, 1921-08-25
PROSPERITY IN OIL
INDUSTRY IS NEAR

early approach of a period Of pros
perity in the oil industry in the
Rocky Mountain region which will
far eclipse anything that has taken
place in the past. Operators who
have recovered from their first at
tach Of pessimism and who have
taken time to analyze the situation
are coming to the conclusion that a
few blessings in disguise have been
bestowed Upon them and that the
near future holds before them some
very rosy and alluring prospects.
1t Is a we'll known fact that the
farthr a pendulum swings in one
direction the greater the distance it
will travel in the direction.
1t is reasonable to apply the same
theory to conditions in the oil in
dustry.
The decline in the posted prices Of
crude oil in the Oklahoma-Kansas
fields this year has amounted to II
per CEN and in the Pennsylvania field
SO per cent. The drop in the price
Of Salt Creek crude during the same
period amounted to SO per cent. In
other words, the pendulum. as far
as prices are concerned, went much
farther in Wyoming and Montana
than in the other fields Of the coun-
try.
Next. consider production during
the period when efforts yer made
to curtail It,. The average daily out
put for the last week in April in
barrels and for the first week in
during that period was cut down IS
nor mont 1Cokirr tho nnvvrkrvr ne n
whole the average daily output in
the last week in April was 1897
$40 barrels and the first week in
August 1.314.24O barrels, or a gain
instead Of a curtailment. Again, the
pendulum went farther in this dis
trict than in any other.
The figures show that Wyoming
and Montana were harder hit by the
depression as far as prices and pfo-
duction were concerned than the re-
ma1nder OF the oil producing reg
ions. The natural inference would
be hat they yer also hurt to a
greater extent but facts will not bear
out such a contention. The oil COM
panfes in this region are in a strong
position as a whole. There have
been practically no failures and only
a very few companies have had to
go into the market for loans or new
financing. Dividends have been cut |
In a few instances but this generally !
was for the purpose of outstanding |
against the season of fam
Inc and involved only a few compa-
MES. The same cannot be said OF the |
other oil districts in as unqualified
terms.
A peculiar condition of this kind !
needs an explanation and 1t is be-
lieveu that a logical one can be given.
and Montana oil develop
ment was retarded and handicapped |
for years by reason of the fact that |
the best lands were claimed by In
and companies as against |
the claims of the government. Com
panies spent money to develop only
find that the wells would have to
be shut In or the proceeds from pro-
duction placed in escrow. This re-
suited In a vast amount Of drilling |
and production during the prosper
ous period when the prices for crude
hight but the operators were
not permitted to enjoy the benefits
OF this income. These operating
costs were assumed at a time when
was easy to obtain and was
and the companies travelled
a cash basis without normal in
The leasing bill became a law in
1920, but did not get into
operation until just about the
time the depression began to creep |
upon the industry. The government
and the operators gradually began to
out the tangles. clear
titles. and release impounded funds.
More than $12,500, 900 in cash has
been turned into the treasures of
the oil companies during the past
year by the government representing
oil sold at the highest market prices.
1t was just like having a reserve |
available for an emergency.
During the period of depression a
general reorganization has been
under way in this district. Companies
have been putting their houses in
order. Standard Oil Co.. OF Indiana
over the Midwest Refining Co.,
enlarged its plant, secured q reduc-1
ton In freight rates on refined pro-
ducts and extended the market far
Their to the east, west and north. New
pools have been opened and every
thing set for the period Of recovery.
Psychology will play an important
part in the recovery when the pendu-
luw begins to swing the other way.
The prices OF crude oil must IL. up
more frequently than in other fields
to get back to normal because the
the pendulum swung farther out
here. Production must also 60 mp by
greater leAps and bounds TO get back
to normal. We have more room IN
which 20 play, because greater SPACE