Evening star., 1927-05-13
An Oil Problem.

An Oil Problem.
The law of supply and demand has
apparently slipped again, this time in
connection with the oil industry, the
second largest industry in the coun
try. Oil operators are alarmed over
| the oil production, which is resulting
in huge stocks in storage and tum'
| BILE in prices. with price-cutting wars
in progress here and in other parts
of the country. The oil men are ap-
| pealing to the Government for advice
and aid in meeting the situation.
They find their difficulty principally
in unrestrained production, with in
| dependents and 'wildcatters" unkind'
ly bringing in wells and glutting the
market.
The agricultural interests of the
country, If that is the proper term for
the farmers in this day Of Interests" "
doubtless will look with more than
passing attention on the plight of the
oil men. The farmers have heard
plenty of good advice in recent years
regarding the curtailment of produc.
ton of foodstuffs. They have been
told that the good old law Of supply
and demand must be relied upon to
solve their problems. They have been
told that the Federal Government and
the State governments are averse
to anything that savors of price fix
ing. They have been buying in a
market where prices were high and
selling in a market where prices were
comparatively low. Now. at least,
they have an opportunity to purchase
oil and gasoline at prices which more
nearly conform to what they obtain
for corn and wheat and cotton.
The oil men are attempting to work
out plan which shall result in curb
ing the nationwide overproduction
which has come upon the industry.
The overproduction is partly due to a
tremendous increase in output in
the Seminole field in Oklahoma. But
production has increased in other big
fields in Texas and California. Heads
Of some of the biggest oil companies,
including the so-called independents,
too, have met in New York in an ef-
fort to work out plan for controlling
production and are coming to Wash
ington to consult with the Federal
Oil Conservation Board, which is
headed by Secretary Work of the In
terror Department.
The overproduction of oil has an
economic side, which is lacking to
some degree in the overproduction of
corn or wheat. Corn and wheat are
recurring crops. But when the Oil is
gone, it is gone. Dire predictions
have been made for years that the oil
supply of the United States and other
countries would be exhausted in a
comparatively short period If con.
sumption was continued at the in.
creasing rate which has been in eff.
feet in the last decade. The reason.
able conservation Of the Oil resources
of the country would be a wise pre-.
caution. Oil is needed in national de.
fense; it will be needed by future gen,
erations for the purposes Of industry
and daily domestic life. This need OF
conservation brought about the es.
tablishment of the Federal on Con.
servation Board, which has made
many recommendations which are yet
to be adopted.
The Oil men will be faced with many
legal difficulties in working out pro-
gram to meet overproduction. The
antitrust laws present some Of the
most worrisome. Agreements among
producers to control production
amounting in the end to agreements
to control prices, give something to
think about. Agreements that tend
to squeeze out all competition and
place an industry in the hands of a
few big operators may be wise tenn.
porarily, but less wise when conditions
shall have changed.
The tendency to call upon the Fed
eral Government for aid in Industrial
and economic crises is becoming more
and more pronounced. Whether the
Federal Government could or should
do anything in the present difficulties
of the oil men is one thing. 1t is Ger
tain, however. that injury to any great
industry of the country in the enc
works hardship upon the other indus
| tries and the people.