The Hawaiian star. [volume] (Honolulu [Oahu]) 1893-1912, 1911-07-11
Market Drowned IN OIL. BUT
owners SEE PROSPECT 0r la
ENORMOUS INCREASE IN DEMAND

/ OF tine depression in the price OF OIL
caused by the enormous production of
! the California oil fields, the dominant
topic Of conversation in petroleum
circles during the week has been the
relations between the Independent
Producers and the Union Oil Company.
Much dissatisfaction exists in certain
districts with the manner in which
the product of the wells of the In
dependent Producers Agency has
been marketed by the Union. or rath-
er, has not been marketed. The COM
ing in of the Lakeview gusher in the
Midway, with it's prodigious and total
ly unexpected production, called upon
the Union to bend all its resources to
the task of saving the torrent of oil
that would have been lost in the des-
est sands had it not been stored or
carried away as fast as it gushed
from the Lakeview crater. Then new
wells were brought in, and the market
was drowned in oil. Prices began to
fall, and the watchword, Save himself
who can" was echoed along the sage
brush. Naturally it was charged that
the Union proceeded to save itself,
being able so to do by selling its own
oil as fast as possible and leaving the
| Independents to hold the mouth OF
the snipe bag open. Then it was
proposed to devise some satisfactory
plan whereby the Agency might store
its oil until disposed Of but great
difficulties were found in the way,
owing to the fact that men produced
Gil from the bowels of the earth for
the purpose of selling it, not for the
purpose of storing it at considerable
expense and risk and loss. There was
too much oil in the Agency, and every
Producer wanted his oil sold first.
Then it was alleged that the system
Of prorating the sales and the receipts
therefrom was not satisfactory to the
smaller producers, who claimed that
the big ones were getting the advan-
tage of them.
Under such circumstances it would
he impossible to preserve unity with
harmony, and it has been decided to
permit the dissatisfied members to
withdraw from the Agency and take
their chances of selling their product
in the open field to the Standard or
the Associated.
Comments on Conditions.
The Coalinga Daily Oil Record which
is the mouthpiece OF the Coalinga
members of the Agency, in comment
ing upon this deplorable condition of
affairs says:
1T is not known here whether there
4 is discomfort among members of the
Agency in the southern fields or not,
but it is safe to say that in Coalinga
the companies are satisfied that the
Agency is doing everything in its
power to assist them. They know the
cause of depression in the oil business
is not through any action or lack of
action by the agency, but one of sup
ply and demand simply.
1T is true that a few small com
panies might be able to dispose of
their production to the Standard on
a 30-cent basis, but as the Standard
can hardly build reservoirs fast
enough for its contract oil today, it
looks as if that company will be chary
of making any kind of contracts with
more companies.
The Standard in May piled almost
a half million barrels more oil in
storage, while the agency's excess was
less than 100000 barrels. This shows
that the Standard is hardly better
able to take care Of more oil than
the agency is The market of the
latter is extending with each month,
and if the storage plan is carried out,
there will be no reason for any COM
Ipanies wanting to leave.
There might be a market for the
Gil of a few small companies by their
leaving the agency, but with a general
opening OF the doors, there might
be such a rush to the outside that
many would soon be clamOring to get
back. In the meantime, however,
those companies staying with the
agency would have the benefit of the
established market, and even if half
of them left the union could draw on
the storage oil until the remaining
agency companies could increase their
production to meet the demands Of
the existing contracts. AS far as the
agency Is concerned, it would be bet
ter off If a number Of the companies
did leave; but it would only be a