Evening star., 1927-12-05
PROBLEMS FACING
i. s. OIL INDUSTRY
West Texas Field Looms as
Flush Output Area-Nature
Is Factor.
BY j. C. ROYLE. !
Special Dispatch to The Star.

| Speclat DfSpatCu 10 1Hc otdI.
NEW YORK, December 5.-The
| prospect of higher gasoline demand
| than ever before is the most favorable
| factor in the petroleum situation at
present. according to members or the
| American Petroleum Institute now
| on their way to the meeting OF the
| institute at Chicago. 1t is estimated
that there have been 100000 prosnec-
! tive purchasers of automoblleS VINO
have put off their buying until around
| the first of the year. That is, the
automobile registrations are 30V,00O
shorter than they should normally be.
This deficit will be filled in Janu-
ary undoubtedly and the tabulatlons
will be augmented by hundreds OF
thousands of regular normal seasonal
sales. That means that every new
tank will be filled again and again and
that the consumption figures will rise
even above the 1927 high point.
Production Is Heavy.
Gasoline production so far this year
has averaged over 100000 gallons
month. Stocks of gasoline despite
the fact that consumption has been
between Is and 20 per cent higher
than ever in history gained through
out most Of the year and it was not
until the last few months that they
fell below the figures of 1926. Prices
in general are at least cents a
gallon lower today than year ago
for the country as a whole and in
some sections the difference Is even
more marked.
In spite of the improved production,
however, the delegates to the institute
meeting are not anticipating smooth
and peaceful session. They have many
battles to be fought out. The peak
undoubtedly has passed in the pro-
duction in the great Seminole field.
but nobody knows what the West
Texas area will bring forth. In the
latter area production has risen over
400 per cent since this time last year,
with potential production placed ten
tatively at 100000 barrels a day.
How to Curtail Output.
Crude production for the country as
whole now Is ranging around $780,
900 barrels day. About 250,000 bar
rels a day still must go into storage.
Increases in West Texas would work
further havoc. But how to curtail this
new flush production? The efforts to-
ward voluntary shut-downs in the
Seminole field were unavailfng. The
Government has shown it will not in
terfere actively.
The shut-in production of the
country today Is about 100000 barrels
a day. Much of this Is in California.
The Western men naturally feel that
they are being penalized by the over
production in the Midwest. The Mid
west felt the same way when the Cali
fornia fields were flooding the market
with oil. But there seems likely to be
demand from the Far West for cura-
<twy- 1kL H. IT, IL f.
meeting.
Considerable person bitterness is
likely to be injected into the Chi.
cago discussions If some delegates do
as they threaten and propose punitive
action in the case of certain men in
the industry whose activities they feel
have not been advantageous to the in
dustry as whole.
Nature Big Factor.
After all, Mother Nature Is a factor
most relied on to adjust the situation.
AS oil is drawing new pools, the pres.
sure eventually must drop and flush
production decline. That is absolutely
effective, whatever may be the results
Of efforts toward cooperative restric-
tive action. It is pretty hard to con.
vince man whose lease has nut q
brief time to run that he should cap
his wells and decline to improve his
opportunity for certain profits.
In the meantime those concerns
best situated financially are taking
what advantage is possible of condi.
tions. It Is sure that Oil stored now at
low prices will eventually appreciate
in value il the owners can afford to
hold it. Some companies are buying
up valuable holdings at depression
prices.
Many companies recently have
acquired new methods Of handling
crude and distilled products and for
making liquid fuel out Of coal tar and
rubber out OF oil, but most OF these
processes have been hung up to dry"
since they are not now commercially
valuable as competitors with oil and
gasoline at present low prices.