Evening star., 1930-12-17
PROBATION OF OIL
OUTPUT DEMANDED
Company Head Believes Fu-
ture of Industry Depends
on Conservation.
BY BENNETT WOLFE,
Associated Press Stan Writer.

TULSA. Okla, December 17.-w. N.
Davis, president of the Midcontinent
Oil and Gas Association, believes the
petroleum industry cannot hope for
better health in 1881 unless 1t continues
to prorate crude oil prcQuction.
Abandonment Of proration. now being
advocated in some quarters, would be
tantamount to a return to the law of
the jungle. which only the strongest OF
oil producers could survive, he declared
today.
% If the oil industry is to enjoy q fair
ana stable measure of prosperity" he
said, Its balance of supply to demand
must be secured through some other
process than the laws of diminishing
returns and survival of the flttest."
False Reports Charged.
Davis charged the forces seeking to
break down the proration structure
were broadcaSting much false propa-
ganda at great expense"
Proration is being attacked on every
conceivable ground" he continued. But
the real opposition is due to the desire
OF some operators, who have their own
pipe lines and refineries or other ex-
elusive markets for crude, to produce
their properties to the maximum, re-
gardless of the injury to their neigh
bors, who, having no market for pro-
portionate quantities, would thus have
their properties drained
THE purpose Of proration is TO pre-
vent such inequitable and unfair prac-
tices.
Its abandonment in the face of the
great oversupply available would mean
open war on a price-cutting basis for
the limited, existing markets. These
markets would not be increased. Price
cuts in one district or State would be
met by similar cuts elsewhere until
ruin of the weaker operators had
thrown their properties into the hands
return to the law of the jungle.
And after that what? There would
still be an available supply Of crude
far in excess of world or national de-
mand, and refining capacity similar
ly disproportionate to consumer require
mentS. For 10 years or more the in
dustry has demonstrated its ability to
keep supply far ahead of the most rapid
increase that the world has ever seen
in demand for any commodity. The
lure of possible fortunes overnight will
continue, as it the past, to inspire the
wildcatter and attract capital regard
less Of low prices. 1t Is trite to say
that drilling should stop; 1t should.
But each lease requires the drilling of
one or more wells, so stop leasing also"
Suggests Conservation.
The supply of oil in excess of mar
ket requirements should be kept stored
in its natural reservoirs in the eerth,
Davis declared
Iron ore could be produced in guam
| titles greatly in excess of consumers
| needs, but 1t isn't DONE" he went on.
"Unneeded oil also must be kept in
the ground. The physical charac-
teristics Of oil production make the
problems involved in its control more
difhcult than in the case of solid
minerals"
Continuing he said:
'To meet one of these problems pc
culiar to the industry, proration is an
essential factor in any curtailment
program, but other factors are equally
| essential and one of these Is co-opera-
ton on the part Of purchasers and con-
sumers of crude to the end that there
should be a market at the posted price
for all of the allowable prorated pro-
duction. Lacking such market, dis
treSsed production in recent weeks be-
came available below the prevailing
price, and, although comparatively only
a trifiing amount, 1t tore down the en-
tire price structure for petroleum and
its products.
Inc abandonment OF proration would
put from 100000 to 1000, 900 barrels
OF Oklahoma's potential daily produc-
ton in distress.
"Curtailment at home only to have
imports increased in like or greater
amount seems futile, but with foreign
living standards and costs far below our
own the remedy for that situation is q
tariff or an embargo, not abandonment
of proration and resultant price war
which only the strongest could survive.
'Proration is the only protection of
the small producers who have no pipe
lines, reflneries or exclusive markets of
their own"