New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1876-09-23
THE RISE IN PETROLEUM.
ITs CAUSES ANp MEANING.

DEMANDING LARGE wELLS-ORDERs DELAYED
"A COUNTERPART TO TEE COAL PAYIc-ACnvTTY
IN THE OIL RRGIoN-INcoNEs INCREASED l68
PER cEHT-BENEFITs TO The LABoRISG MEX.
IRON AN OCCASIONAL CORRESPONDENT or THE TRTBUNBl
OH CRY, Penn, Sept. 21.-There is no con-
ceang the fact that the late advance in petroleum from
81 56to "a per barrel for crude surprise pro-
ducers tankers spectators and all concerned in thu
trade and its supplies The extent OF il at least was
surprise even TO the combination thai has the credit
abroad Of having been the Those who look TO
specuetOns combinations Of any kind for the princ
pal this rise in oil will from either
the common law OF trade the experience Of
the petroleum business. The oil trade has had
a Disastrous and bitter experience in forcing up
prices by artificial This business 10 pecu-
ar,y amenabe to the laws OF supply and demand, be-
cause the Of the product Is uncertain and the
stock Is expensive and risky to carry At the tme
the market in any other product is easier conered"
than IN this because crop Of oil can be harvested
IN six weeks under the standards Of profit and loss
that are accepted little advance in price VIII stimulate
production TO point that will load down any clique
tempting long to control prices with existing stocks.
The facts that gainsay are: That the prices
of the past four years have been abnGTna that they
have been the result of striking exceptionally rich
deposit Of oil that with the demise of large flowing
wells and the exhaustion OF the deposit that supplied
them the first cause of "40ent oil" has disappeared;
that thereafter the accumulated stocks Of this exeep
tonal supply the remaining first cause Tor MAIN
tanning abnormaly low prices Granted these points,
the questions to ask What is the stock on hand and
the current productions What relation do they hold to
the consumption There only three factOrs in the
problem viz, production, stocks, and consumption.
These will determine prices; combinations cannot long
disturb much unsettle the resultant price.
THE GAUGE MOVEMENT.
We have now for the first tie accurate statistics
these points Mainly through the agitation Of The DAILY
~ itv
uremcnt Of all the oil in the region the first day Of
September has Just been taken by committee OF pro-
ducers selected for their experience Observation-Disclosures
This test Of double Importance as showing truthiuy
the stock hand, and confirming the estimates OF
production heretofore made by compers Of monthly sta
tstca reports These reports have been carried along
for years. and at this proving up" by the they
agree so nearly with the actual stocks that can de-
pend upon their past statistics substantially correct
The stock Of merchantable crude OIL then, on Sept /,
was 3,I64384 barrels. The stock JAM l, 1916, was
3,326,726; in May, 1875 4552,672 barrels The first
fact bearing the Of an advance is that rs MIL
lions or 80 per of the stock has been drawn of be-
cause production has been less than demand As pro-
ducion we also have figures For present stocks and
for monthly shipments by rail and pipe from the region
we have actual statistics and just stated the third
factor in the neutrality-suspicious. stockis verified by the
gauge The average production in barrels Of crude per
month has been as follows:
First eight months,
with an average production in 1875 Of 24075 barrels,
consumption depleted the extent Of 000
barrels representing Of demand prOduc
ton. With average production for the eight months
Of 1876 OF S75-beng 2O5 barrels per month less than
last yearstocks have increased Counting refuse oisas
all previous statistics dOne) instead Of diminished,
demonstrating that the Of trade has been inter-
fered with the proper demand is not yet supplied
Il was because Of this interference with the curerS Of
trade that prices advanced rapidly when they started
This much as 70 production This general statement IL
also the only estimate that be made OF consumption
because there statistics covering that part OF the
business We only know that last year the trade took
all the production 8,7sS f7O barrels and $4,000 bar
res of stocks besides making 9,343 40 the years de-
mand; while thus Tar In 1s7G-eight months-it bss
taken only q little six millions, and must for the
rest OF the year take out 1926, 295 barrels, allowing
nothing increased Of kerosene This viii cal Tor
$1,000 barrels per day the rest Of the year.
Briefly then this the situation in June last, when
the advance began. with production during '76 to
that time averaging 673 barrels less per day than for all
the previous year; with a known demand in rs Of
1864, being 2249 barrels per day more than the
average daily production OF 20; with the stocks drawn
down million and quarters with no large wells known
or IN prospect and large number OF wells drilling gin
such moderate territory exsted with shipments for
the six months over 100000 barrels behind the cor
responding movements Of the last two years-with this
condition OF diminished stocks moderate production
and procasnated orders for supplies that must be had
Is t any wonder a great advance took placei II any
"corner had 10 do with the ascension 1t was that pro
duced by the exporters In drawing out Of the market for
three months OF the shipping The law Of supply
and demand-as absolute the law OF specific gravity
simply asserted itself II the standard Oil Company had
any agency In this advance, it only the butt
OF bull against the rear Of the fast mail train.
Indeed 1t irrational not TO expect reaction from
fortycent OIL Only 2O00-barre wells yield that Kind
OIL The shortsightedness Of the exporters, knowing
az they did, that the average yield ofnew wells is now
less than 20 barrels, keeping out OF market is only
another illustration of the faulty that at times over
comes experts in any line of business.
WHAT THE ADVANCE MEANS.
Few people outside OF the region appreciate what this
Jump of the market signifies aud effects. II May last
there were 1889 904 barrels OF oil held in this region
The advance in few daJ added $9OO0000 to The
value of this stock, and in form real that The
money for this great additional wealth could
have been, and the bulk OF it was, realized
Add to this the consequent appreciation OF the
value OF all other property aud the continuous Yaie
Of higher market the product and one hasa
counterpart to the recent fall In values Of coal stocks
Is an accreton of wealth such is rarely known In time
OF peace in any legitimate traffic The effect the a.
pec of the oil regions is OF rising from the dead
Never since good times OF Pthole and The Creek
has there been such activity and life There are no large
wells 20 got The average yield OF wells struck IN
the flush of the Butler District was 900 barrels per
day. the average of the wells finished In the past mQnth
was II barrelsl There we're 26s wells completed last
MONTH but they addedonly barrels per day each to the
production besides making up the natural decline OF old
wells To keep supply equal to demand at least ten times
many wells in those other days viii have to be con
santly drlnguness far richer territory be discovered
The prosecution of this increased development Is I'M
pcded by scarcity OF material, machinery and skilled
labor-ior the who supply these also not pre-