Boo, Cheer

The one word above all others that one does not utter to oilmen is Overproduction. They hope against it, they talk against it, they try to act against it. Last week they acquired two new talking and hoping points: 1) California's law forbidding oil production without proper conservation of natural gas (expected to slow up production in that state by 20% to 25%) went into effect; 2) A report from. Oklahoma that an agreement had been reached to shut down the new Oklahoma City field there for 30 days.

Yet just as these hopeful signs were reported, oil men received a shock. It was all the greater shock because it came from within their own ranks. The Lamp, organ of Walter C. Teagle's Standard Oil of New Jersey, came out, flatfooted, with the statement that there was very serious overproduction. Said The Lamp: "Since overproduction starts at the mouth of the well, let us see what the producer has done to prevent himself from earning a fair return on his capital and skill." Then it proceeded to list: overproduction of crude petroleum in the first six months of 1929, 45 million barrels; overproduction for the second six months (estimated) at least 15 million barrels; average overproduction for the year, five million barrels a month-gone into storage to act as a drug on the market.

The Lamp did not stop with accusing producers. It turned its rays on the refiners, declared they had increased their "runs" more than consumption warranted, had produced 8,400,000 more barrels of gasoline in the first six months of the year than was used. To leave no loophole for comfort, it added:

"The industry can find no fault with the manner in which sales of its principal product have mounted. Over the corresponding period of 1928 the demand for gasoline in the first six months of this year, including experts, showed an increase of 15.38%, but in the same time refinery runs increased . . . resulting in an increase in the total gasoline supply of 19.03%-"

Oilmen gasped and gurgled at these dour remarks. Edwin Benjamin Reeser, president of the American Petroleum Institute, must have shuddered. He was in California hopefully watching that state's new law go into effect. The business of the Petroleum Institute is to make the world cheerful for oil men. Its president did not refer directly to The Lamp's remarks, he did not deny them. But had something of his own to say, and what he said was this:

"Gasoline and petroleum products consumption in the U. S. has outstripped even the vastly increased production. The ratio of increase in the use of gasoline and products is relatively at the rate of two for one, compared with the current increase in output."