Evening star., 1923-11-24
BY ROGER w. BABSON.

Special Dispatch to The Star.
WELLESLEY HILLS, Mass, No
vember 24.-Overproduction is the
outstanding characteristic of the oil
! world for the current year. To over
production may be traced the ma
5ority of the troubles which beset the
oil industry today. The high water
mark of oil production in 1923 and
for all time was reached in the week
ending September s. when the daily
yproduction was 2,2S0, 900 barrels For
the same week last year this figure
was 1,493,700 barrels
Consumption of crude oil and gaso-
line has continued to increase, but it
has been overShadowed by production
from spectacular gusher wells in the
Los Angeles basin. Consumption has
increased from last years figure of
5S6,000.000 barrels to the present in
dictated rate of 750,000,0O0 barrels, a
new high mark.
Latest Moves in Industry.
To meet this unusual demand and
TO prevent possible famine the oil
industry had undertaken very extern
sive drilling programs and planned
TO increase it's refinery output by
building more refinerieS and by more
extensive use of the process known
as Cracking" which yields more
An unlooked-for combination of
circumstances overdid these plans.
y very intensive campaign of close
spaced drilling into four California
feet thick, threw the bulk of this
guSher pool on the market all at once.
This production added to that of two
new fields in oklahoma and two
others in Texas were the causes of the
glut in the crude oil market. Luckily
for the oil business. just at this time
Mexican production was on the de-
cline, or worse condition OF afalrS
might have resulted
This overproduction of the crude
and refined products caused a severe
cut in crude oil prices in all the fields;
Midcontinent 33 500 gravity fell
from So barrel in February to S1.10.
Pennsylvania crudes dropped from $i
to S2.75 a barrel.
scores of Price Wnrs.
Gasoline prices for a while con-
tinued relatively high. In August
Gov. McMa of South Dakota
forced a reduction from &c to 16 cents
gallon in that state. This drastic
cut started wave of price cutting,
gas" wars and further crude oil price
reductions. which have probably not
Yet quite reached the bottom.
These reductions in crude oil and
gasoline prices have cut deeply in the
earnings Of oil companies. "independ-
ents" and "Standards" alike. There
cleaning and revamping along many
lines in the strong as Well as the
weak companies Policies of long
standing will be changed, regroup-
ing of Independent companies and
unlooked-for reworkingS of stand
ard" connections may well be eX-
pected. Many small producer and
refiner will be forced out of business:
The crisis, however, is over and
production is now on the decline. The
industry as whole is gradually
righting itself and the spring and
summer of 1924, with increasing con-
sumption and lessened production,
should bring into view more op-
tmistic horizon than exists today in
the oil industry.
Big Declines I'm Securities.
Meanwhile fifteen of the better
grade oil stocks have declined $1,000,
600. 900 in value from their high
points for the year in March and
April or an average decline of about
80 per cent. y diagnosis of the trou-
BILE reveals two primary cause.-the