Evening star. [volume] (Washington, D.C.) 1854-1972, 1931-03-19
OIL MOVES DRAW
BORAH OPPOSITION
Congress Row May Go to
Heart of Anti Trust Law and
Conservation Policy.
BY MARK SULLIVAN.

Attempts to rescue the American OIL
producing industry from a menacing
condition by various mutual agreements
ere opposed by Senator Borah as being
contrary to the Sherman antitrust law
This is the initial exchange in a con-
troversy which. before it ends, will 60
to the heart not only of the antitrust
law, but the policy of conservation.
Aside from these political aspects, it is
apparent to those closest to the situa-
ton that an immense business and the
prosperity of at least two States is in
Volyed.
The fundamental fact is that the an
nual consumption OF oil in AmSrica is,
roughly. a billion barrels. The annual
capacity OF existing wells is, roughly,
two and one-half billion barrels. This
is without drilling any new we'll. and
the fact is that there are enormous
areas of new territory still untouched.
These figures are alone 2 sufficient pic
ture of disastrous competition.
The situation began about year ago
TO threaten the existence of what are
known as the independent producers"
The independent producer is in many
cases large corporation capitalized at
tens of millions of dollars. The day is
long past when the independent pro-
ducer was. in the words of a Texas
Shoestring, two jumps behind a million
dollars and one Jump ahead OF the
sheriff" Independent operators are to-
day ths financial and industrial back
bone of some Western and Southwest
ern States
Demand for Oil Tariff.
An carly protective move by the
harassed industry was demand upon
Congress. made about a yearsago. for
a tariff on oil. At that time the whole
tariff bill was in the making. The
demand for a tariff on oil, being made
chiefly through Democratic Senator's
in the oil-producing States. had the
effect of disrupting the then existing
combination of Democrats and Pro-
gressives working for a lower tariff
in general. The combination up to
that time had been successful. When
some Democratic Senators tried for a
tariff on oil, and had the appearance
of making trades with high-tariff SEN
ators wishing to favor other industries,
there was an angry explosion in the
Senate. The episode ended with some
Democratic Senators glaring angrily at
other Democratic Senators, charges of
bad faith and of treachery to Demo-
cratic tariff principles. and to a gen.
eral atmosphere Of mutual suspicion
Gratis and Progressives
A year later the oil producers last
month renewed their effort for tariff.
It was realized quickly that in the
absence of a general tariff bill nothing
could be done on this line. The de-
mand was changed to one for an Of
fetal embargo on oil from foreign
countries. That ran afoul of group
of treaties making such action impos-
sible.
The effort of the oil producers then
took the form Of bringing about
voluntary mutual agreement among
companies importing oil to cease SO
doing. Such an agreement, or, at least:
= state of willingness on the part OF
the importers, seems at this writing
probable 1t is at this moment that
! Progressive Senator Borah raises the
threat of the antitrust law.
Wanted Only to December.
The theory of the advocates of mu-
tual agreement is that the agreement is
wanted only until next December, when
Congress meets again and may, so the
oil producers optimistically think, give
them permanent relief in the hape OF
2 tariff. Aside from the doubtful like
Ilhood of that, it is asserted by men
competently informed that not even
complete cessation of oil imports would
permanently rescue the domestic pro-
ducers. To total of annual imports IS
about hundred million barrels. Cassa-
ton Of that would have comparatively
little effect on a domestic situation In
which the annual demand is billion
barrels. whereas the annual potential
production from existing wells is about
212 billion barrels.
Hand-in-hand with the effort to limit
imports is an attempt to pro-rate pro-
Cuction by domestic producers About
the attempt at proration, two points are
made by those who doubt whether this
device will provide permanent remedy.
One is that the pro-rating agreements
are difficult or impossible to enforce,
that even when ncminally in effect they
PRE- violated and rullifed, and that at
any moment they are apt to be thrown
overheard. The other point, made by
some Progressive5 and by some Demo-
Gratis who don't come from oil-produc-
ing States, is that the pro-rating agree
ments are, like the proposed embargo
agreement, violations of the antitrust
law
About all that can be said IN the net
is that the oil-producing industry is in
an interesting situation having several