The Washington herald., 1922-10-30
OIL PRODUCTION
Demand Expects Expecta.
tions-O Output Is in
creasing.
By JOSEPH Z. PooUE.
Author Of ssThe Ecsnomics of
Ratxnlsun

Fetroleum."
On January / Of this year the oil
wells Of the United States were yield
ing 1909. 200 barrels of crude pstro-
leum daily. On October Is the daily
output Of our domestic oil fields was
i,565.ooo barrels. an increase in
round numbers of $4,000 barrels per
day. During this same period the
imports Of crude petroleum from
Mexico, because of the decline OF the
Toteco Pool. decreased from 100000
barrels per day to about 100000 bar
rels, thus registering q loss Of some
thing short Of 100000 barrels a day.
The fact IL, therefore. that the salt
water invasion Of the Mexican oil
fields has been compensated for. with
q margin to spare by the increased
productivity of the oil fields of the
United States.
Domestic Output . Surprise.
The decline In the Mexican supply
was anticipated, but not the offset
ting increase in domestic output. On
the contrary. the decline in Mexican
supply was looked forward to as the
occasion Of a shortage and the signal
for sharply advancing prices. 1t was
in preparation for this outcome that
the price Of crude petroleum was
maintained at 50 through the first
half of 1928 asd upwards of Il, 900. 900
barrels Of crude petroleum added to
the already large volume carried in
storage. The accumulated stocks
were designed to come into play as
an offset to q supply rendered def
cient by the impotence Of the Mexican
| wells.
And thus we are brought face to
face with the quandary In which the
petroleum industry now finds itself.
Large stocks OF crude petroleum
over 26o.000.000 barrels In fact-are
on hand. accumulated in large part
| at high prices, to meet a need that
has been filled from another direction.
The industry. therefore. is coming to
| see itself saddled with a surplus that
has no immediate economic function.
| This incubus constitutes a problem
the solution Of which may well be
watched with interest. Unlike the
problem Of international debts. cas-
| collation. is not possible answer.
Too Much Gasoline.
An indirect result of the policy of
storage, which was in effect the crea =
ton OF an artificial demand. is found
In the overproduction OF gasoline dur
ing the spring and summer. In the
face of consumptive requirements
breaking all precedents and exceed
Ing most expectations the stocks of
gasoline have been too much added
to and now stand wen above normal
for this time of year. Their size
offers a barrier to vigorous refinery
activity during the winter months
This condition affords an txplana-
tion Of the downward tendency in
the price of gasoline for the past
few months.
Now for the brighter side of the
picture. Few II any other major in
dustries are enjoying demands a..
strong as those which have favored
the petroleum industry during 1922.
The consumption of gasoline this
year Increased 16 per cent over 1921
the demand for kerosene enlarged 20
per cent; fuel oil requirements ex-
panded 16 per cent, and lubricating
oils. 1915 per cent. These are notable
increases. And especially so in view
OF the fact that oil demands in 1921
were strong as compared with COM
modities in general. Further in
creases are In prospect for 1923. In
| deed. the rate of growth OF petroleum
| requirements Is phenomenal and in
the long run must tax productive
| capacity.