Evening star. [volume] (Washington, D.C.) 1854-1972, 1930-04-15
OUTLOOK IMPROVES
FOR OIL INDUSTRY
Recent Advances in Price
i Have Followed Reduc-
ton of Output.
BY PRESTON S. KRECKER,
Special pispatch to- The Star.

Special Dispatch to The Star.
NEW YORK, April 15.-Announce-
ment of a general advance in prices of
crude oil in the midcontinent and Texas
oil fields within the last few days indi-
Gates that the industry has turned
the corner" The road has been q
long and hard one The fact that q
significance to investors in Oil shares.
The advance means that the con-
servation campaign which the leaders
of the oil industry have been carrying
on for several years is at last bringing
tangible results The fundamental
trouble with the petroleum industry
has been that production has been out
of balance with consumption, with the
result that surplus stocks of crude and
refined oils have been accommodating in
huge quantities and prices have been
borne down to levels which for many
operators left little or no margin of
profit.
Output CurtaiIed.
The rise in prices would not have
been possible had not producers whole
heartedly co-operated in curtailing pro-
duction with a view to restoring ball
ance with demand. Statistics recently
have indicated that such balance has
been virtually attained.
TCSGOTdIlOIl VI
is a moral defeat for the Standard Oil
Co. of New Jersey, which, against the
protests of an Overwhelmingly large
majority of competing major indepen-
dent producers, cut prices of crude oil
last January and forced a general re-
duction throughout the midcontinent
and Texas areas. Competitors, while
compelled to meet that cut in self
protection, denounced it as unneces-
Sary In view of the trend of develop
ments in the industry. Now, hardly
three months later, the Standard Oil
has virtually conceded that it was in
error and has restored in part the
cuts it made in January.
Production of crude oil now is run
ming at a lower daily average rate
is down to about the daily average for
1929, which is the avowed goal of con-
servationists, who have maintained
that with huge surplus stocks of crude
available above ground, the industry
need make no provision in new pro-
duction this year for the normal
growth Of demand that characterizes
each year.
Curtailment Of crude oil output in
itself would not have solved the prob
lem had not refinery output also been
cut. That step was taken at the sug-
gestion of the Federal Oil Conservation
Board, which several weeks ago adj
vised refiners to suspend operations
one day out of seven. All important
ref1ners have adopted that suggestion
in principle, with the result that for
the first time in months stocks of
gasoline have shown a substantial de-
crease.
Distress" Gasoline.
Already gasoline prices have been
raised in important areas, including
New York and New England in the
East and a large area in the Middle
West, with the probability that adj
vances will be made countrywide. A
factor in the gasoline price advance
has been the absorption of distress"
gasoline that pressed on the midcon-
tinent and New York markets last
Winter and forced the market down.
The method adopted by the oil In
dustry to correct the problem of over
production contrasts favorably with
less economic efforts tried in other
commodity markets to hold surplus on
the market and support prices. Such
efforts to prevent operation Of the
laws of supply and demand invariably
fail.
The recovery in oil prices indicates
that the worst has been experienced
| In the market for petroleum and its
products, thus adding one more to the
! small but growing list of commodities
! whose prices have turned upward after
prolonged depression.
(copyriGht, 1900