The Washington herald., 1920-02-25
OIL SHORTAGE
CAUSES ALARM
Pres. Kingsbury Of Cali
fornia Standard Oil
Urges Economy.
SUPPLY IS NADEQU
Western Demands Will
Further Advance Quo
tations In the East.

Serious shortages In crude oil and
It's derivatives are pointed out by
X. r. Kingsbury. president Of the
Oil Company Of caiifor-
mia, in an exclusive statement to
The Herald. Consumers. particular,
ly in California. are using up more
than is produced. and the reserve
supply Is fast disappearing.
The effect of the California short
age will be felt in the increase OF
prices in the Eastern market. as
the shortage In the West Is being
made UP by purchases in the East
ern districts.
Mr.. Kingsbury suggests as the
for this serious situation
increased production and importa-
tion, conservation and the elimina-
tion of waste on the part Of the
oil industry and the public.
Kingsbury Statement:
Instructions have been issued to
all agents of the Standard Oil Com
pany California; to take no con-
tracts for the sale of fuel oil with
out referring to the home office in
San Francisco says Mr.. Kings
bury. AT the same time Is has
been decided that expectations Of
refined products, already MATERIAL
ly curtailed, shall be kept at a mini
mum and be only such as to meet
the company's contractual obliga-
tions.
"The condition of the petroleum
industry which has necessitated these
actions Is 0ne which so closely ana
Importantly touches the interests OF
the public. industrially and other
wise. that a description of 1t will
be useful in giving a thorough un-
derstanding of the situation which
exists. In its simplest terms, IL Is
that the crude oil production of
California is pot sufficient to meet
the demands.
Importation Necessary.
California was called upon in
1919 to supply approximately 49,
000,0 gallons Of naphtha products.
This quantity could not be obtained
from the production Of crude oil in
California and the shortage OF over
20, 000,0 900 gallons was imported from
the East. With the demand for
gasoline and heavier fuels in direct
TO the number of inter-
nal combustion engines. including
automobiles, trucks, tractors, ma
rine motors and pumping plants and
with the production of this class of
constantly increasing
the 1920 demand for naphtha prod
ucts, it is estimated, will exceed the
1919 demand by at least IS per cent.
Indicating a total requirement of
600. 100000 gallons. From the pres
ent supply of crude oil, the total
possible production of naphtha prod
ucts Is but 100000, 900 gallons, indi-
eating a shortage in the products
named of 15o.c00.000 gallons.
Must Compete.
while heretofore gasoline has
been purchased in the Mc-S-Conti-
nent Field. such purchases must
necessarily be made on a competi-
tive basis with Eastern buyers. The
prices of gasoline in the
Field today, at points
of manufacture, are Is cents and ~
cents per gallon. Add to this price
Z cents per gallon. the cost of bring
ing the product to the Coast in tank
cars, and this gasoline would sell at
San Francisco at between 25 cents
End 80 cents per gallon, as against
the present price of 21h cents.
There are two simple factors
and consumption. Today
the crude oil production of Califor-
mia is $4,000 barrels daily less than
the requirements. and the deficiency
for 1920 at the present rate Of pro-
duction will exceed 10000, 900 bar
rels. Since 1916 stocks have de-
creased 100000 barrels. which
means that the public consumed
that quantity over the amount pro-
duced. Stocks of crude oil on hand
today of 10000, 900 barrels are lower
than at any time since 1910. and
of this quantity, 1t is estimated,
only 100000 barrels are availa-
BILE for the market. At least TO-
10000 barrels are required as a
working capital, or. so to speak,
"as merchandise on the Shelf" and
the remaining 6.000,0 900 barrels are
in pipe lines and tank bottoms and
entirely unavailable.
Prices Increases.
This company has been success
full in increasing its production of
crude oil. In 1918 the increase was
4 100000 barrels over 1917, and in
1919 100000 barrels over 1918, but
even these considerable increases
on the part OF one company do net
save the whole situation. In view
of the existing shortage the COM
pany has increased the prices It
offers for refinable crude oil. Other
purchasers of refinable crude OIL
have been paying large premiums
over the prices offered by the Stand
ard Oil Company.
The remedies are increased pro-
duction and importations and, to
a lesser extent but quite as impor-
tant. conservation and the elm
ination of waste by careful and
handling of petroleum and
its products by the oil industry,
ON the one hand, and its scientific