Evening star. [volume] (Washington, D.C.) 1854-1972, 1929-04-01
0rM MAAlR&EI
BY KENNETH S. VAN .sTRUM.

NEW YORK, April For many
months the larger oil producers have
been trying to check the overprc duction
Of oil which has been threatSnins the
industry with disaster. iPhey attempted
to get the oil-producing States to- co-op-
crate with them in conservation plans, "
but. the individual States, though real
iztng the ultimate effect of overproduc-
ton, did not work in unison. When
Oklahoma curtailed production, Texas
and California continued to expand,
making Oklahoma means TO their end.
q The American Petroleum Institute,
an organization made up Of the larger
producers In the Western Hemisphere,
was considering plans to curtan pro-
duction when President Hoover made
the statement that the executive de-
pertinent of the Federal Government
was against further leasing of oil lands
unless ordered by Congress.
Plan Production Cuftailmeut.
The institute soon afterwarH went
into conference. Within two weeks they
announced their intention to shut lin
ESQ, 900 barrels of oil daily and thus to
bring production down to "the daily
average of 1928" This would mean no
change in the Mexican production, for
that Is already below its 1928 level, and
only. small reductions in most South
American fields. United States produce
ton, however, would. have TO be cut
100000 barrels daily in order to be
brought down to the 1928 average.
The plan depends for its accomplish
ment upon the, cooperation 4 OF five
committees representing operators in
the five principal producing centers OF
the Western Hemisphere - the United
States, Mexico, Colombia; Venezuela
and Peru. It is hoped that curtailment
will be SO per. cent effective by April ]
and 100 per cent by July /.
Entitled to Fair Return.
e. B. Reeser, president of the insti-
t,te, pointed out that the industry has
not earned over 325 per cent in its in
vestment for the past four years, and
in 1927 earned less than per cent. He
said, 1.-THE plans which have been
adopted will result in greater profit for
the industry, but personally I DO not
anticipate any general advance ~ the
price of gasoline to concumers at this
time. There will probably be q narrow
ing of the margin between the price OF
gasoline at refineries and that which
consumers pay" ~ ,' - g.
The investor has many problems to
consider when studying oil stocks. The
overproduction menace is apparently
going to disappear. Although. produc-
ton for last week increased over the
previous week, leaders in the, industry
seem convinced that curtatlment can be
effected, and the recent. strength in oil
stocks supports that viewpoints :
Other Influences.
P%l.~ E.u~nAn.. d. oiI~cac,,r{S{a~ ;v,a,,cf
temper his enthusiasm, however. Case
line and crude oil prices are now at
low levels AS long as prices remain
low the 10000 900 daily consumers
of those products will not object to the
curtailment Of production. On the other
hand, the profits of the industry cannot
be increased very far with prices at
present levels except in so far as more
efficient refining methods are used. II
the price of gasoline and crude OIL Is
raised to allow the producer his fair
return, to which he is unquestionably
entitled, there Is little doubt that the
millions of consumers will not feel so
sympathetic to conservation.
In addition to this consideration the
investor must keep in mind that oil
swings of the stock market. Only last
week oil stocks which had advanced
considerably when curtailment news
was heard dropped precipitously when
stock prices suffered bad break. AL
though the oils recovered quickly
enough, these temporary upsets caused
by market gyrations are to be expected,
no matter how favorably the industry
itself is progressing.
Short Term Investments.
Investment trusts and individual In
vestors who have sold out their spec
ulative securities have been faced with