The Oily Deep

Of recent years when an oil man has a nightmare, he sees a sea of petroleum. vaster than the Pacific, with dark green oleaginous billows rolling before a wind that moans "Overproduction, overproduction." Yet last week when 2,941,550 barrels of oil swelled up each day from the bowels of the U. S., a greater secretion than ever at any one time before, there was comparatively little disturbance to the peaceful slumbers of the men of oil.

Among the deepest of the sleepers last week, was the chairman of a great oil company who slept the sleep of the just, weary from his pharmaceutical labors in the dispensary of the Federal jail in Washington, D. C. Not only the cloistered seclusion of prison walls but trust in his company's progress protected his rest. For, while Harry F. Sinclair slept and while he worked, plans were going forward for enlarging his company's outlets.

Sinclair Consolidated Oil Co., through a $50,000,000 subsidiary (Sinclair Auto Supply Co.) announced plans for the creation of a chain of monster service stations, to sell oil and gasoline in conjunction with everything else a motorist desires. From Davenport, Iowa, to Buffalo these stations will be scattered, each costing $100,000, $250,000 or even more. One of the first, in Cleveland, will cost $300,000 and extend through an entire block.

The Sinclair plan is but a symptom of a major movement in the industry: to sell more oil, more cheaply. Master service stations of various types are already erected or projected by Standard Oil of Ohio, Beacon Oil Co., Pierce Petroleum Co., even by Firestone Tire Co. (TIME, Aug. 19). Shell Union Oil Co. recently obtained $40,000,000 by new financing to enlarge its service station outlets.

Producers Outlets. Prairie Oil & Gas Co., once part of the extinct Standard Oil, a large producer (but not a retailer), of oil in Texas, Oklahoma, Kansas and Wyoming was last week reported about to merge with Sinclair, thereby acquiring a retailing agency. From jail, Chairman Sinclair admitted "through a friend" that engineers were surveying the properties of both companies, but added happily, "I have no intention of retiring from the oil business."

Outlet for the Oil Sea. Whether or not as a result of these efforts, there are signs that the outlets for oil are growing not only satisfactorily but more rapidly than was expected. Chief among the signs is that Prairie Oil & Gas has just resumed dividends, after a lapse of two years. Producing companies bear the brunt of the losses in times of overproduction. When they begin to prosper the industry is looking up. The price trend for gasoline during the summer months has been slightly higher, again a token contrary to overproduction, although it must be discounted because of seasonal demand. Finally there may be some additional demand for oil in China if that country goes to war with Russia, which has been supplying part of its demand for kerosene.

The Inlets. Little progress has been made in efforts towards a national agreement to restrict production, an agreement which could end overnight any danger of oil drugging the market. Yet great hopes are held for the results of a California law which goes into effect in September. The law forbids oil production without proper efforts to conserve the natural gas which flows out with the oil. Enforcement of the law may reduce California's overproduction by some 250,000 barrels daily. California is at present yielding more oil than any other State. The result may be a reduction of 10% or more in the U.S. output.