Evening star., 1923-06-27
LOWER OIL PRICES
FAST APPROACHING
Sinclair President Sees But
One Outcome to PiIing Up
of Huge Reserve.
BY J. C. ROYAL.
Special Dispatch to The Star.


NEW YORK, June 27-Conditions
In the oil industry are bad and get
ting worse, according to j. B. Nc
Mahon, president of the Sinclair Oil
and Gas Company of Tulsa, Oklahoma.
Over production. he said today, would
continue for at least year and lower
prices for oil during the remainder Of
the summer and next winter appear
inevitable.
World production today is greater
than world demand" he said. "As a
result storage all over the country
Is being taxed to the limit" He de-
clared that oilmen had foreseen the
necessity of purchasing agencies pro-
rating their buying and taking only
a certain percentage of the produc-
ton of each producer.
Predicts Lower Priced OIL.
Over production, according to my
belief, is the result of improved re-
lining methods and to output Of a
higher grade of oil rather than to a
decreased demand" Mcmahon added.
cracking processes now in general
use yield approximately % per cent
more gas than the methods in use a
Few years ago. From this it can be
seen that 10 per cent of the oil pro-
duced two years ago would be suffi-
cient to supply the demand for gaso-
lene."
Asked where he thought present
conditions were leading the oil in
dustry. he promptly replied ITO low
er-priced OIL"
Purchasing agencies" he con-
tinued. will be forced to run the price
of oil down to a point where II will
not be profitable to drill more wells"
Cut in Output Seen.
Oil men here believe that the cur
tailment due to prorating of pipe
line runs in the midcontinent field
will result in a decided reduction in
production as no pipeline company
than 1t can sell to ref1ners. Efforts
TO lower output by voluntary action
of producers in the midcontinent field
have not been successful, and If the
prorating of pipeline runs proves no
more efficacious, lower prices are gen.
orally anticipated.
The announcement of the prorat-
ing of pipeline runs has been fol-
lowed by rumors of the sale and
merger of many independent oil con-
Germs in the midcontinent field. The
object of such consultations would
be the cutting down of overhead and
conserving of finances during the period
Of low oil prices.
Hard on Small Producers.
1t is also pointed out that during
the period of higher oil prices some
of the smaller producers deserted the
large purchasing companies. Now
they find that the Independent pur-
chasers cannot absorb their output.
while the large concerns are taking
care of their steady customers first.
AS a result the oil of such pro-
ducers is going begging and they
face the necessity of building stor-
age facilities and storing oil with
but little cash coming In to care for
operating expenses. These facts. ac-
cording to reports from Tulsa today,
are making the smaller independents
more willing to listen to offers for
the purchase of their holdings. Re-
cent visits of representatives of the
mention of that concern in con-
nection with acquisition of new prop
critics.
New Wells Boosting supply.
To add to the complexity of the
situation in the southwest the new
Powell Field in Navarro county. Tex,
is becoming recognized as factor in
the industry. New wells brought in
in the Powell Field are holding the
Texas production up to a high mark
despite curtailment of operators in
other sections. In less than six
risen from nothing to 10000 barrels
day and operators there express
belief that it will become another
Mexia Field with an output of $4,000
to $4,000 barrels daily.
In the meantime. steel companies
are being pushed to the utmost to
supply plates and other materials
for storage tanks in a dozen differ
other side of the picture stands the
fact that gasoline consumption in
the United States is increasing
steadily.