Evening star. [volume] (Washington, D.C.) 1854-1972, 1929-04-01
PLANS TO CURB OIL !.
FLOW HINGE ON us.
Attitude of Government to Be
Deciding Factor in Step to.
Limit Production.
BY MARK SULLIVAN.

head III washington one OF the
most important situations bearing upon
the future course of business and
economic policy In the United States.
The officials of the American PETROL
cum Institute, comprising nearly all
the important Oil producers in the
United States, are coming to find out,
In effect, what will be the attitude
of the Government toward an agree
ment they made last week to restrain
production. The agreement Is, in sub
stance not to take any more oil out
Of the ground in 1929 than they took
in 1928
The member of the Government upon
whom lies the immediate responsibility
for an answer is Secretary Of the In
terror Wilbur. The Interior Depart
ment has custody of most Government
oil matters and the Secretary OF the
Interior is chairman of the Federal
Oil Conservation Board. The other
Navy and Commerce
Secretary Wilbur, in anticipation of
the meeting Wednesday, has turned the
fundamental question involved over to
Attorney General Mitchell. Mr.. Mitch
ell has been asked to give an official
opinion as to whether the agreement
proposed by the oil producers is con-
trary to the basic Sherman antitrust
act and its supplement. the Clayton
act. What Mr.. Mitchell will do will
be to examine the proposed agreement
| and decide whether it violates the
antitrust act, the essential words of
which are as follows:
Every contract combination, in
form OF trust or otherwise, Or conspir-
acy, in restraint of trade or commerce
&c hnralayy Hoc1orod {1JanroJ
Decision to Govern Future.
Whether the language of the agree
ment Is contrary to the language OF the
| antitrust act is purely legal question.
II Mr.. Mitchell says Eyes, 1t is vio-
lation," then, obviously the agreement
falls. No group Of business men would
go on in violation of law, and no adj
ministration could afford to let them.
There would remain. however, the
quite different matter of policy. AS a
matter OF policy, the Government long
has favored conservation of oil, and
| there can be no doubt that this agree
ment IS, among other things, an act
| OF conservation. Competition in the
production Of oil does lead to deplorable
waste of a precious natural resource.
In 1924 President Coolidge said: The
present methods Of capturing our oil
deposits are wasteful to. an alarming
degree" Persons with no financial in
terest in oil, such as biologists and
heads OF schools of mines are most ear
nest In deploring the waste attending
unlimited competitive production and
advocate some such limitation as the
producers are now attempting. They fear
the early exhaustion Of this natural re-
source.
A large section of public opinion. so
far as it understands the conditions,
also would deplore the waste involved
| IN unlimited competitive production.
From the viewpoint Of public opinion
as a whole, and of politics, however,
there are two difficulties. The anti
trust law is one the statute books and
| ought not to be violated. In the second
place. 1t will be assumed that the pro-
posed limitation Of production probably
Will lead to the consuming public pay
ing higher price for oil and gasoline
than it otherwise would. This will be
anticipated, even though the oil pro-
ducerS carefully abstain, as it can be
assumed they will abstain. from any
agreement to raise or Ak prices.
Price Wars Detrimental
Under the extreme competitive, con-
uitAO1 IloW eASU1IlS III Oh pEOQuCC1On,
price cutting wars take place While
these wars last, the public often gets
its oil and gas at less than cost. Re-
Gently, in such price cutting war in
California, gasoline was sold to, con-
sumers at cents gallon, plus the
tax Of cents. This abnormal advan-
tage to the public is temporary and
from the permanent point of view is a
disadvantage because waste necessarily
leads to an earlier diminution of the
natural supply and to a period Of ex-
cessively high prices.
Everybody concerned in the confer
ence at Washington on Wednesday is
aware Of the conflicting principles in
volved, and of the diffieulty of the prob
lem. The oil producers have been care
full to avoid the spirit of conspiracy.
They have kept the Federal Govern
ment and the State governments in
formed of each move. In effect, they
are saying, I'VE want to do this If you
will let U.s."
An essential element in the situation
is the fact that as respects. agreements
to restrain production. oil Is in a class
apart. The public, interest in conserva-
ton of a natural resource would not
exist in the case of a similar agreement
among ordinary manufacturers of any
ordinary commodity The trouble Is,