U.S. Supreme Court OHIO OIL CO. v. CONWAY, 281 U.S. 146 (1930)

[Page 281 U.S. 146, 155]

tral Texas, Gulf Coast, and other sections, are shown in the trade journals and were put in evidence. The quotations that are according to gravity have a rising scale of prices as gravity increases. [Footnote 3]

[Page 281 U.S. 146, 157]

suitable for making lubricating oil, the evidence is that in February, 1928, the price of the complainant's Urania oil was 75 cents a barrel, while that of the coastal 'Grade A' oils was $1.20 a barrel, and the Louisiana tax on each, the gravity being under 28 degrees, was four cents a barrel. The respondent states that the oils of these Louisiana fields are shipped to a common market, Port Arthur, Tex., and, by reason of the greater distance, the transportation charges for the oils of North Louisiana are

[157-Continued.]

TABLE CONTINUED

Gray County Carson and Wheeler (Texas) (Texas Hutchinson Salt Creek, Grade B & Light Somerset (South Panhandle) Panhandle) (Texas Panhandle) Wyo. Crude (G. Coast) Central Texas) 5 6 8 7 9 10

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.15 . . . . . . . . . . . . . . . . . . . . 1.18 . . . . . . . . . . . . . . . . . . . . 1.21 . . . . . . . . . . . . . . . . . . . . 1.24 . . . . .90 .90 .90 . . . . . . . . . . . . .90 .90 .90 . . . . 1.27 . . . . .90 .95 .90 1.10 1.30 . . . . .95 1.00 .90 1.15 1.33 . . . . 1.00 1.05 .90 1.20 1.36 . . . . 1.05 1.10 .95 1.25 1.39 1.05 1.10 1.15 1.00 1.30 1.42 1.07 1.15 1.20 1.05 1.35 1.45 l. [Footnote 09] 1.20 1.25 1.10 1.40 1.48 1.11 1.25 1.30 1.15 1.45 . . . . 1.13 1.30 1.35 1.20 1.50 . . . . 1.15 1.35 1.40 1.25 . . . . . . . . 1.17 1.40 1.45 1.30 . . . . . . . . . . . . 1.45 1.50 1.35 . . . . . . . . . . . . 1.50 1.55 1.40 . . . . . . . . . . . . 1.55 1.60 1.45 . . . . . . . . . . . . 1.60 1.65 1.50 . . . . . . . . . . . . 1.65 1.70 1.55 . . . . . . . . . . . .

[Page 281 U.S. 146, 163]

distance of the fields from the common market and the consequent difference in transportation charges. Whether or not this is an adequate explanation, it cannot be said that the State, from the standpoint of the Federal Constitution, could not put the same specific severance tax on the same sort of oils used in the same way, merely because particular producers of such oils might obtain different prices. There may be many reasons why one owner obtains more in gross return for the same sort of commodities than another owner, and still other reasons why the net returns of the one may be more than those of the other. This court recently decided that a tax imposed by Alabama on those selling cigars and cigarettes, which was based on the 'wholesale sales price' was not repugnant to the Fourteenth Amendment because of an alleged difference in the wholesale prices paid by dealers who bought from the manufacturers and by those who did not. Exchange Drug Company v. Long, 281 U.S. 693, 50 S. Ct. 244, 74 L. Ed. -, decided March 12, 1930. A classification of threaters for license fees according to prices of admission was held to be valid, although some of the theaters charging the higher admission, and paying the higher tax, had the less revenue. Metropolis Theatre Co. v. Chicago, , 33 S. Ct. 441. We find no ground for holding that the tax in this instance violated the Federal Constitution.

Judgment affirmed. Footnotes

Footnote 1 Section 21 is as follows: 'Texas may be levied on natural resources severed from the soil or water to be paid proportionately by the owners thereof at the time of severance. Such natural resources may be classified for the purpose of taxation and such taxes predicated upon either the quantity or value of the product at the time and place where it is severed. No severance tax shall be levied by any parish or other local subdivision of the State.'No further or additional tax or license shall be levied or imposed upon oil or gas leases or rights, nor shall any additional value be added to the assessment of land, by reason of the presence of oil or gas therein or their production therefrom.'

Footnote 2 The text of section 2 of Act No. 5 of 1928 in relation to oil is as follows: 'Taxes on natural resources severed from the soil or water ... shall be predicated on the quantity severed, and shall be paid at the following rates: ...'(7) a. On oil of 28 gravity and below, four (4) cents per barrel of 42 gallons.'b. (1) On oil above 28 gravity and not above 31 gravity, four and one-fourth (4 1/4) cents per barrel of 42 gallons.'b. (2) On oil above 31 gravity and not above 32 gravity, five (5) cents per barrel of 42 gallons.'c. On oil above 32 gravity and not above 36 gravity, eight (8) cents per barrel of 42 gallons.'d. On oil above 36 gravity and not above 43 gravity, ten (10) cents per barrel of 42 gallons.'e. On oil above 43 gravity, eleven (11) cents per barrel of 42 gallons.'

Footnote 3 Among the price quotations for crude oil produced in Louisiana- Arkansas, set forth in 'The Oil Weekly' of May 25, 1928, are the following:'LOUISIANA-ARKANSAS (All Companies.)*'Homer, Haynesville, Caddo, El Dorado, De Soto and Crichton and Cotton Valley.**

Below 28 gravity .91

Footnote 28 to 28.9 gravity .96

Footnote 29 to 29.9 gravity 1.01

Footnote 30 to 30.9 gravity 1.06

Footnote 31 to 31.9 gravity 1.11

Footnote 32 to 32.9 gravity 1.16

Footnote 33 to 33.9 gravity 1.19

Footnote 34 to 34.9 gravity 1.22

Footnote 35 to 35.9 gravity 1.25

Footnote 36 to 36.9 gravity 1.28

Footnote 37 to 37.9 gravity 1.31

Footnote 38 to 38.9 gravity 1.34

Footnote 39 to 39.9 gravity 1.37

Footnote 40 to 40.9 gravity 1.40

Footnote 41 to 41.9 gravity 1.43

Footnote 42 to 42.9 gravity 1.46

Footnote 43 to 43.9 gravity 1.49

Footnote 44 to 44.9 gravity 1.52

Footnote 45 to 45.9 gravity 1.55

Footnote 46 to 46.9 gravity 1.58

Footnote 47 to 47.9 gravity 1.61

Footnote 48 to 48.9 gravity 1.64

Footnote 49 to 49.9 gravity 1.67

Footnote 50 to 50.9 gravity 1.70

Footnote 51 to 51.9 gravity 1.73

Footnote 52 and above 1.76

[Footnote *] Shreveport-Eldorado's postings stop at above 40 gravity.

[Footnote *] * Below 36 gravity, the posting on Cotton Valley is 75 cents. From 36 to 52 and above the regular gravity schedule is followed.

Bellevue 1.25 Jennings 1.15 Vinton 1.30 Edgerly 1.30 Starks Dome 1.30 Urania .75 Calion .75

Another list of quotations in the same issue of 'The Oil Weekly' is as follows:"Gulf Coast"* "Grade 'A' all companies $1.20 Gulf Coast Light Oil, below 25 1.15

Footnote 25 to 25.9 gravity 1.17

Footnote 26 to 26.9 gravity 1.19

Footnote 27 to 27.9 gravity 1.21

Footnote 28 to 28.9 gravity 1.23

Footnote 29 to 29.9 gravity 1.25

Footnote 30 to 30.9 gravity 1.27

Footnote 31 to 31.9 gravity 1.29

Footnote 32 to 32.9 gravity 1.31

Footnote 33 to 33.9 gravity 1.33

Footnote 34 to 34.9 gravity 1.35

Footnote 35 to 35.9 gravity 1.37

Footnote 36 to 36.9 gravity 1.39

Footnote 37 to 37.9 gravity 1.41

Footnote 38 to 38.9 gravity 1.43

Footnote 39 to 39.9 gravity 1.45

Footnote 40 and above 1.47

[Footnote *] Humble Oil & Refining Company's postings on Gulf Coast Light stop at 35 to 35.9. Its price on all crudes above 35 to $1.37 per barrel.

Magnolia Petroleum Company's postings stop at 31 to 31.9."

The following table is taken from 'The Oil and Gas Journal' of June, 13, 1929:"Crude Oil Gravity Table

Crane, Upton, Crockett, Winkler, Howard, Pecos, Okla., Kans. No. La. and Texas crudes,and Stephens, N.C., Tex. Arkansas Lea, N. Mex. Ark. Gravity 1 2 3 4

Footnote 24 and above . . . . . . . . . . . . . . . . Below 24 . . . . . . . . . . . . . . . . Below 25 .85 . . . . .70 . . . .

Footnote 25 to 25.9 .90 . . . . .74 . . . .

Footnote 26 to 26.9 .95 . . . . .78 . . . .

Footnote 27 to 27.9 1.00 . . . . .82 . . . . Below 28 . . . . 1.00 . . . . .90

Footnote 28 to 28.9 1.05 1.05 .86 .94

Footnote 29 to 29.9 1.10 1.10 .90 .98

Footnote 30 to 20.9 1.15 1.15 .94 1.02

Footnote 31 to 31.9 1.20 1.20 .98 1.06

Footnote 32 to 32.9 1.25 1.25 1.02 1.10

Footnote 33 to 33.9 1.30 1.30 1.06 . . . .

Footnote 34 to 34.9 1.35 1.35 1.10 . . . .

Footnote 35 to 35.9 1.40 1.40 1.14 . . . .

Footnote 36 to 36.9 1.45 1.45 1.18 . . . .

Footnote 37 to 37.9 1.50 1.50 . . . . . . . .

Footnote 38 to 38.9 1.55 1.55 . . . . . . . .

Footnote 39 to 39.9 1.60 1.60 . . . . . . . .

Footnote 40 to 40.9 1.65 1.65 . . . . . . . .

Footnote 41 to 41.9 1.70 1.70 . . . . . . . .

Footnote 42 to 42.9 1.75 1.75 . . . . . . . .

Footnote 43 to 43.9 1.80 1.80 . . . . . . . .

Footnote 41 and above 1.85 1.85 . . . . . . . .