The Washington herald., 1922-01-30
OIL INDUSTRY Sees
FUTURE SHORTAGE,
AUTHORITY CLAIMS
Stocks of Crude Mount,
But Refiners Still
Purchasing.
SUPPLY NOW GREAT
Current Production Is 20 Per
Cent in Excess of Pres
ent Requirements.
NOW GREAT

of shares on the stock market re-
fleet not past conditions. nor even
present events. but are anticipatory
of supposedly discernible conditions
that lie in the immediate future.
For the past few months and up to
the date of the present writing TIE
price Of crude. petroleum has taken
on a considerable measure of such
a characteristics. and We have in
consequence witnessed the anomaly
of. first. a sharp rise in price and
then a period of apparent stability.
in the face of a distinct and mount
ing oversupply Of this raw material.
Whether this discounting of the
future will continue to prevail
against the counter influences Of
current facts is a question that the
present writer prefers to leave 20
someone with a sixth sense to an.
swer.
Production Exceeds Demand.
First. as to the facts. The sup
ply of crude petroleum domestic
production Plus imports) is running
far in advance of our needs. While
statistics: except for domestic pro-
duction. are only laggardIy avail
able, we would not go far wrong
in estimating that the current sup
ply is 20 per cent in excess of cur
rent requirements: that is to say.
in January We have at our COM
mercial command in this country
and Mexico a daily production rum
ming upward of 100000 barrels
above our daily requirements.
As a corollary to this condition
the stocks Of bbth crude petroleum
and it's refined products are accu-
mulating. Crude Is going into
storage; gasoline, kerosene, fuel oil,
and lubricating oils are all being
made faster than shipments are 60
ing out from the refneries. At
least such was the case, according
to December statistics. and there is
nc reason to suspect a reversal
since. II is not surprising. there
fore. to find that the prices of tn:
products of petroleum have been
slumping of late, sliding back quite
a bit from the advances that came
SO suddenly in October.
A SECONDARY Reaction.
There conditions have led many
people to conclude that the oil in
dustry is entering a period of sec
ondary reaction as transition
between depression and full re-
vival. This happened, indeed. un-
der somewhat similar conditions in
1916, following the preston of 1914
Is. Such course. too, Is quite
common in other industrial direc-
tions. The statistical evidence is
all in favor of il. But we have
outlined but half the story-per-
haps not quite half.
Our analysis must now leave the
field of measurable facts and take
into consideration the intangibles.
Here we are dealing with prob
abilities, expectations. Obviously
there Is something in the situation
besides the fact relationships out
lined above, or else the price of
crude petroleum would not be hold
ing the ground gained last fall.
Crude petroleum is still changing
hands in somewhat of buyers
market.
Is . shortage Comings
Evidently those who are purchas-
ing crude petroleum in excess of
their current requirements are do
ing so in expectation of advancing
prices before such excess is brought
into use. This expectation of ris-
ing prices must naturally involve
an expectation of an eventual de-
flciency of supply. Such an ex-
pectation would be justified from
knowledge Of conditions in the
Mexican oil fields, where 1t is but
a matter of months before a daily
production of several hundred thou
sand barrels will be Topped off our
available supply. Such an expecta-
tion would. in addition, be supported
by a study of the degree to which
our domestic production of crude
petroleum is coming to be dependent
upon flush production-upon gusher
oil. Both of these conditions spell
an ultimate decline in supply. Those
who are purchasing crude petroleum
in excess of current requirements
are speculating on their ability to
carry the situati until the def