a 68,067 20.90
Illinois. ..................... 15,692 49 4 31,033 1.90
Lima-Indiana................ ,
Lima ...................... 13,975 66 10 N C 4,467 0.32
Indiana.................... 512 55 7 11 I 2,666 5.20
Kentucky-Tennessee .......... 8,796 932 13 3' 2 25,633 2.90
Appalachian. 3 O c o
Pennsylvania and New York. 71,101 246 115 24,467 0.34
West Virginia............... 17,302 252 147 23,067 1.30
South, East and Central Ohio 14,178 116 75 15,433 1.10
Rocky Mountain. ........... 868 381 181 54,767 63.00
California .................... 9,357 422 66 273,000 29.50

Total .................. 228,702 8,342 3,001 1,240,633 5.4

Mexico..................... 61 26 12 237,884 3900.00
80b 567 296,305 3710.00
249b 296,305 1190.00

1 The figures relating to the American fields are those for the month of June, 1920, published by
the U. S. Geological Survey.
2 The wells abandoned in the American fields are listed by years, as given by the U. S. Geological
Survey. The figures (567) for wells abandoned in the Mexican fields include the total abandonments
to date.
The well statistics for the Mexican fields refer to conditions on June, 1919, as given by Boletin
del Petroleo: b refer to conditions during December, 1919, as given in Oil and Gas Journal. The num-
ber of actually producing wells (80) during December, 1919 is estimated.







VALENTIN R. GARFIAS


TABLE 2.-Foreign Companies, Producing and Marketing, at Present
Operating in Mexico
Atlantic, Gulf and West Indies S. S. Co. New England Oil Corpn.
Cia Petrolera de Tepetate. Cochrane, Harper and Co.
Agwi Pipeline Co. Canada Mexico Oil Co.
Agwi Refining Co. France and Canada Oil Transport Co.
Agwi Terminal Co. New England Exploration Co.
New England Oil Refining Co.
Cities Service Co. (See also Magnolia Petroleum Co.)
Cia de Gas y Combustible Imperio, S. A. Pierce Oil Corpn.
Cia Terminal Imperio, S. A. Cia Mexicana de Combustibles, S. A.
Cia Emmex de Petroleo y Gas, S. A. Anglo-Dutch Interests.
Empire Transportation and Oil Corpn. La Corona Petroleum Co.
Gulf Coast Corpn. Chijoles Oil, Ltd.
Lagunita Oil Co. Cia Mexicana de Petroleo La Corona.
National Petroleum Corpn. Tampico Panuco Petroleum Co.
Southern Fuel & Refining Co.
Tampascas Oil Co. Mexican Eagle Oil Co., (Aguila).
Cia Mexicana de Oleoductos Imperio, S. A. Eagle Oil Transport Co., Ltd.
Oilfields of Mexico, S. A.
Compania Terminal Union. Scottish American Oil and Transport Corpn.
Hispano Mejicana Oil Co. Southern Oil & Transport Corpn.
Hispano Cubana Oil Co. Fuel Oil Distribution Corpn.
Tampico Navigation Co.
East Coast Oil Co., S. A. Tampico Shipbuilding Corpn.
Southern Pacific Railroad. Tal Vez Oil Co.
Scottish Mexican Oil Co.
General Petroleum Company of California. Sinclair Consolidated Oil Corpn.
Continental Mexican Oil Co. Sinclair Gulf Corpn.
Sinclair Mexican Petroleum Co.
Gulf Oil Corpn. Freeport and Tampico Fuel Oil Corpn.
Mexican Gulf Oil Corpn. Freeport and Mexican Fuel Oil Corpn.
Freeport and Tampico Fuel Oil Transp.
Island Oil and Transport Corpn. Corpn.
Antillian Corpn. Mexican Seaboard Oil Co.
Capuchinas Oil Co. International Petroleum Co.
Colombia Petroleum Syndicate, Ltd. Standard Oil Interests.
Cia Metropolitana de Oleoductos, S. A. Atlantic Lobos Oil Co.
Cia Mexicana de Petroleo La Libertad, S. A. Port Lobos Petroleum Corpn.
Cia Petrolera Nayarit, S. A. Cortez Oil Corpn.
Esfuerzo Tampiqueno, S. A. Atlantic Petroleum Producing & Refining Co.
Island Refining Corpn. of Mexico, S. A.
Metropolitan Petroleum Corpn. Atlantic Oil Co.
Panuco Boston Oil Co.
Interocean Oil Co. Producers Terminal Corpn.
U. S. Asphalt Refining Co. Magnolia Petroleum Co.
Mexican Crude Oil & Asphalt Product Co. Azteca Petroleum Co.
Cia Inversiones de Aztlan, S..A.
Mexican Petroleum Co., Ltd. New England Fuel Oil Corpn.
Pan-American Petroleum & Transport Corpn. Compania Transcontinental de Petroleo, S. A.
Caloric Co. Panuco Excelsior Oil Co.
Huasteca Petroleum Co. Vera Cruz Mexican Oil Co.
Cia Naviera Transportadora de Petroleo, S. A. Penn-Mex Fuel Co.
Tamiahua Petroleum Co. Texas Company of Mexico.
Tuxpam Petroleum Co. Panuco Transportation Company of Mexico.
Chiconcillo Petroleum Co. Tex-Mex Oil Co.
Doheny & Bridge.
Tidewater Petroleum Co.
National Oil Co. Tide-Mex Oil Co.
National Shipbuilding Co. Union Oil Company of California.
Comales Oil Co. Otontepec Petroleum Co.
Cia Exploradora del Petroleo, S. A. California Investment Co.






4 PRODUCTION, TRANSPORTATION & TAXATION OF MEXICAN PETROLEUM

TABLE 3.-Comparison of Mexican and American Standards for Measuring
Petroleum and Its Products
Volume Relations
1 U. S. barrel = 42.00 U. S. gal. 1 U. S. gallon = 231.00 cu. in.
= 5.6145 cu. ft. = 0.13368 cu. ft.
= 158.985 i. = 3.7853 li.
= 0.158985 cu. m. = 0.0037853 cu. m.
1 cubic foot = 7.4807 U. S. gal. 1 cubic meter = 1000.00 li.
= 0.17811 U. S. bbl. = 35.31445 cu. ft.
= 28.317 li. = 264.1775 U. S. gal.
= 6.2899 U. S. bbl.
1 liter = 0.03531 cu. ft.
= 0.26418 U. S. gal.
= 0.0062899 U. S. bbl.
The American standard weight of water is taken with water at 600 F.; the Mexi-
can standard, with water at 4 C. (39.20 F.).
Volume Weight Relations of Water at 600 F.
8.32823 lb. per U. S. gal.
349.78566 lb. per U. S. bbl.
Metric ton (2204.622 lb.) per 6.3028 U. S. bbl.
Long ton (2240 lb.) per 6.4039 U. S. bbl.
The specific gravities of oils are expressed in the Mexican and American standards
as follows:
Mexican Standard
c g y = Weight of volume of oil at 200 C.
S c g y Weight of same volume of water at 40 C.
American Standard
eciic g y Weight of volume of oil at 600 F.
peic gravity Weight of same volume of water at 600 F.
Density is the weight per unit volume.
The formulas for converting Baum6 degrees into specific. gravity at 600/600 F.
and vice versa, are as follows:
140
Baum6 degrees = Sp. 60/ F 130
Sp. Gr. X 60'/60' F.
140
Specific gravity = 130+Baum-600/60 F.
To convert specific gravity of oil from the American to the Mexican standard
multiply the specific gravity as shown on the American hydrometer by 0.001061
and subtract the result from the American hydrometer reading; vice versa, to correct
from Mexican into American reading, multiply the specific gravity shown by the
Mexican hydrometer by 0.001062, and add the result to the Mexican hydrometer
reading.
The coefficient of expansion per degree Fahrenheit for oils varies with the specific
gravity (609/600 F.) as follows:
0.67 specific gravity......... 0.000728 0.87 specific gravity......... 0.000419
0.72 specific gravity......... 0.000627 0.91 specific gravity......... 0.000392
0.77 specific gravity......... 0.000540 0.96 specific gravity......... 0.000368
0.82 specific gravity......... 0.000470 1.00 specific gravity......... 0.000356
To ascertain the number of U. S. barrels of oil at 600 F. in 1 metric ton of 2204.622
lb., divide the specific gravity at 600 F. into 6.3028; for barrels per long ton, divide
specific gravity at 600 F. into 6.4039.







VALENTIN R. GARFIAS


TABLE 4.-Relation Between World's and United States' Petroleum Pro-
duction and Mexican Production and Exports in Barrels of
42 U. S. Gallons


~


rates Mexican Production
on

Per Per
Cent. Totalt cent
of ofT t
World World


United St
Product
World's
Production
Total



167,434,434 69,389,194
182,006,076 88,766,916
194,879,669 100,461,337
218,204,391 117,080,960
215,292,167 134,717,580
213,415,360 126,493,936
264,245,419 166,095,335
285,552,746 178,527,355
298,616,405 183,170,874
327,937,629 209,557,248
344,174,355 220,449,391
352,446,598 222,935,044
383,547,399 248,446,230
403,745,342 265,762,535
427,740,129 281,104,104
461,493,226 300,767,158
506,702,902 335,315,601
514,538,716 355,927,716
557,500,000 377,719,000
660,000,000 443,402,000


Mexican Exports

Per
Totalt To U. S. A.t Cnt
U.A.
U. S. A.


893,709
7,627,795
20,915,928
22,880,530
24,279,375
26,746,432
42,545,843
51,768,010
77,703,289 *
147,204,000


7,383,229
17,809,058
16,245,975
17,478,472
20,125,657
29,933,516
40,819,870*
57,618,589'
112,374,000


* Oiland Gas Journal.
t Boletin del Petroleo (Mexico City).
t U. S. Geological Survey.
Estimated.


TABLE 5.-Summary of Mexican Oil Production, Exports, Stocks, -and
Domestic and Field Consumption During 1917 to 1920 in
Barrels of 42 U. S. Gallons

1917 1918 1919 1920


Exports.................... 42,545,843 51,780,479 75,812,760 147,204,000*
Bunker fuel.............. 12,746,927 2,336,768 1,890,5291
Domestic consumption....... 9,218,491 14,098,766 33,000,000
Loss in refining ............ 492,588 600,000

Total net production...... 55,292,770 63,828,326 92,402,055 180,204,000*

Field consumption and losses 4,781,509 5,000,000 13000,000
Oil in steel storage.......... 10,000,000 14,526,559 12,528,518

NOTE.-1917-1918 figures taken from Boletin del Petroleo. 1919 figures taken
from the Oil and Gas Journal. Field consumption for 1918 estimated by Mexican
Petroleum Department. 1919 figures also estimated.


* Estimated.


I I


10,345 0.006
40,200 0.02
75,375 0.04
125,625 0.06
251,250 0.12
502,500 0.23
1,005,000 0.38
3,932,900 1.38
2,713,500 0.91
3,634,080 1.11
12,552,798 3.65
16,558,215 4.70
25,696,291 6.70
26,235,403 6.50
32,910,508 7.70
40,545,712 8.79
55,292,770 10.91
63,828,000 12.40
92,402,055*16.56
185,000,000 28.0







6 PRODUCTION, TRANSPORTATION & TAXATION OF MEXICAN PETROLEUM

TABLE 6.-Mexican Oil Exports from Tampico, Tuxpan, and Port
Lobos to Destinations in Barrels of 42 U. S. Gallons

1917 1918 1919 1920

Expor Per Exp Per Export Per Expor Per
Exports Cent. Exports Cent. Exports Cent. Cent.


From Tampico ........ 32,537,821 70.6 37,176,008 65.5 44,092,135 55.0 89,909,213 58.7
Tuxpan............. 13,516,337 29.4 15,849,998 27.9 17,166,714 21.0 18,786,904 12.2
Port Lobos.......... 3,739,390 6.6 20,070,993 24.0 44,579,183 29.1

46,054,158 100.0 56,765,396 100.0 81,329,842 100.0 153,275,300 100.0

Destination:
United States........ 35,386,242 76.7 40,819,870 71.9 57,618,589 70.8 112,373,795 73.3
Canada............. 630,579 1.38 681,177 1.2 2,558,496 3.1 2,010,958 1.3
South America...... 4,801,536 10.60 5,557,827 9.7 6,642,985 8.2 13,087,007 8.5
Central America..... 535,367 1.16 377,394 0.6 553,692 0.7 593,252 0.4
West Indies......... 885,483 1.6 1,964,282 2.4 5,754,903 3..8
Great Britain........ 679,157 1.48 2,600,806 4.6 3,054,357 3.8 5,493,533 3.7
Netherlands ......... 239,985 0.3 1,101,448 0.7
France .............. 277,591 0.3 579,496 0.4
Portugal............ 110,509 0.1 107,341 0.1
Mediterranean Ports. 49,836 0.11 66,767 0.1 159,130 0.1
Gibraltar ........... 144,624 0.1
Malta.............. 95,794 0.1 41,952 0.0
Tunis .............. 58,433 0.0
Egypt .............. 116,716 0.2 463,179 0.3
Algiers.............. 60,538 0.0
Italy ............... 101,729 0.1
Suez................ 72,504 0.1 132,630 0.1
Mexican Coastwise .. 3,971,441 8.60 4,689,774 8.3 5,996,982 7.4 6,070,431 3.9
Bunker Fuel......... 1,153,065 2.1 1,960,593 2.4 4,895,265 3.2
Local Deliveries. ..... 45,648 0.0

46,054,158 100.00 56,765,396 100.0 81,329,842 100.0 153,275,300 100.0




TABLE 7.-Mexican Oil Exports to United States Harbors from January
1917. In Barrels of 42 U. S. Gallons

1917 1918 1919 1920

Per Per Per Per
Exports ent. Exports Per. Exports Exports Cent.
p sCent. Cent, CentC


Texas Ports........... 9,023,492 25.5 9,878,409 24.2 15,787,493 27.4 30,941,986 27.5
New Orleans ......... 7,254,180 20.5 8,082,334 19.8 8,181,840 14.2 14,824,281 13.1
Florida Ports.......... 3,680,169 10.4 2,571,652 6.3 1,959,032 3.4 6,087,332 5.4
New York............ 13,552,930 38.3 17,144,345 42.0 26,965,499 46.8 48,626,183 43.3
New England Ports.... 1,875,471 5.3 3,143,130 7.7 3,975,683 6.9 11,098,771 9.9
California ............. 749,042 1.3 795,2421 0.8

Total toUnited States 35,386,242 100.0 40,819,870 100.0 57,618,589 100.0112,373,795 100.0







VALENTIN R. GARFIAS


TABLE 8.-Mexican Oil Exports by Companies from January 1917.
In Barrels of 42 U. S. Gallons

Company 1917 1918 1919 1920


Standard Oil Group
Standard Oil Co. of New York
Standard Oil Co. of New Jersey ........ 5,035,774 7,645,671 6,970,927 21,502,886
Transcontinental Petroleum Co.
Penn-Mex Fuel Co ..................... 3,451,226 7,007,833 8,495,047 3,176,963
Cortez Oil Corp ...................... ....... 1,935,360 9,096,435 7,960,959
Panuco-Boston Oil Co.................. 48,777 385,996
Magnolia Petroleum Co. (New England)..
Mexican Petroleum Co.
Huasteca Petroleum Co................. 12,236,388 11,708,109 12,651,974 29,280,421
Royal Dutch Shell and British Interests
Mexican Eagle Oil Co. (El Aguila) ...... 8,567,299 8,583,258 12,570,492 17,266,692
La Corona Petroleum Corpn ............ 524,626 2,895,587
Tal Vez Oil Co ........................ 24,368 98,896 398,889 504,993
The Texas Co ........................... 1,955,146 1,256,128 6,814,084 12,355,082
Sinclair Consolidated Oil Co.
Freeport & Mexican Fuel Oil Corp....... 3,626,917 3,939,756 4,753,862 8,300,045
Gulf Oil Corpn.
Mexican Gulf Oil Co.................... 1,121,236 1,734,191 4,574,520 10,573,622
East Coast Oil Co ....................... 3,390,939 3,398,459 4,639,513 5,542,820
Island Oil and Transport Corpn ............ 6,212,915 12,410,323
Pierce Oil Corpn ......................... 636,469 1,253,133 977,730 2,312,039
Union Oil Company of California........... 1,622,131 2,002,453 68,811
Cities Service Co.
National Petroleum Corpn.............. 258,894 543,791 489,159 792,050
New England Fuel Co....................... 166,567 218,244 1,126,967
Cochrane and Harper ..................... 335,571 1,187,915
Inter-ocean Oil Co........................ 619,056 492,511 635,296 438,754
Compania Terminal Union ................ 293,719 400,094
National Oil Co.......................... 1,602,134
Atlantic Gulf Oil Co.
Compania Refinadora del Agwi.......... 6,403,967

Total............................... 42,545,843 51,766,116 80,701,780* 146,489,120

Includes 2,998,491 bbl. Mexican coastwise shipments that were consumed domestically, making
net exports 77,703,289 bbl.






8 PRODUCTION, TRANSPORTATION & TAXATION OF MEXICAN PETROLEUMS

TABLE 9.-Tank Steamers in Operation and Under Construction by
Companies Exporting Mexican Oils

In Operation Under Construction

Company Numb Total Maximum N ber Total Maximum
SDead- Tonnage Dead- tonnage
T weight per Tankers weight per
Takers T er Taers T T er
Tons Tanker Tons Tanker

Atlantic Gulf Oil Co................. 14 160,400 12,000
Eagle Oil and Transport ............. 16 221,000 18,100 7 126,000 20,000
East Coast Oil Co.................. 4 25,000 8,000
Gulf Refining Co ................... 15 106,777 12,777 4 30,270 10,300
National Petroleum Corpn........... 1 5,100
Pan American Petroleum & Transp. 18 145,325 12,350 11 150,000 12,000
Pierce Oil Corpn* .................. 2 10,000 5,000
Shell Transport Co.t................. 263,000
Sinclair Consolidated Oil Corpn....... 11 50,884 7,500 12 116,600 10,500
Standard Oil Group
Standard Oil Co. of N. Y.t......... 19 109,039 12,650 15 159,960 12,650
Standard Oil Co. of N. J.t......... 45 449,166 15,000 17 225,000 20,000
The Texas Co...................... 15 100,000 9,500 80,000 10,000
Union Oil Company of Californiat.... 12 82,875 11,000 8 89,000 12,000

It is acknowledged that the information on this table is incomplete.
t Only a small number of these tankers are in the Mexican trade.
PRODUCTION AND EXPORTS
Mexican and American Oil-measuring Standards
The standards for measuring oil in Mexico are based on the metric
system and so the weight of water, which is the basis for comparison with
oil, is taken with water at a temperature of 40 C. and the specific gravity
of oil is based on oil at 200 C.; the American standards are taken on the
basis of the relative densities of oil and water at 600 F. (17 C.). It is
therefore evident that oil having a specific gravity of, say, 0.982 under
the Mexican standards is not an oil of 0.982 specific gravity under the
American standards. In order to establish the relation between both
systems, Table 3 has been compiled; this gives the specific gravities and
Baum6 degrees in the American standard and the corresponding specific
gravities in the Mexican standard, and also the volume-weight relation
showing the number of barrels per metric ton.
The Mexican Government levies the tax on the weight of the oil,
pesos-per-metric-ton basis, while the American operator sells the product
by volume on the dollars-per-barrel basis.

Relation between World, United States, and Mexican Production
A clear idea of the Mexican oil production and exports may be
obtained from Table 4 and Fig. 1, which show that for the first seven
years, Mexico's yearly production did not reach 1 per cent. of the world's
total; that the increase in production was gradual until the light-oil fields
were discovered, in 1910, from which date there has been a rapid increase,





VALENTIN R. GARFIAS 9

until the Mexican production aggregates about 28 per cent. of the world's,
total. The greatest portion of the Mexican production is exported, the
exports began in 1911 and reached an important amount in 1913. About
three-fourths of the exports go to the United States, in 1920 this amounted
to over 112,000,000 bbl. During 1920, the United States and Mexico
produced on an aggregate close to 95 per cent. of the total world's output.




!'; 11 --il- 1t11111111111 :6,. 4!

10--------- -----i--I




10 -- - - L y -









1917 1918 1919 19?0
FIG. 1.-- EXICAN OIL EXPORTS, BY PORTS FROM WHICH EXPORTED, AND TOTAL TO
THE UNITED STATES.

Summary of Mexican Production

Table 5 gives an analysis of Mexican production, exports, bunker fuel,
stocks, and domestic and field consumption during the last four years.
It shows that production has increased three and one-half times during
this period, domestic consumption has likewise increased, while the
volume of oil stocks or in storage has remained practically constant. The
figures relating to domestic consumption, losses, and storage shown in
the table are admittedly only approximately correct.
The following table gives the storage capacity in the Mexican fields
during 1919 and in August, 1920:
STORAGE CAPACITY, IN U. S. BARRELS
1919 AUGUST, 1920
Steel tanks......................... 26,355,000 31,455,000
Concrete tanks........................ 275,000 275,000
Earthen reservoirs ...................... 22,005,000 22,060,000
Concrete reservoirs.................... 865,000 860,000

Total....................... .. .......... 49,500,000 54,650,000






10 PRODUCTION, TRANSPORTATION & TAXATION OF MEXICAN PETROLEUMS

The steel storage facilities of four of the large companies is as follows:
BARRELS
Mexican Eagle..................... ........... 7,120,000
Mexican Petroleum ................................. 6,500,000
La Corona ....................................... 2,500,000
Transcontinental. .................................. 2,200,000


Exports by Destination

Table 5 and Fig. 2 show that by far the greatest bulk of the oil ex-
ported from Mexico goes to the United States, South American harbors


u 00


00





100 11 1
500
4 500
1400



100
500
S400

100






9 00f
300
.00







600
500
400
zoo






100
o1111 14001 H ll1




















The amount of oil used as bunker fuel is increasing at a rapid rate,





VALENTIN R. GARFIAS


for the first six months of 1920 being about equal to the total for the
preceding year. The Mexican coastwise movements include oil shipped
from Tampico, Tuxpam, and Port Lobos to Mexican harbors and to the
Aguila company's refinery at Minatitlan. The harbor of Tampico still
retains the leadership in oil exports with 59 per cent., Port Lobos comes
second with 29 per cent., and Tuxpam third with 12 per cent.
The oil shipped to Puerto Mexico is refined at Minatitlan and thence
marketed in Mexico or foreign countries by the Mexican Eagle Oil Co.
A small amount of oil produced in the Tehuantepec region is likewise
refined at Minatitlan, it being difficult to differentiate between this pro-
duction and the crude from Tuxpam or Tampico, included under "Coast-
wise shipments."
The yearly over-all exports from Puerto Mexico have been approxi-
mately as follows:
BARRELS BARREL
1913...................... 1,003,000 1917............. 1,401,000
1914............ ....... 1,846,000 1918.............. 1,010,000
1915................ ... 1,933,000 1919............. 1,882,000
1916 ....................... 1,536,000 1920............ 2,300,000 (estimated)

Table 7 shows that since January, 1917, most of the oil. exports had
gone to New York, Baltimore, Philadelphia, and neighboring ports; over
one-half of the Mexican oil exported to the United States going to ports
on the Atlantic seaboard. The exports to Texas ports have aggregated
about one-fourth of the total exports-to the United States, this figure
being kept more or less constant since 1917, while the exports to New
Orleans have gradually decreased from 20 to about 13 per cent. The
exports to Florida ports have likewise decreased from 10 to 5 per cent.
and those to New England ports have had a correspondingly gradual
increase. The exports to California harbors aggregate a fractional
percentage of the total and consist for the most part of about 5 to 15
shiploads during 1919 and the first half of 1920.

Exports by Companies

Table 8 shows that the Standard Oil group easily lead at the present
time, the Mexican Petroleum being second; the exports by the Anglo-
Dutch interests are third, but they have approximately only one-half
the exports of the first group of companies. A number of independent
companies exported from 8,300,000 to 68,000 bbl. each during the year
1920.
It is interesting to note that only about sixteen companies, or rather
interests, are at present exporting Mexican oil, the transporting and
marketing of Mexican oil being thus narrowed down to the well-estab-
lished oil interests.





12 PRODUCTION, TRANSPORTATION & TAXATION OF MEXICAN PETROLEUM

Exports by Grades of Oils

It is difficult to obtain figures of exports of Mexican oils by grades;
those on which Fig. 3 is based are more or less approximate. However,
this chart shows that the exports of light crude have increased tremend-
ously during the last eight months, and that there has been but little
increase in the exports of heavy crude, crude gasoline, and fuel oil. This
would seem to indicate that refinery facilities have not been increased
during that time, the increase in exports being primarily due to the larger
volume of the light crude now produced in the Chinampa-Naranjos-
Alazan pool.


FIG. 3.-TOTAL MEXICAN EXPORTS SINCE NOVEMBER, 1919.


COST OF TRANSPORTING MEXICAN OIL IN TANK STEAMERS

Tables 6 and 7 show that since January, 1917, from 70 to 76 per
cent. of the total Mexican exports have gone to the United States; in
fact, were Mexican coastwise shipping, bunker fuel, and local deliveries
excluded, the net percentage shipped to the United States harbors
would be well over 75 per cent.
Table 7 shows that over half of the exports to the United States go to
Atlantic seaboard harbors, New York harbor and vicinity leading with
43.3 per cent. Approximately one-fourth goes to Texas ports, 13.1





VALENTIN R. GARFIAS 13

per cent. to New Orleans, the remaining 15 per cent., or so, is distributed
between the Florida and New England ports; the amount being shipped
to California is almost negligible. It is therefore evident that in studying
the cost of transporting Mexican oils in tank steamers, it is necessary to
analyze conditions governing the transportation between the Mexican
harbors and Texas ports, New Orleans, Florida ports, New York and New
England, and primarily between Mexico and these last two mentioned.

Net Carrying Capacity of Tank Steamers

The net carrying capacity of tank steamers plying between Mexican
and American ports has been compiled in Figs. 4 and 5, which show that
the larger tankers are being used between Mexico and- New York a'nd
New England harbors, the smallest being used for the short runs to

51,000 3i 340
48,000 320
45,000 300
4,0ooo00 -







1917 1918 1919 1 1 I 292 0




between Mexican harbors and New England or New York is a 10,000-


45,00 bbl.; the smaller tankers of 3000 to 5000 tons and oil barges make






the run between Tampico and Florida and Texas ports.
Fig. 4 gives the average number of barrels transported per tank-
6 15 ,0 0 0 - - ^ f -- r-- - - - - - - ^ W












steamer-trip and indicates that this has increased from about 28,000 in
January, 1917, to 49,000 in October, that the a g larger units
between Mexican harbors and New England or New York is a 10,000-
deadweight-ton tanker or larger, able to carry 60,000 bbl. and more per



are being constantly put into steamers plyvice. This figure alsoeans have a dead-
weight tonnage of about 8000 tons with a carrying capacity decreases during the winter months.about
45,000 bbl.; the smaller tankers of 3000 to 5000 tons and oil barges make
the run between Tampico and Florida and Texas ports.
Fig. 4 gives the average number of barrels transported per tank-
steamer-trip and indicates that this has increased from about 28,000 in
January, 1917, to 49,000 in October, 1920, showing that larger units
are being constantly put into service. This figure also shows that the
carrying capacity decreases during the winter months.






14 PRODUCTION, TRANSPORTATION & TAXATION OF MEXICAN PETROLEUMS
















1. 15,00011 1
45,000
6 30,000


15,000



3 30,000
1 45,000 I I





















FlG. 5.--AVERAGE NET CAYING CAPACITY PER TANK STEAMER TIIP FROM MEXICAN
Trip






45,000


0



1917 1918, 1919 19zo

FIG. 5.--AVERAGE NET CARRYING CAPACITY PER TANK STEAMER TRIP FROM MEXICAN
TO AMERICAN POETS.


Distance from Tampico to American Ports and Time Required for Round
Trip

The distance from Tampico to American and other ports and the
average number of days required to make a round trip by a tanker, with
an average speed of 10 mi. per hr., allowances being made for days lost
in repairs, dry-docking, etc. are as follows:

DISTANCE, TIME, DISTANCE, TIME,
MILES DAYS MILES DAYS
Antofagasta, Chile ...... 3,668 38 Callao, Peru ........... 2,874 32
Baltimore, Md.......... 1,951 24 Canal Zone............. 1,485 20
Bayonne, N. J.......... 2,030 25 Freeport, Tex........... 474 12
Beaumont, Tex.......... 475 12 Fall River, Mass........ 2,131 26
Boston, Mass........... 2,276 27 Galveston, Tex.......... 473 12
Buenos Aires, Argentine 5,518 54 Houston, Tex........... 473 12






VALENTIN R. GARFIAS


DISTANCE, TIME,
MILES DAYS


Jacksonville, Fla. .......
Key West, Fla..........
Kingston, Jamaica.......
Liverpool, England......
London, England........
Marcus Hook, Pa........
Maurer, N. J...........
M iami, Fla.............
Mobile, Ala ............
Montreal, Canada .......
New Orleans, La........
New York..............
Norfolk, Va ..........
Pensacola, Fla.........


1,361
907
1,252
4,905
5,201
2,000
2,025
1,048
721
3,301
721
2,030
1,829
759


DISTANCE, TIME,
MILES DAYS
Philadelphia, Pa........ 2,000 25
Pt. Arthur, Tex......... 473 12
Portland, Me............ 2,275 27
Providence, R. I........ 2,131 26
Rio de Janeiro........... 5,417 53
St. Thomas, W. I....... 1,905 23
San Francisco, Calif..... 4,150 42
Savannah, Ga ...... .... 1,439 20
Southampton, England. 5,013 50
Sparrows' Point......... 1,950 24
Tampa, Fla ............ 921 16
Texas City, Tex......... 475 12
Valpariso, Chile ........ 4,144 42
Warner's, N. J.......... 2,025 25


The shortest trip, to Texas ports, requires an average of twelve days,
while fifteen days are allowed tankers making the New Orleans route.
The round trip to New York harbor and vicinity requires twenty-five
days; for the New England ports one or two days more are needed.

Cost of Tank Steamers

In pre-war days, the price of a 10,000-ton tanker averaged close to
$70 per ton; some of the larger oil companies purchased these steamers
for less. During the war, the price reached $200 per ton and higher; but
some months ago, a downward tendency began and it is possible to
contract for tankers'of 10,000 tons and over for between $140 and $150
per ton.
Although the transportation costs are based, in this report, on
steamers rated at 10,000 d.w. tons, the tendency is to increase the ca-
pacity of the boats to 15,000 and 20,000 tons, as shown on Table 9. The
Eagle Oil and Transport, and the Standard Oil of New Jersey have
under construction several 20,000-ton boats.
As a general rule, a boat built for a tanker should carry, in barrels,
on an average six times its deadweight tonnage; for example, a 10,000-ton
tanker should average at least 60,000 bbl. of oil per trip. Naturally, the
exact figures depend, among other factors, on the weight of the oil,
design of tanker, amount of space needed for tanker's fuel (more bunker
space will be needed on longer trips) season of the year, draft of boat as
compared to the depth of water in the loading arid unloading harbors,
etc. Five-thousand-ton tankers will carry somewhat over 30,000 bbl.;
7000-ton tankers about 45,000 bbl.; 10,000 d.w. ton'tankers from 60,000
to 65,000 bbl.; 15,000-ton tankers about 95,000 bbl.; and 20,000-ton
tankers about 120,000 barrels.
As a general rule, it has been found more advantageous to equip
tankers with steam engines using fuel oil for steam generation; boats





16 PRODUCTION, TRANSPORTATION & TAXATION OF MEXICAN PETROLEUMS

equipped with Diesel type engines have not given as reliable service as
the steamers.
Cost of Transportation

Taking as a unit a 10,000 d.w. ton tanker, able to carry 60,000 bbl. of
oil and upward per trip, and costing $200 per deadweight ton, which is
higher than the present average cost, and assuming other equally con-
servative figures, the cost of transporting oil for round trips taking from
12 to 30 days is shown in Fig. 6.
Thus the cost per barrel for transporting oil in a 10,000 d.w. ton
tanker, from Tampico to Texas ports, 12 days round trip will be 42.5c.;
to New Orleans, 15 days, 53c.; to Florida ports, 16 days, 57c.; and to
New York, 25 days, 88 cents.
If the tanker only cost $100 per ton, the correction factors in the
lower left-hand corner of Fig. 6 should be used; thus, the New Orleans
trip will cost 39.64c. per bbl. and not 53 cents.
In corroboration of the figures given by the chart for the cost of
transporting oil, the following is quoted from the Journal of Commerce of
July 29, 1920: "In closing the contracts, the United States Shipping
Board has agreed to charter sufficient tank ships for its transportation
at the Government rate of $6.50 per deadweight ton per month."
Allowing an average of 6 bbl. per deadweight and assuming that the
oil is to be transported from Tampico to New Orleans in a 10,000-ton
tanker costing $200 per deadweight, making two round trips per month,
the Shipping Board charter rate would give a transportation cost of
54.2c. per bbl. against the 53c. per bbl. obtained from Fig. 6.
It is the opinion of competent authorities that for round trips taking
from 12 to 30 days, the various charges for the shorter and longer trips
will about balance each other, leaving a fairly uniform ratio for cost of
transporting oil per barrel for the long and short trip.

CONCLUSIONS

1. The United States and Mexico will produce on an aggregate, in
1920, close to 90 per cent. of the total world's output of petroleum.
2. The Mexican production, in 1920, will aggregate over 25 per cent. of
the world's total.
3. About 75 per cent. of the Mexican exports estimated at 108,000,-
000 bbl. in 1920 go to the United States, and this represents about 25
per cent. of the United States production.
4. Of the oil exported to the United States, about 52 per cent. is
shipped to New York and North Atlantic ports; 27.5 per cent. to Texas
ports; the remaining 18.5 per cent. to New Orleans and Florida ports.
5. Although there has been a gradual increase in the exports of fuel











gOST OF.TRANSPORTING MEXICAN OIL
IN TANK STEAMERS TO AMERICAN; PORTS
BASED ON Od000 D.w.r. TANKERS

AVERAGE NET.CARRYING CAPAGCI' DF TANKER
SPER ROUND TRIP 6000 BILS.*
2 INITIAL COST OF TANKER PER D.W.T. $200.00
3 PORT CHARGES PER ROUND TRIP a1;500.00
4' STORES; PAINT, ETC. 133.00 PER DAY
5 REPAIRS 233.00
6 WAGES OF CREW AND SALARIES OF OFFICERS 166.00
7 PROVISIONS,WATER. ICE, ETC. 13300 -
8 ADMINISTRATION 27.00 P
i9 SUNDRIES 66.00
10 OIL FOR,FUEL,.F.O.B. TAMPICO (PER TON). 5.00 -
II DEPRECIATION 5%
12 AVERAGEINSURANCE. 4%
13 INTEREST ON INVESTMENT 107
14 STEAMER BURNING OILAS FUEL
15. DAYS IN PORT PER ROUND TRIP 7T
16 AMERICAN CREW ASSUMED
N.B. ACCOMPANYING L[ST OF NUMBER OFODAYS REQUIRED PER ROUND
TRIP TO VARIOUS AMERICAN PORTS ALLOWS TWO EXTRA DAYS PER'
TRIP.fDR. DRY.DOCING AND EMERGENCY REPAIRS

ACCOMPANY/H6 RLCPRT rY V.R; GARFIAS



NOTE:"G
-- mAcr TAIN T CmT rrr r T-srr-ING, 1t 4aN- s KNq L-N S

Mur|~Psl |IRon CralN (Acron rRdarsaGoIV To AcTUA or iTNPR D.w.T,


aOST'spsraI 6r. --"
(3) Q) -0 F4- TAN OT 1


(a) s.lra s s.6 .. AC-TUL o .. AHsW.-






204
Fwze. 6.





18 PRODUCTION, TRANSPORTATION & TAXATION OF MEXICAN PETROLEUM

oil, heavy crude, and crude gasoline, the great increase is due almost
entirely to the greater volumes of light crude exported.
6. The average load per tank steamer trip from Mexican harbors has
increased from 28,000 to 48,000 bbl. from January, 1917, to August, 1920.
The average load to North Atlantic and New York harbors is close to
60,000 bbl. (10,000-ton tankers); about 45,000 bbl. to New Orleans
(8000-ton tankers); 30,000 bbl. to Texas, and Florida ports (5000-ton
tankers). Tank steamers under construction, 12,000, 15,000,.and 20,000
tons, when placed in operation, should increase the average net carrying
capacity per tanker trip.
7. The transportation costs given in Fig. 6, based on 10,000 d.w.
ton tankers, are very conservative; in fact, appreciably lower figures
are fully justified at present. The figures given apply to boats owned by
the operating company, not to chartered boats.
8. No reliable figures of Mexican oil in storage are available.

MEXICAN TAXATION ON PETROLEUM AND ITS PRODUCTS

Although the following analysis of Mexican taxation on petroleum
was made by the writer when acting as Special Commissioner of the
Petroleum Department of the Mexican Government, the conclusions
drawn represent his own views, for which the Mexican Government can
in no way be held responsible.
The Mexican Government at present levies on petroleum and its
products not utilized in the Republic, the so-called Export Stamp Tax,
which is based on certain percentages, varying with the grades of oil, of
the prices of the exported commodity. These prices may be determined:
(1) as those prevailing within Mexico; (2) prices in New York, or other
American harbors, less marine transportation costs; (3) the prices, any-
where in the United States, of similar petroleums as regards physical
properties.
The amount of the present taxes that depend on oil prices, which in
turn can be interpreted in three ways, has been, and is the source of
misunderstandings between some of the operators and the government
whenever the government and the companies' manner of evaluating the
oils disagree. The aim of the writer is to pave the way for the removal
.of these causes for controversies and to suggest changes that will make
for a more definite and'clear basis for taxation.

TAXES PRIOR TO MAY, 1917

With the exception of the usual stamp tax on documents, and such
other minor contributions, the oil companies operating in Mexico did not
pay taxes to the government on about 24,800,000 bbl. produced prior to





VALENTIN R. GARFIAS


1912. In fact, companies like the Aguila, Huasteca, and the Standard
Oil of New Jersey were exempt from the usual import taxes on machinery,
etc. On July 1, 1912, during the administration of President Madero,
an export tax of 20 centavos per metric ton, approximately 1.54 U. S.
cents per barrel of oil exported, was charged: this tax, which was applied
irrespective of the quality of the oil, was in force until November, 1913,
when it was increased to 75 centavos per metric ton, about 5.77 U. S
cents per barrel, during the Huerta administration. This tax, like the
preceding one, was applied to oil exported, irrespective of its quality,
and was reduced on May 1, 1914, to 60 centavos per metric ton, approxi-
mately 4.62 U. S. cents per barrel, during the Carranza administration
and was in force until May 1, 1917, when the present tax, based on a
certain per cent. of the value of the oils wag established. The exports
from 1912 to April, 1917, inclusive, aggregating about 111,700,000 bbl.,
were taxed, therefore, approximately $4,355,000, or about 3.9 U. S. cents
per barrel.

TAXES FROM MAY, 1917 TO DATE

It should be understood that the tax, called in this paper the export
stamp tax, applies exclusively to petroleum and its products and is inde-
pendent of any other former or subsequent tax that applies to petroleum
as well as to other exports. Under this heading may be included the
paper redemption tax (infalsificable), bar dues for oil shipped from Tampico,
etc. It is clear, therefore, that when one speaks of Mexican taxation on
oil, one should differentiate between the export stamp tax, to which
the decree of Apr. 13, 1917, applies and which is based on a certain
percentage of the value of the oils, and any other taxes not inherent to
the petroleum industry. The additional taxes that are not properly oil
taxes are small, compared with the export stamp tax.

THE EXPORT STAMP TAX

The decree of Apr. 13, 1917, on which this tax is based, reads in part
as follows:
S. that it being of very diversified quality, the petroleum produced in the
Republic, and for the same reason of different commercial value, the tax should have
as a basis the value of each product, in order that it be reasonable and equitable;
that a considerable quantity of this liquid is not utilized because the necessary pre-
cautions are not taken in the exploration work and its daily handling, this circum-
stance occasioning frequent losses, not only to the interested companies, but also to
the Government, on account of the taxes that it fails to collect.
In view of the foregoing, I (the President) have enacted the following decree:
Article 1.-All crude petroleum of national production, its derivatives and the
gas from the wells, from the moment that it flows from the ground or leaves the
storage deposits, are subject to a special stamp tax under the following terms:






20 PRODUCTION, TRANSPORTATION & TAXATION OF MEXICAN PETROLEUMS

(a) Crude and fuel oil......................... 10 per cent. of assigned value.
Refined gasoline ........................... 3 per cent. of assigned value.
Crude gasoline ............................ 6 per cent. of assigned value.
Refined kerosene .......................... 3 per cent. of assigned value.
Lubricating oils ........................... Y4c. per liter.
Asphalt ................................. $1.50 per ton.
Gas ..................................... 5 per cent. ad valorem.
'(For up-to-date rates and changes see Table 1.)
(b) The crude petroleum and its derivatives, when wasted in any quantity,
whether for lack of care or not complying with the legal regulations, will pay a tax
double the one corresponding to similar products.
The products derived from the natural gas of the wells, when it is wasted from the
same reasons, will pay 10 per cent. of its commercial value.
Article 2.-(Exempts from tax, oil consumed in Mexico.)
Article 3.-(Defines "crude oil," "refined oils," etc.)
Article 4.-In order to be able to establish the tax, which, in accordance with
fraction (a) of Article 1, corresponds to each one of the products derived from petro-
leum, the Secretary of Hacienda will fix every two months the prices of said articles
at the shipping ports, taking the average of the values reached in the previous month.
The manifestations or bills that the companies present regarding sales of the same
articles, in the interior in Mexico, will serve as a base for making the estimate
referred to.
In case that no operations of sales take place in the interior, the average value
which these products had in New York the previous month, or in the harbors of the
United States, will be taken, deducting the value of transportation of said products,
from the Mexican to the foreign harbors. If there are no available data to make the
previous calculations, an equal price will be assigned to that which similar articles
have, in regard to physical properties, in the United States, fixing on this price the
respective tax.
THE GRADES OF MEXICAN OILS EXPORTED

Although it is difficult to obtain accurate information regarding the
various grades of oils exported from Mexico, enough data has been ob-
tained to show that, at present and for some time past, the bulk of the
exports can be divided into four classes:
Light or southern crude................ 0.9333 sp. gr. (200 Be.)
Heavy or Panuco crude................ 0.9859 sp. gr. (120 B6.)
Fuel oil ................ .............. 0.9589 sp. gr. (160 Be.)
Crude kerosene or tops................. 0.7527 sp. gr. (560 B6.)

The light crude is exported in large quantities and is also partly
refined in topping plants, which produce a low-flash fuel oil and light tops,
or crude gasoline. The heavy crude is not refined, being used exclusively
for fuel purposes in power plants; its low flash point and high viscosity
prevent its extensive use for marine purposes.

MEXICAN TAXES ON VARIOUS GRADES OF OILS
The export stamp taxes from May, 1917, to January, 1921, for the
four main grades of oils, have been computed and listed in Tables 10 and















































FIG. 7.-MEXICAN EXPORT STAMP TAX IN U. S. CENTS PER BARREL OF 42 U. S. GALLONS.






























V6B. FLO/L










FIG. 8.-MXICAN EXPORT STAMP TAX. PE CENT. INCASE O DECEAE.O/L






FIG. 8.--MEXICAN EXPORT STAMP TAx. PER CENT. INCREASE OR DECREASE,!





VALENTIN R. GARFIAS


13, on the basis of U. S. cents .per barrel. These tables show that the
lowest tax, 3.90c. per bbl., was levied on heavy crude in 1917, the highest,
72.7c. per bbl., or about 1.73c. per gal., being levied on crude gasoline for
several months in 1920.
In a general way the taxes on light crude have gradually increased
from 7.8c., in 1917, to 18.2c., in September, 1920; fuel oil tax has increased
from 5.7 to 13c.; heavy crude from about 4 to 10c. and back to 8.6c.;
and crude gasoline, from 1.2 to 1.7c. a gallon.
The monthly fluctuation in taxes for the four grades of oils are graph-
ically shown in Fig. 7, which illustrates the comparatively few changes
that have occurred from May, 1917, to March, 1920. The percentage
of increase in the taxes on the various grades is shown in Fig. 8, which
illustrates the abnormal increase of the tax on heavy crude, on March,
1920, as well as the lack of uniformity in the fluctuations of all taxes from
March, 1920, to date.
The average export stamp taxes, in U. S. cents per barrel, paid from
1912 to 1917 were: July, 1912, to November, 1913, 1/1; November, 1913,
to May, 1914, 5/1; May, 1914, to May, 1917, 4/; irrespective of the
quality of the oils, while the average from May, 1917, to December,
1920, for the four main grades of products has been: Heavy crude,
5; light crude, 11; fuel oil, 9; crude gasoline, 56c. per bbl., or 1j1c. per
gallon.
Table 2 shows the total taxes on petroleum and its products, which
include, besides the export stamp tax, others not exclusively applicable
to the oil industry. This table shows the infalsificable, or paper re-
demption tax (one paper peso be paid for each metal peso paid in taxes)
figured on-the uniform ratio of 10 to 1 for the relative values of the
paper and metal peso, which ratio undoubtedly gives larger figures than
have been actually paid. Bar dues have been calculated on the assump-
tion that all the oil exported paid these bar dues, while, as a matter of fact,
these dues are applicable only to the oil shipped from the harbor of
Tampico.
The total taxes herein listed represent practically all the returns the
Mexican Government obtains from the oil industry, inasmuch as no
income nor excess profit or similar taxes are in operation in Mexico.

THE VALUE OF MEXICAN OIL

The statement has been often made that the export stamp tax, which
by law should represent 10 per cent. of the price of the oil, actually
amounts to 40 per cent., but the absurdity of such statements can be
realized by analyzing the average taxes from 1917 to date. On the
assumption that these taxes represented 40 per cent. of the prices of the
oils, we would have:





24 PRODUCTION, TRANSPORTATION & TAXATION OF MEXICAN PETROLEUM
PRICE IN MEXICO
40 PER CENT. TAX U. S. CENTS
Heavy crude .............. .............. 5c. 12% per bbl.
Light crude..................... ............. lc. 27 per bbl.
Fuel oil .................................. 9c. 22% per bbl.
Crude gasoline ............................ lc. per gal. 3%4 per gal.

The computed prices in this case fall far below the market price, as
any one familiar with conditions can certify. This comparison illus-
trates, further, the difficulties encountered in ascertaining whether the tax
in question is, or is not, the exact percentage marked by law of a price
that, according to the law, can be computed in three ways, none of which
is clearly enough defined to eliminate possibilities of misunderstandings.
It has been advanced by representatives of some companies that the
only proper basis for arriving at the true value of Mexican oils, say at
Tampico, will be found in the selling contracts made between companies,
or between an oil company and the U. S. Shipping Board, which stipulate
the price at the Mexican harbor. In support of this contention, con-
tracts are exhibited showing the prices of Mexican oils varying within
wide limits, but as a rule- well below what might be considered a fair
market value. It is further stated, by the supporters of this method of
appraising Mexican oils, that account should be taken of long term con-
tracts which net the companies relatively low figures at the present
time.
On the other hand, it should be evident to any one familiar with inter-
companies' oil contracts, that they do not offer the best means of ascertain-
ing the fair market price, as shown by the following examples: Producing
company A sells its oil at Tampico to transportation company B at a
price that will net little or no profit to the producing company. Com-
pany B, in turn, sells the oil in the United States to marketing company C
for a price that will allow the transportation company to operate its
boats at a fair profit, leaving to the marketing company the big margin of
profits in disposing of the products to consumers in the United States.
It certainly would be unfair to claim, in this case, that the inter-company
contract price between A and B should be taken as the fair price of the
oil at Tampico.
A second case will give another view of this same question. Produc-
ing company A, when in great need of financial assistance, was forced to
sell its production to outside company B on a long-term contract at a
price that is now considerably lower than the market price; it is decidedly
unfair to claim that the contract price in question represents the actual
market conditions for the duration of the contract.
There is also the case of a long-term contract made under profitable
terms in years past, but with poor judgment as to future prices of Mexi-
can oils. It would be unfair to claim that the prices stipulated in these






VALENTIN R. GARFIAS


contracts always represent actual market conditions when the net result
is only to shift profits from one company to another.
The U. S. Shipping Board has made contracts, principally for oils
that the Shipping Board could not use without refining, and the price of
the oil transported was one of the many clauses in the contracts. These
contracts often included certain trading agreements for fuel oils that could
be utilized as bunker fuel, the price of, say, the light crude contracted,
refining of the crude, preferential rights for additional transportation
-facilities, etc. Here again, the contract price might well not reveal the
actual market price of the crude.
Were the letter and not the spirit of the 1917 law followed a tax on
gasoline of about 2/1 U. S. cents per gallon would be justified, in place
of the present tax of 1.7 U. S. cents per gallon, if the current Tampico
price of gasoline were taken; into account.
Summarizing the foregoing, it may be safely concluded that as long
as the export stamp tax is based on the prices of oils in Mexico, as defined
in the decree of April, 1917, the result will be endless controversies
between the Mexican Government and the operating companies.

RELATION BETWEEN PRICES OF AMERICAN AND MEXICAN OILS

It should be clearly understood that by the following analysis the
writer does not intend to establish, for instance, a direct ratio between
the prices or values of Mid-Continent crude at the well and those of
Mexican petroleum, nor that the composition of Mexican light crude
corresponds to that of Gulf Coast, Mid-Continent, or Californian crudes,
nor that the price of Mexican oil be established by comparison with the
fluctuations in prices of one or all of the American oils mentioned. The
endeavor is: (1) To analyze the fluctuations in price of the bulk of Ameri-
can oils, viz: Mid-Continent, Californian and Gulf Coast, which aggre-
gate about 85 per cent. of the total production of the United States; (2)
to establish the history of market fluctuations of these oils and such other
closely related products as bituminous coal so that the average would
represent a fairly stable picture of over-all market fluctuations, independ-
ent of the control of any one interest (official or otherwise) and solely
related to the laws of supply and demand; (3), once this bench mark is
established, to ascertain the relation between the Mexican ad valorem
taxes levied from beginning to date and these average prices, not with
the view of deciding what the price of Mexican oils has been, but in an
effort to ascertain what relation has existed between Mexican taxes and
such independent standard on which future taxation could be based thus
eliminating past controversies between the Mexican Government and the
operating companies. The writer wishes, therefore, to emphasize at
this time that what results are given are not offered as the solution of the








































FIG. 9.-COMPARISON OF VARIOUS CRUDE OILS AND BITUMINOUS COAL PRICES IN UNITED STATES.





VALENTIN R. GARFIAS


question as to what really has been or is the value of Mexican oils in
American harbors, but are only presented as offering a new and impartial
basis for taxing the Mexican oils exported.
As the law of April, 1917, provided that the value of oils in the United
States may be taken into account after proper allowances are made for
the cost of transporting the oil from the Mexican to the American harbors,
realizing the many difficulties encountered in reaching satisfactory results
by using the prices in Mexico as per companies' contracts, etc., the
writer compiled detailed information on the fluctuation of oil values in
the United States from 1917 to date; first, to ascertain whether there has
been over-all market conditions uniformly affecting the value of American
oils in the western, southern and central fields, and, second, to ascertain
what relation, if any, exists between the values of the American and
Mexican products.
The average oil prices listed related to the production of the Mid-
Continent, California and Gulf Coast fields and therefore represent over-
all market conditions. Fig. 9 and Table 12 show that there exists an'over-
all market condition uniformly regulating fluctuations in prices of fuels.
As about 50 per cent. of the Mexican exports are delivered to the Atlantic
seaboard, it was thought advisable to include in the analysis the export
price of bituminous coal, with which Mexican oil comes directly, or
indirectly, in competition, the ratio of 1 ton of coal to 3/1 bbl. of oil,
which is the generally accepted equivalent, being decided upon, and the
export price of coal being converted to the barrel-of-oil basis. The
fluctuations of prices of bituminous coal, as shown in Fig. 9, are more
uniform than the oil prices, and more closely follow the average market
conditions.
The Mexican exports to the United States, which are 75 per cent. of
the total exports, equal about 25 per cent. of the American oil production,
so when it is sold on the Atlantic or Gulf Coast seaboards, it has to compete
with the United States petroleums; therefore, the price of the Mexican
oil is controlled by that of the home product. Fig. 9 shows that from
the. end of 1919 to date, there has been a sharp increase in the prices of
fuels, both liquid and solid, throughout the United States, and it is in-
conceivable that the prices of Mexican oils, the bulk of which is marketed
in the United States, did not follow these over-all market fluctuations of
values.

RELATIVE COST OF OPERATING IN MEXICAN AND AMERICAN
OIL FIELDS

The claim is often made by some operators that the Mexican oil
taxes should be reduced because of the high cost of development com-
pared with this cost in the United States. But it has been proved that





28 PRODUCTION, TRANSPORTATION & TAXATION OF MEXICAN PETROLEUMS

the over-all costs are lower in the Mexican than in the American fields,
for the average depth of wells in the Mexican fields is less than 2500 ft.,
which is no greater than that in most American fields, and while the cost
of drilling is somewhat greater, it is certainly not much in excess of
drilling wells of the same depth in American fields where conditions are
similar.
In some American fields, the production cost, made up mostly of the
cost of bringing the oil from the underground reservoirs to the surface,
is about 40c. per bbl., and as the life of the well decreases, the production
cost materially increases. On the other hand, the production cost in
Mexican fields is exceedingly low, because practically all the wells are
gushers that flow marketable oil, necessitating no dehydration. The
cost of pipe lines in the Mexican fields is not materially greater than in
some United States fields; the Mexican pipe lines, as a rule, are a good
deal shorter than the average lines from the American oil fields to
sea-board.
But the main reason for the lower operating cost in the Mexican fields
can be found in Table 1. In order to produce, in round figures, 100,000,000
bbl. per year, it is necessary in California to pump about 9400 wells, while
in Mexico 250 wells produce a greater amount by natural flow. In
fact, the number of wells actually producing in Mexico is much nearer
100 than 250. The California well averages about 29/1 bbl. per day,
while the productivity of the Mexican wells ranges (according to whether
we class as producers every well capable of producing or only those
actually producing) between 1190 bbl. and 3000 bbl. per day. Cali-
fornia conditions are well above the average in the United States, as the
228,000 wells producing in the country only average about 5/1 bbl. per
well per day, as compared with 29/1 bbl. for the California wells. Besides
these producing wells, in the United States and Mexico, many dry holes
have been drilled; about 6000 wells have been abandoned each year from
1913 to 1917 inclusive in the United States while the total number of
wells abandoned in Mexico to date is less than 600.
These statistics prove the low cost, everything considered, of operat-
ing in the Mexican oil fields; a closer analysis discloses the fact that in no
other oil field have such economical conditions for operations prevailed
as in the Mexican fields to date.

RELATION BETWEEN AVERAGE OIL-COAL PRICE AND MEXICAN
TAXES

The average prices of American petroleums and bituminous coal,
which represents market conditions of these commodities in the United
States, are given in Tables 12 and 13 and are graphically shown in Figs.
7 and 10. These records show a gradual increase in the average price,
























p-




















FIG. 10.-AVERAGE PRICE AT WELL OF MID-CONTINENT CRUDE, CALIFORNIA CRUDE, GULF COAST CRUDE, AND BITUMINOUS
COAL EXPORT PRICE (CALCULATED PER BARREL OF OIL) COMPARED WITH MEXICAN EXPORT STAMP TAX ON LIGHT OIL (20* B.)
PER BARREL OF 42 U. S. GALLONS.
CO





30 PRODUCTION, TRANSPORTATION & TAXATION OF MEXICAN PETROLEUMS-

from $1.10 per bbl. in January, 1917, to $1.60 per bbl. in Decem-
ber, 1919, followed by an increase during 1920, from $1.60 to $2.77.
The average price increased, therefore, 45.5 per cent. during the years of
1917 to 1919 inclusive, and 73 per cent. in the first eleven months of 1920;:
the over-all fluctuations from January, 1917, to November, 1920, repre-
sent close to 15.2 per cent.
Table 13 shows the per cent. relations, by months, between the average
oil-coal price and the export stamp tax on the four grades of oils exported;
the figures indicating that the average tax on light crude corresponds
approximately to 7 per cent. of the type price (see Fig. 10), the percentage
during August, 1920, of 5.98 being about the lowest recorded; the tax on
fuel oil represents on an average, 5.4 per cent. of the oil-coal price, the
tax for August, 1920 being in proportion the lowest so far levied.
This analysis, based on facts, clearly shows that the Mexican export
stamp taxes, with the possible exception of that on heavy crude, are
lower in relation to the average market conditions, at the present time,
than when initiated in May, 1917.

TAX CONTROVERSIES BETWEEN MEXICAN GOVERNMENT AND OIL
COMPANIES

Although a number of important foreign companies have always worked
in harmony with the Mexican Government, as was stated to the writer by
their representatives in the course of this investigation, other companies
have questioned any increase in taxation with the resulting controversies
between these companies and the government whenever such changes
occurred.
It is undoubtedly true that the principle on which the present Mexi-
can tax operates has not been successful, nor has it met in its application
with the full approval of most of the operating companies. This is due
not so much to the amount of taxes actually paid as to the inability of
the operators to foretell when or what increases will take place, thus
preventing sellers and purchasers from taking proper care of these changes
at the time of fixing contract prices that extend for considerable time.
This has raised difficulties between buyer and seller, the former in some
cases being willing only to agree to pay the prevailing tax when the con-
tract is made, thus leaving the seller unable to collect any additional
amount in case the tax is increased before the expiration of the contract.
It appears, therefore, that although the operators are not justified in
asking for a reduction of the present tax, in order to safeguard the inter-
ests of bona fide marketers the Mexican tax should be revamped to
conform with the usual business transactions between buyer and
seller.





VALENTIN R. GARFIAS


CONCLUSIONS AND RECOMMENDATIONS

The foregoing discussion clearly indicates: (1) That the rate of
Mexican taxation on oil exported and, in fact, the aggregate of all
Mexican taxes affecting the oil industry, far from being burdensome in
nature as some operators contend, have been and are, if anything,
reasonably low. (2) Mexican oils exported prior to May, 1917, were
taxed only about 4 U. S. cents per barrel, and in several cases the ex-
porting companies were and are exempt from paying the customary
import duties on machinery and other supplies thus further benefiting
from their Mexican operations. (3) That the export stamp taxes levied
under the decree of April, 1917, are in proportion, lower in August, 1920,
than in April, 1917, when the law was put into effect. (4) That the
basing of the tax on the price of Mexican oils in Mexico, as the decree
provides, has given rise to endless arguments and dissensions. (5) That
the tax as applied creates difficulties between the seller and purchaser of
Mexican oils, which can and should be eliminated. (6) That it would be
advantageous to apply Mexican standards for measuring oils, within
the metric system, on the volume basis, rather than on the weight basis,
inasmuch as all Mexican oil is sold by volume.
Keeping clearly in mind the rights of the Mexican Government as
well as the just claims of the operators, and realizing that many of the
difficulties can be overcome by the establishment of some stable "bench-
mark" directly related to market conditions, on which to base the value of
Mexican oils and therefore the taxes on their products, the writer offers
the following recommendations:
1. That the Mexican tax on each grade of exported oils be based on
percentages of the average American oil-coal price, as defined in this
report.
2. That these percentage relations between the tax on any one grade
of oil and the oil-coal price should remain practically constant unless new
conditions should develop to make a change imperative.
3. That, if possible, monthly variations of the average oil-coal price
be taken into account.
4. That the tax be applied on the volume (cubic meter) rather than
on the weight (metric ton) of the oil exported (the average oil-coal price
in dollars per barrel converted to pesos per cubic meter is shown on
Table 12).
5. That the law of April, 1917, be abrogated and a new law enacted
covering, in a general way, the main points herein advanced.











TABLE 10.-Mexican Government Oil Valuations as Basis for Taxation from May, 1917
Base of Taxes.-For oils having a density greater than 0.91 sp. gr., decrease valuation 0.20 pesos for each increase in sp. gr. of 0.01 up to 0.97, above which
point no credit can be taken.
For each increase of 0.01 in sp. gr. below 0.91, increase valuation 0.40 pesos.
"x" = Pesos per metric ton.
"o" = Pesos per liter.


Year Month


1917 May-June


July-Aug.


Grade


Fuel oil...................
Gas oil ....................
Crude.....................
Crude.....................
Refined gasoline............
Crude gasoline............
Refined kerosene...........
Crude kerosene. ..........
Lubricants.................
Asphalt..................
G as......................

Crude.....................
Crude.....................
Fuel oil .............. .....
Crude gasoline.............


U. S. Standard
Mexican Stnd- 600/600 F.-15.56/15.560 C.
68'/39.20 F.Sp.Gr.
20/4 C. Sp. Gr. I ..


0.9323
0.9849
0.9579
0.7519


Fuel oil... ........... ...
Gas oil ....................
C rude. ...................
Crude.....................
Gasoline, bulk.............
Gasoline, cans............
Kerosene, bulk:...........
Kerosene, bbl.............
Kerosene, cans............


Crude................... .
Crude................... .
F uel oil .............. ....
Crude gasoline ..........


0.9323
0.9849
0.9579
0.7519


Sp. Gr.


0.911
0.971
0.911


0.9333
0.9859
0.9589
0.7527


0.911
0.911
0.911
0.971


0.9333
0.9859
0.9589
0.7527


Baum6


23.68
14.18
23.68


20
12
16
56


Mexican
Valuation
of Grades
in Pesos



8.50
8.50
5.00
11.00
0.166
0.0840


10.554
5.00
7.542
0.166


8.50
8.50
11.00
5.00
0.11
0.12
0.29
0.0554
0.6751


10.554
5.00
7.542
0.11


Mexican
Mexican
Stamp Tax in
Per Cent. on Per Metric
Vacation Ton in Pesos


10
10
10
10
3
6
3
6

5 ad val.
10
10
10
6
10
10
10
10
6
3
6
6
3


0.85 (x)
0.85 (z)
0.50 (x)
1.10 (a)
0.005 (o)
0.010 ()
0.0025 (
0.0050 (
0.0025 (o)
1.50 (x)

1.0554
0.50
0.7542
13.246
0.85
0.85
1.10
0.50
0.0066

0.00332


1.0554
0.50
0.7542
8.7777


0
C


S


i j i---- - - -


I


------- ---------I------I i-


z
tamp Tax

InU. S.
Cents per
Bbl. of
42 U. S. Gal.




a








3.9105
5.7370
79.0935









7.8135
3.9105
5.7370
52.4125
705










16B






1917 Sept-Oct. Fuel oil ................... 0.91 10.00 10 1.00
Crude ...................... 0.91 13.00 10 1.30
Crude..................... 0.97 5.50 10 0.55
Gasoil.................... 0.91 10.00 10 1.00
Refined gasoline ............ 0.12 3
Crude gasoline ............. 0.11 j 6 0.00675
Kerosene, crude or refined.. 0.03 6 0.00180
Crude ................... 0.9323 0.9333 20 12.554 10 1.2554 9.2945
Crude.................... 0.9849 0.9859 12 5.50 10 0.55 4.3015
Fuel oil ................... 0.9579 0.9589 16 9.042 10 0.9042 6.8780
Crude gasoline..-......... 0.7519 0.7527 56 0.11% 6 8.9772 53.6040


Nov.-Dec. Fuel oil............... .... 0.91 10.50 10 1.05
Crude............ ....... 0.91 13.50 10 1.35
Crude..................... 0.97 5.50 10 0.55
Gas oil.................... 0.91 10.50 10 1.05
Refined gasoline ............. 0.12 3
Crude gasoline ............. 0.13% 6 0.00675
Kerosene, crude or refined... 0.03 6 0.00180
Crude .................... 0.9323 0.9333 20 13.054 10 1.3054 9.6650
Crude ..................... 0.9849 0.9859 12 5.50 10 0.55 4.3015
Fuel oil.................. 0.9579 0.9589 16 9.542 10 0.9542 7.2585
Crude gasoline............. 0.7519 0.7527 56 0.113. 6 8.9772 53.6040
1918 Jan-Feb. Fueloil.............. .... 0.91 10.50 10 1.05
Crude...................... 0.91 13.50 10 1.35
Crude..................... 0.97 5.50 10 0.55
Gas oil.................... 0.91 10.50 10 1.05
Refined gasoline ............ 0.12j 3
Crude gasoline ............. 0.11% 6 0.00705
Kerosene, crude or refined... 0.03 6 0.0018
Crude..................... 0.9323 0.9333 20 13.054 10 1.3054 9.6650
Crude .................... 0.9849 0.9859 12 5.50 10 0.55 4.3015
Fueloil................... 0.9579 0.9589 16 9.542 10 0.9542 7.2585
Crude gasoline ............. 0.7519 0.7527 56 0.11% 6 9.3762 55.9865
Mar.-June Fuel oil .................. 0.91 10.50 10 1.05
Crude..................... 0.91 13.50 10 1.35
Crude..................... 0.97 5.50 10 0.55
Gasoil.................... 0.91 10.50 10 1.05
Refined gasoline ........... 0.1250 3
Crude gasoline ............ 0.1175 6 0.00705
Kerosene, crude or refined.. 0.03 6 0.0018
Crude .................... 0.9323 0.9333 20 13.054 10 1.3054 9.6650
Crude ................... 0.9849 0.9859 12 5.50 10 0.55 4.3015
Fueloil................... 0.9579 0.9589 16 9.542 10 0.9542 7.2585
Crude gasoline ............ 0.7519 0.7527 56 0.1175 6 9.3762 55.9865
Barrels per metric ton
120 B6.- 6:3929
160 B6.- 6.5729
200 B6.- 6.7533
560 B6.- 8.3736 or
1329.96 Liters











TABLE 10.-(Continued)
O
Base of Taxes.-For oils having a density greater than 0.91 sp. gr., decrease valuation 0.20 pesos for each increase in sp. gr. of 0.01 up to 0.97, above which
point no credit can be taken.
For each increase of 0.01 in sp. gr. below 0.91, increase valuation 0.40 pesos.
"" = Pesos per metric ton. 0
"o" = Pesos per liter.

U. S. Standard Mexican Stamp Tax
Mexican Stand- atMexican Mexican
Year Month Grade ard t 60/60 F.-15.56/15.560 C. Mexica n tMexican
Valuation Stamp Tax in In t.
680/39.20 F. sp. gr of Grades Per Cent. on In U. S.
20/4 C. sp. gr. in Pesos Valuation Per Metric Cents per
Baumb 42 U. S. Gal.

1918 July-Dec. Fueloil .................. 0.91 13.00 10
Crude...................... 0.91 15.50 10
Crude............ .... 0.97 6.00 10
Gas oil.............. .... 0.91 13.00 10
Refined gasoline and refined
kerosene ............... 0.1250 3
Crude gasoline............ 0.1175 6 0.00705
Kerosene, crude or refined... 0.04 6 0.00240
Crude..................... 0.9323 0.9333 20 15.054 10 1.5054 11.1455
Crude..................... 0.9849 0.9859 12 6.00 10 0.60 4.6925 0
Fuel oil................... 0.9579 0.9589 16 12.042 10 1.2042 9.1605
Crude gasoline............. 0.7519 0.7527 56 0.1175 6 9.3762 55.9865, o
1919 Jan.-Feb. Fueloil ................... 0.91 13.00 10
Crude..................... 0.91 15.50 10
Crude...................... 0.97 6.00 10
Gas oil .................... 0.91 13.00 10
Refined gasoline and refined'
kerosene ................ 0.1250 3
Crude gasoline ........... 0.1175 6 0.00705
Kerosene, crude or refined... 0.04 6 0.00240
Crude..................... 0.9323 0.9333 20 15.054 10 1.5054 11.1455
Crude.................... 0.9849 0.9859 12 6.00 10 0.60 4.6925
Fueloil.................. 0.9579 0.9589 16 12.042 10 1.2042 9.1605 O
Crude gasoline............ 0.7519 0.7527 56 0.1175 6 9.3762 55.9865 &
t4
CI







1919 Mar.-Apr.


Fuel oil .................
Crude...................
Crude .............. ......
Gas oil ..................
Refined gasoline ............
Crude gasoline .............
Kerosene, crude or refined...

Crude...................
Crude...................
Fuel oil.................
Crude gasoline............


.1 1 I1-1 1 -


0.9323
0.9849
0.9579
0.7519


0.9333
0.9859
0.9589
0.7527


20
12
16
56


13.00
15.50
6.00
13.00
0.1250
0.1175
0.06


15.054
6.00
12.042
0.1175


10
10
10
10
3
6
6


0.00705
0.00360


1.5054
0.60
1.2042
9.3762


11.1455
4.6925
9.1605
55.9865


May-June Fuel oil .................. 0.91 13.00 10
Crude ..................... 0.91 15.50 10
Crude...................... 0.97 6.00 10
Gas oil.................... 0.91 13.00 10
Refined gasoline ........... 0.1250 3
Crude gasoline ............0.1175 6 0.00705
Kerosene, crude or refined... 0.0650 6 0.0039
Crude ..................... 0.9323 0.9333 20 15.054 10 1.5054 11.1455
Crude..................... 0.9849 0.9859 12 6.00 10 0.60 4.6925
Fueloil .................. 0.9579 0.9589 16 12.042 10 1.2042 9.1605
Crude gasoline ............ 0.7519 0.7527 56 0.1175 6 9.3762 55.9865

July-Aug. Fuel oil .................. 0.91 13.00 10
Crude ..................... 0.9 6.00 10
Gas oil .................... 0.91 13.00 10
Refined gasoline ............ 0.1 56 7.
Crude gasoline ............ 0.1175 6 0.00705
Kerosene, crude or refined.. 0.0650 6 0.0039
Crude ..................... 0.9323 0.9333 20 14.554 10 1.4554 10.7755
Crude ..................... 0.9849 0.9859 12 6.00 10 0.60 4.6925
Fuel oil ................... 0.9579 0.9589 16 12.042 10 1.2042 9.1605
Crude gasoline.............. 0.7519 0.7527 56 0.1175 6 9.3762 55.9865
13.00 1


Sept.-Oct.


Fuel oil ..................
Crude .....................
Crude .....................
G as oil....................
Refined gasoline...........
Crude gasoline .............
Kerosene, crude or refined...
Crude .....................
Crude .....................
Fuel oil ..................
Crude gasoline ............


I I


0.9323 0.9333
0.9849 0.9859
0.9579 0.9589
0.7519 0.7527


13.00
15.00
6.00
13.00
0.1250
0.1175
0.0705


10
10
10
10
3
6
6


20 14.554 10
12 6.00 10
16 12.042 10
56 0.1175 6


0.00705
0.00450


1.4554
0.60
1.2042
9.3762


3


z


10.7755
4.6925
9.1605
55.9865


Barrels per metric ton
120 B6.- 6.3929
160 B6.- 6.5729
200 B6.- 6.7533
560 B.- 8.3736 or
1329.96 LitersJ


03
oo
CAO





I


I I I












TABLE 10.-(Continued)

Base of Taxes.-For oils having a density greater than 0.91 sp. gr. decrease valuation 0.20 pesos for each increase in sp. gr. of 0.01 up to 0.97, above which point
no credit can be taken.
For each increase of 0.01 in sp. gr. below 0.91, increase valuation 0.40 pesos.
= Pesos per metric ton.
o" = Pesos per liter.


Month




Nov.-Dec.

Jan.-Feb.


Grade


Fueloil..................
Crude....................


Crude.....................
G as oil....................
Refined gasoline ...........
Crude gasoline............
Kerosene, crude or refined...


Crude...... ..............
C rude.....................
Fuel oil ...................
Crude gasoline.............


Mexican Stand-
ard at
680/39.20 F. sp. gr.
200/40 C. sp. gr.



0.91
0.91


0.9323
0.9849
0.9579
0.7519


Mar.-Apr. Fuel oil .................. 0.91
Fuel oil, heavier than....... 0.97
Crude................... . 0.91
Crude........... ........... 0.965
Gas oil.................... 0.91
Refined gasoline............
Crude gasoline............
Kerosene, crude or refined...

Crude............... ..... 0.9323
Crude....... .............. 0.9849
Fuel oil................... 0.9579
Crude gasoline............. 0.7519


U. S. Standard
at
600/600 F.-15.56/15.560 C.

SG. Degrees,
Sp. Gr. Baum6


0.9333
0.9859
0.9589
0.7527


0.9333
0.9859
0.9589
0.7527


Mexican
Valuation
of Grades
in Pesos



13.00
15.50

6.00
13.00
0.1250
0.1175
0.0750


20 15.054
12 6.00
16 12.042
56 0.11%


16.62
13.00
21.67
13.00
16.62
0.1500
0.1425
0.0950

20 21.224
12 13.00
16 15.662
56 0.1425


Mexican
Stamp Tax in
Per Cent. on
Valuation



10
10

10
10
3
6
6

10
10
10
6

10
10
10
10
10
3
6
6

10
10
10
6


Mexican Stamp Tax

In U. S.
Per Metric Cents Per
Ton in Pesos Bbl. of 42
U. S. Gal.


1.5054
0.60
1.2042
9.3762








2.1224
1.300
1.566
11.3712


11.1455
4.6925
9.1605
55.9865








15.7135
10.1675
11.9125
67.8990


Year




1919

1920


I 1 ~ 1 ~ _












May-June Fuel oil...................
Fuel oil, heavier than.......
SCrude .................. ..
Crude, heavier than........
G as oil....................
Refined gasoline ..........
Crude gasoline ............
Kerosene, crude or refined...


Crude.....................
Crude ....................
Fuel oil...................
Crude gasoline ............


0.91
0.97
0.91
0.965
0.91


0.9323
0.9849
0.9579
0.7519


0.9333
0.9859
0.9589
0.7527


16.62
13.00
21.67
13.00
16.62
0.1600(o)
0.1525(o)
0.0950(o)


20 21.224
12 13.00
16 15.662
56 0.1525


2.1224
1.30
1.566
12.1691


15.7135
10.1675
11.9125
72.6635


July-Aug. Fueloil................... 0.91 17.00 10
Fuel oil, heavier than....... 0.97 13.00 10
Crude.................... 0.91 23.00 10
Crude, heavier than........ 0.965 13.00 10
Gas oil.................... 0.91 25.00 10
Refined gasoline............ 0.1600(o) 3
Crude gasoline............ 0.1525(o) 6
Kerosene, crude or refined... 0.0950(o) 6

Crude. .................. 0.9323 0.9333 20 22.554 10 2.2554 16.6985
Crude..................... 0.9849 0.9859 12 13.000 10 1.3000 10.1675
Fuel oil.................. 0.9579 0.9589 16 16.042 10 1.604 12.201
Crude gasoline............. 0.7519 0.7527 56 0.1525 6 12.1691 72.6635

Sept.-Oct. Fuel oil................... 0.91 18.00 10
Fuel oil, heavier than....... 0.97 11.00 10
Crude ..................... 0.91 25.00 10
Crude, heavier than......... 0.965 11.00 10
Gasoil. ................... 0.91 35.00 10
Refined gasoline........... 0.1500(o) 3
Crude gasoline ............. 0.1425(o) 6
Kerosene, crude or refined... 0.0800(o) 6


Nov.-Dec.


Crude....................
Crude.....................
Fueloil ..................
Crude gasoline.............


0.9323
0.9849
0.9579
0.7519


0.9333
0.9859
0.9589
0.7527


24.554
11.000
17.042
0.1425


10
10
10
6


LC


'.5



0


2.4554 18.179
1.1000 8.603
1.704 12.9623
11.3712 67.899


Barrels per metric ton
12 B6.- 6.3929
16 B6.- 6.5729
20 BA.- 6.7533
560 BB.- 8.3736 or
1329.96 liters


1920


I






38 PRODUCTION, TRANSPORTATION & TAXATION OF MEXICAN PETROLEUMS

TABLE 11.-Total Mexican Export Taxes in U. S. Cents Per Barrel of
42 U. S. Gal.
Export Infalsificable = Bar Dues = 10
Year and Month Stamp 10 Per Cent. of Centavos per Grand
Tax Export Stamp Tax Metric Ton Total

Light Crude
200 B4.
May, 1917.................... 7.813 0.781 0.740 9.335
September, 1917............... 9.294 0.929 0.740 10.964
November, 1917.............. 9.665 0.966 0.740 11.371
July, 1918 ................... 11.145 1.114 0.740 13.000
July, 1919.................... 10.775 1.077 0.740 12.593
November, 1919............... 11.145 1.114 0.740 13.000
March, 1920 ................. 15.713 1.571 0.740 18.025
July, 1920.................... 16.698 1.669 0.740 19.108
September, 1920 ............. 18.179 1.817 0.740 20.737
December, 1920 ............. 18.179 1.817 0.740 20.737
Fuel Oil
160 B4.
May, 1917 ................... 5.737 0.573 0.760 7.071
September, 1917............... 6.878 0.687 0.760 8.326
November, 1917.............. 7.258 0.725 0.760 8.745
July, 1918................... 9.160 0.916 0.760 10.837
March, 1920 ................. 11.913 1.191 0.760 13.864
July, 1920.................... 12.201 1.220 0.760 14.181
September, 1920 ............. 12.962 1.296 0.760 15.018
December, 1920 ............. 12.962 1.296 0.760 15.018
Heavy Crude
12 B6.
May, 1917 .................. 3.910 0.391 0.782 5.083
September, 1917.............. 4.301 0.430 0.782 5.513
July, 1918.................... 4.692 0.469 0.782 5.943
March, 1920 ................. 10.167 1.016 0.782 11.966
September, 1920............... 8.603 0.860 0.782 10.245
December, 1920 .............. 8.603 0.860 0.782 10.245

Crude Gasoline
560 B6.
May, 1917 ................... 52.412 5.241 0.597 58.250
September, 1917 ............. 53.604 5.360 0.597 59.561
January, 1918................ 55.986 5.598 0.597 62.182
March, 1920 ................ 67.899 6.789 0.597 75.286
May, 1920................... 72.663 7.266 0.597 80.526
September, 1920 ............. 67.899 6.789 0.597 75.286
December, 1920 ............. 67.899 6.789 0.597 75.286







VALENTIN R. GARFIAS 39


TABLE 12.-Relation Between American Fuel Prices and Mexican Export
Stamp Taxes on Petroleum and its Products
NOTE. One Cubic Meter= 6.2899 bbl. One U. S. dollar= Two Mexican pesos

Dollars per Barrel Pesos per Cubic Meter

Bitumin- Present Stamp Tax
Month and Year Mid- Calif- ous Coal Gulf Average Type
Conti- ornia Export Coast Price Price
nent Crude Price Crude 200 120 560 160
Crude (3.5 bbl. B6. Be. Be. Be.
per ton) 0.93230.9849 0.751 0.9579


1917
May............ 1.70 0.82 0.991 1.00 1.128 14.190 0.983 0.492 6.593 0.722
June............... 1.70 0.92 1.011 1.00 1.158 14.567 0.983 0.492 6.593 0.722
July............... 1.70 1.02 1.091 1.00 1.203 15.133 0.983 0.492 6.593 0.722
August.............. 1.85 1.02 1.140 1.00) 1.253 15.762 0.983 0.492 6.593 0.722
September........... 2.00 1.02 1.100 1.00 1.280 16.102 1.169 0.541 6.743 0.865
October............. 2.00 1.02 1.120 1.00 1.285 16.165 1.169 0.541 6.743 0.865
November.......... 2.00 1.02 1.360 1.00 1.345 16.920 1.216 0.541 6.743 0.913
December........... 2.00 1.02 1.017 1.00 1.259 15.838 1.216 0.541 6.743 0.913
1918
January............ 2.00 1.02 1.086 1.00 1.277 16.064 1.216 0.541 7.043 0.913
February............ 2.00 1.02 1.165 1.00 1.296 16.303 1.216 0.541 7.043 0.913
March.............. 2.25 1.02 1.147 1.35 1.442 18.140 1.216 0.541 7.043 0.913
April............... 2.25 1.02 1.136 1.35 1.439 18.102 1.216 0.541 7.043 0.913
May............... 2.25 1.27 1.046 1.35 1.479 18.606 1.216 0.541 7.043 0.913
June............... 2.25 1.27 1.105 1.35 1.494 18.794 1.216 0.541 7.043 0.913
July........... ....... 2.25 1.29 1.142 1.35 1.508 18.970 1.402 0.590 7.043 1.152
August............. 2.25 1.29 1.122 1.35 1.503 18.907 1.402 0.590 7.043 1.152
September.......... 2.25 1.29 1.148 1.80 1.622 20.404 1.402 0.590 7.043 1.152
October............. 2.25 1.29 1.185 1.80 1.631 20.518 1.402 0.590 7.043 1.152
November.......... 2.25 1.29 1.142 1.80 1.621 20.392 1.402 0.590 7.043 1.152
December........... 2.25 1.29 1.194 1.80 1.634 20.555 1.402 0.590 7.043 1.152
1919
January............ 2.25 1.29 1.336 1 1.50 1.594 20.052 1.402 0.590 7.043 1.152
February........... 2.25 1.29 1.250 1.25 1.510 18.995 1.402 0.590 7.043 1.152
March.............. 2.25 1.29 1.428 1.25 1.555 19.562 1.402 0.590 7.043 1.152
April.............. 2.25 1.29 1.371 1.00 1.478 18.593 1.402 0.590 7.043 1.152
May.............. 2.25 1.29 1.200 1.00 1.435 18.052 1.402 0.590 7.043 1.152
June................ 2.25 1.29 1.250 1.00 1.448 18.216 1.402 0.590 7.043 1.152
July................ 2.25 1.29 1.228 1.00 1.442 18.140 1.355 0.590 7.043 1.152
August............ 2.25 1.29 1.320 1.00 1.465 18.429 1.355 0.590 7.043 1.152
September........... 2.25 1.29 1.400 1.00 1.485 18.681 1.355 0.590 7.043 1.152
October............. 2.25 1.29 1.438 1.00 1.495 18.807 1.355 0.590 7.043 1.152
November.......... 2.33 1.29 1.465 1.00 1.521 19.134 1.402 0.590 7.043 1.152
December............ 2.50 1.29 1.380 1.25 1.605 20.191 1.402 0.590 7.043 1.152
1920
January............. 2.97 1.29 1.600 1.75 1.903 23.939 1.402 0.590 7.043 1.152
February........... 3.00 1.33 1.560 2.00 1.973 24.820 1.402 0.590 7.043 1.152
March............... 3.50 1.33 1.615 2.50 2.236 28.128 1.977 1.279 8.542 1.499
April............... 3.50 1.58 1.815 3.00 2.349 29.550 1.977 1.279 8.542 1.499
May............... 3.50 1.58 2.028 3.00 2.527 31.789 1.977 1.279 9.141 1.499
June............... 3.50 1.58 2.280 3.00 2.590 32.582 1.977 1.279 9.141 1.499
July................. 3.50 1.70 2.660 3.00 2.715 34.154 2.101 1.279 9.141 1.535
August.............. 3.50 1.70 2.957 3.00 2.789 35.085 2.101 1.279 9.141 1.535
September.......... 3.50 1.70 2.957 3.00 2.789 35.085 2.287 1.082 8.542 1.631
October.............. 3.50 1.70 3.050 3.00 2.812 35.375 2.287 1.082 8.542 1.631
November.......... 3.50 1.70 2.870 3.00 2.77 34.846 2.287 1.082 8.542 1.631
December............ 3.50 1.70 2.415 2.50 2.529 31.814 2.287 1.082 8.542 1.631







40 PRODUCTION, TRANSPORTATION & TAXATION OF MEXICAN PETROLEUMS


TABLE 13.-Mexican Export Stamp Tax Showing Percentage Relation to

Average Oil and Coal Price from May, 1917 (in U. S. cents per Barrel)


Light Crude Fue
Average 200 Be. 160
Oil and (0.9323) (0.95
Year and Month Coal
Price
Tax Per Tax
Cent.


1917
May............. $1.128 $0.078 6 92 $0.057
June............... 1.158 0.078 6.73 0.057
July............... 1.203 0.078 6.50 0.057
August............. 1.253 0.078 6.24 0.057
September.......... 1.280 0.093 7.26 0.069
October............. 1.285 0.093 7.23 0.069
November.......... 1.345 0.097 7.19 0.073
December.......... 1.259 0.097 7.68 0.073
1918
January............ 1.277 0.097 7.56 0.073
February........... 1.296 0.097 7.46 0.073
March............. 1.442 0.097 6.70 0.073
April............... 1.439 0.097 6.72 0.073
May............... 1.479 0.097 6.53 0.073
June................ 1.494 0.097 6.47 0.073
July............... 1.508 0.112 7.39 0.092
August.............. 1.503 0.112 7.42 0.092
September........... 1.622 0.112 6.87 0.092
October............. 1.631 0.112 6.83 0.092
November........... 1.621 0.112 6.88 0.092
December........... 1.634 0.112 6.82 0.092
1919
January............. 1.594 0.112 6.99 0.092
February............ 1.510 0.112 7.38 0.092
March............. 1.555 0.112 7.17 0.092
April............... 1.478 0.112 7.54 0.092
May............... 1.435 0.112 7.77 0.092
June............... 1.448 0.112 7.70 0.092
July............... 1.442 0.108 7.47 0.092
August............. 1.465 0.108 7.36 0.092
September........... 1.485 0.108 7.26 0.092
October............ 1.495 0.108 7.21 0.092
November......... 1.521 0.112 6.94 0.092
December. ......... 1.605 0.112 6.94 0.092
1920
January............ 1.903 0.112 5.86 0.092
February........... 1.973 0.112 5.65 0.092
March............. .2.236 0.157 7.03 0.119
April............... 2.349 0.157 6.69 0.119
May............... 2.527 0.157 6.22 0.119
June............... 2.590 0.157 6.06 0.119
July.' r ............. 2.715 0.167 6.15 0.122
August.............. 2.790 0.167 5.98 0.122
September.......... 2.790 0.182 6.53 0.130
October............ 2.812 0.182 6.47 0.130
November........... 2.77 0.182 6.57 0.130
December........... 2.529 0.182 7.2 0.130


1 Oil Heavy Crude
B6 12 BE.
79) (0.9849)


Per Tax Per
Cent. Cent.



5.08 $0.039 3.46
4.95 0.039 3.38
4.77 0.039 3.25
4.58 0.039 3.12
5.37 0.043 3.36
5.35 0.043 3.35
5.40 0.043 3.20
5.77 0.043 3.42

5.68 0.043 3.36
5.60 0.043 3.32
5.03 0.043 2.97
5.04 0.043 2.99
6.53 0.043 2.91
4.86 0.043 2.88
6.07 0.047 3.11
6.09 0.047 3.12
5.64 0.047 2.89
5.62 0.047 2.88
5.65 0.047 2.88
5.61 0.047 2.87

5.75 0.047 2.94
6.07 0.047 3.11
5.89 0.047 3.02
6.20 0.047 3.18
6.39 0.047 3.27
6.33 0.047 3.24
6.35 0.047 3.25
6.25 0.047 3.20
6.17 0.047 3.16
6.13 0.047 3.14
6.02 0.047 3.09
5.70 0.047 2.92

4.81 0.047 2.47
4.64 0.047 2.38
5.33 0.102 4.55
5.07 0.102 4.33
4.72 0.102 4.02
4.60 0.102 3.92
4.50 0.102 3.74
4.38 0.102 3.64
4.66 0.086 3.08
4.63 0.086 3.06
4.70 0.86 3.10
5.14 0.86 3.40


Crude Gasoline
560 B6.
(0.7519)


Tax Per
Cent.


$0.524
0.524
0.524
0.524
0.536
0.536
0.536
0.536

0.560
0.560
0.560
0.560
0.560
0.560
0.550
0.560
0.560
0.560
0.560
0.560

0.560
0.560
0.560
0.560
0.560
0.560
0.560
0.560
0.560
0.560
0.560
0.560

0.560
0.560
0.679
0.679
0.727
0.727
0.727
0.727
0.679
0.679
0.679
0.679


46.45
45.26
43.57
41.82
41.88
41.71
39.85
42.58

43.84
42.53
38.82
38.91
37.85
37.47
37.13
37.25
34.52
34.32
34.54
34.26

35.12
37.08
36.00
37.87
39.01
38.66
38.76
38.22
37.70
37.44
36.80
34.88

29..42
28.36
30.36
28.90
28.74
28.06
26.76
26.04
24.35
24.30
24.50
26.85


~--------




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