IMPORTED FUEL OIL

Dominion, Volume 27, Issue 38, 8 November 1933, Page 11

IMPORTED FUEL OIL

Imposition of Duty Opposed Before Commission BITUMEN AND ASPHALT Imposition of a duty on imported fuel oils and a protective against bitumen and asphalt in favour of the manufacture of tar, requests made o the Tariff Commission recently by the Gas Companies’ Association ot Aeu Zealand, were opposed in representations made by other interests to the commission yesterday. s The request for a duty on imported fuel oil was opposed by Mr. J. K. L. Webling. representing the Shell Company of New Zealand, Ltd. The present Customs regulations admit free of duty 'crude petroleum, crude residual oil, once run shale oil, aud crude distillates of petroleum when imported in ships bottoms. Mr. Webling said that immany cases a duty would inevitably cause an-.lu-crease in manufacturing, production, or running costs. Where, as in the vast majority of cases, there were strong technical and economic reasons why fuel oil should be used instead of other heat and power-producing agents, a duty would merely add another burden to industry by increasing costs. If the free play of sjich competition as fuel oil might provide were restricted, prices for gas and coke might be increased. .A reversion to giis-firing would lie bound to increase costs, while a reversion to coke-firing would, in piany cases, result in the production of goods of inferior quality as well as increasedcosts owing to; a larger proportion of rejects. For many industrial applications gas could not compete with fuel oil, even if fuel oil were sold at twice the current rates; In many cases, too, coke could not compete with fuel oil because of ' technical exigencies. In several instances, notably the glass manufacturing industry, it would be impossible for manufacturing firms to continue to produce certain goods if they were compelled to use gas or coke, Mr. Webiing continued. A prohibitive duty on fuel oil would compel some factories to close down entirely, while in other cases important sections of factories would have to be closed. 1 The incidence of such a duty would be unfair inasmuch as all fuel oil users would be penalised in order to give protection to a very small percentage of the gas ami coke trade. Although the Gas Companies’ Association had asked for a protective duty, it was important to i|oie that the strongest competitor of gas was electric energy, said Mr. Webiing. No duty on fuel oil could possibly restore, to gas and coke the large trade which bad been captured by electricity. He 1 submitted that the proposed duty would be contrary to the public interest. Competition tended to keep tho prices of kindred commodities at a reasonably low level, and such a state of affairs was very much in the public interest. Bitumen Tariff Objected To. The application for a protective tariff against bitumen and asphalt was vigorously opposed by representatives of the Neuchatel Ashphalte Company, Ltd., and the Shell .Company, Ltd: Tlie Gas Companies’ Association recently asked for a -duty on both British and foreign bitumen of £2/10/- a ton. “In our opinion the gas industry has ample protection in the price at which -tar can be sold, ns its selling price is already much below that of bitumen or asphalt,” said Mr. F. Chapman, New Zealand manager of the Neuchatel Company. “The protection asked for would seriously add to the curtailment of the paving industry by increasing the cost of all road construction.', It will make it increasingly difficult for local authorities to under-, take this necessary work. Funds for road construction have of necessity been reduced, and those in authority are formed to confine their activities largely to maintenance. A further increase in costs by the proposed duty may cause maintenance work also to be paiffiaHy suspended, with the danger of losing a portion of the capital value of the existing roads.

“Even if tar were a satisfactory substitute for bitumen or asphalt, it is unlikely that the supplies available would be adequate for all the country’s road construction .purposes. Also, some useful tar preparations are made by Tniximg" the tar with bitumen and the duty on. bitumen would obviously add to tfce cost of these preparations.” Other industries where Trinidad Lake bitumen was used*would suffer through the taxation proposed, without •any benefit to the gas industry, he said. Examples of these were the" insulatm>b of electrical coiiduits, steel tope manufacture, and the fluxing of mastic rock asphalt where it was used as a cushion under tram rails. Supposing tar was equal in quality to bitumen, as had been claimed, the prices at which tar was sold should be sufficient protection, Mr. Chapman contended. He was quite sympathetic with the application of tlie gas company, which was looking after its own interests, but the paving industry in the countrv was an important one, and much labour and plant was involved. The point to be considered was whether sufficient tar was manufactured in New Zealand to carry out all paving work that was necessary; this, he thought, was far from tlie ease. Tar also was a most variable commodity. Some works produced very good tar, and others tar that could not possibly be used on the roads. Concluding, Mr. Chapman said tliat he would like the commission to receive detailed evidence on tlie subject which his head office in Australia was sending. This the commission agreed to do. Limited in Use. Protest against the duty was also made by Mr. D. H. Scott, who appeared for the Shell Company of New Zealand. Tar in New Zealand had been given every opportunity to justify its use, and it was the fault of the tar-makers and the poor results obtained in using the product that had limited its use. he said. Mention had been made of the quantity of tar used in Great Britain, but one must also bear in mind the fact that a large anionut of bitumen was also used there. Tar, as used in England, was in general of a better quality and consistency than that made here. Tar had a number of privileges that were denied to bitumen, be continued. These were: It did not have to pay sales tax, or the 25 per cent, exchange, and it did not pay a’ : duty o£ 10 per cent, ad valorem phis 9-40ths surtax, making a total of 12J per cent. In spite of this additional duties had been asked for upon a material that had no peer as far as quality was concerned tjnd was not disastrously competitive with tar. “Any additional duties that are placed upon this product would only penalise the motorists of New

Zealand, who already bear more than their share of taxation,” lie said. Mr. A. S. Mitchell, consulting engineer and architect, also expressed opposition to the placing of a duty on bitumen or bituminous products, claiming that New Zealand had no effective substitute for bitumen for roadmaking and "insulation purposes.