The Washington herald., 1917-08-07
HOLLAND LETTER
The Biggest Daily
Financial News Feature Of
the Counhy's Best Newspapers.

Adolph Sutro brought to the East q
few days ago. upon his return from
visit to California. some encour-
aging reports of crop conditions
and industry there. but on the other
hand one that was very discourag-
ing. He spoke OF the approach Of
something like stagnation in the
crude oil Industry of California and
there appeared to be hint in what
he. said of criticism of the govern
ment's action in neither itself caus-
ing the oil to be secured nor allow
ing anybody else to exploit those
enormous deposits.
Mr.. Sutro's comment supplements
a statement made few days ago
by President Bedford of the Stand
ard Oil Company and some things
which Harry T. Sinclair and others
who are prominent in the oil indus
Bedford wrote with extreme eau
tion when he intimated that unless
there was curtailment of the usA
OF gasoline or increased productics
Of crude oil the visible suppl,
would. in the United States, be ex-
hausted within a year.
Mr.. Bedford. Mr.. Sinclair and
others are persuaded that the sit
uation in the oil industry has caused
a serious menace to arise. not only
to the government itself but to
American Industries. Suppose, for
instance, that the government
should make a demand for say
100000 barrels of highly refined
oil for the use of the American
armies in France. The govern
ment might be able. by comman-
deering some part of the visible
supply. to secure this amount once
or twice. But the government can
not commander the agencies which
are necessary to be employed If
there is to be an increased produc-
ton of crude oil. 1t has been said
that the government cannot COM
mandeer nature, nor can any of the
oil producers do that. The oil pro-
ducers, for instance. find great diff
ficulty in securing the expert lead
ership characterized by the work
of prospectors. The prospectors.
for instance. may report that sur
face indications justify digging of
ten wells in a particular locality,
but actual borings are likely to
show that eight or nine of these
wells are what are called busters"
that is to say dry holes. One well
out of the ten may produce magnif-
Gently. But the prospectors have
to be paid literally for all the ex-
pert work they do and the oil pro-
ducers cannot afford the very great
expense entailed thereby unless
they are reasonably assured of good
prices and large production.
Out of crude oil there are produced
today about 1900 by-products of diff
ferent kinds. and those who should
know say that there is no product in
use today of such Importance to gen.
eral industry as crude oil and its by
products. Among these by-products
are gasoline. Kerosene, lubricants,
certain forms of explosives, medical
articles, including internal lubricants
in the manufacture of which the
Americans surpass even the Russians.
Then there is fuel oil, commercial
wakes, roofing material, road oil,
paints and literally hundreds of diff
ferent kinds of lubricants.
Much has been written and said
within the past year or two of the
ability of the United States to take
away from Germany the supremacy
that country had attained. before the
oA III Alit iidilhlhNIhlt VI uytSlhhs
But If there should be a shortage in
the production of crude oil the grow
ing dyestuff industray in the United
States would thereby be greatly i'm
periled.
Were there crude oil in plenty then
there undoubtedly would be a large
output of by-products of new kinds,
for the capacity of crude oil properly
treated to develop materials Of value
in industry and trade, and which are
really by-products. is limited only by
the researches OF the chemists. The
materials used in the oil business have
within a year or two advanced by as
much as 100 per cent, whereas crude
oil has advanced only about 10 per
cent.
The chief apprehension somewhat
cautiously confessed by the oil pro-
ducers Of the United States Is based
upon their fear of the attitude of the
government toward production. They
confess that it has already impaired
the business because the prospector
has become discouraged and will no
longer take chances. Consequently no
new oil pools or fields have been Of
late discovered. 1t might be good pol
icy to subsidize the prospector.
Another attitude of the government
which causes apprehension is this;
while the government proposes to tax
and commander, if necessary, the oil
wells that are paying propositions, it
nevertheless will pay no attention to
the fact that the one paying well may
represent the digging of ten other
wells, which yield no returns. The
leading oil men say that, at present,
the oil producers of the United States
clearly understand the crisis the oil
industry now faces. But it Is not that
industry alone that is affected by this
crisis or may hereafter be unless new
production be equal to the demand
which will be made upon the indus
try. Almost all kinds of business will
be seriously affected If there be a
material impairment of the oil indus
try. Some of these industries will be
brought to a standstill unless new
fields are open and production re-
spends fairly well to demand.
The government has the oil fields.
The government undoubtedly has the
power to commander oil that has
been produced, but its power does not
go beyond that. The government cam
not compel practical oil men to pros
pect for, then to develop, next to pipe
oil, or to deliver oil upon tank ships
so that it may be transported across
the seas, If the cost of loading and
unloading is so large that it repre-
sents a loss rather than a reasonable
profit upon the transaction.
Domestic consumption of petroleum
products has been and is still in
creasing at a rate which a few years
ago would have been deemed incon-
ceivable. This consumption will be
continued until peace is restored and
il there is. no gain in the production
then in short time the United States
Will have no oil to export The best