Evening star., 1933-09-10
American Petroleum Industry on
Way to Becoming Quasi.Monopoly
BY WILLIAM HARD.

BY WILLIAM HARD.
The petroleum industry furnishes to-
day the most startling illustration Of
the possibilities of the new deal. This
industry may be on its way to becoming
quasi monopoly, operated as q public
utility Such is the opinion OF many
intimate observers here. both in private
life and in high official quarters.
The reasons are to be found in de-
velopments which began long before
Mr.. Roosevelt became President. These
developments have found enlarged ex-
preston under Mr.. Roosevelt in the
petroleum clauses Of the national in
dustrial recovery act and in the petro-
leum code adopted under the auspices
Of the National Industrial Recovery
Administration.
Today the private managers Of petro-
luem companies are operating their
businesses within a network of wage
controls. hours controls. employe man
agement controls. development controls.
production controls. price controls and
importation controls which already re-
duce them drastically from the status
Of free e-will business adventures TO the
status Of almost automatic quasi
bureaucrats
This new process begins at the very
start Of oil operations. 1t begins in
proposed fresh fields of oil discovery
! The N. r. A. code permits exploration
for new wells. but specifically states that
''the shipment Of petroleum which was
produced in a new field which has not
been developed in accordance with a
plan approved by the President is un-
fair competition and in violation Of
this CODE
In other words, there can be no new
flush addition to our petroleum supply
now except in accordance with plans
devised or, at any rate. sanctioned by
the Federal Government.
| Nor is this idea a mere whim Of new
deal brain trust boy wonders. 1t has
precedents, conservative precedents.
! Under the Hoover administration the
Department of the Interior took a lead
ing and guiding hand in an agreement
with private petroleum producers for
the scientific conservationist develop
ment Of the Kettleman Hills field, in
California. The idea Of national social
sanctions for new petroleum production
plans Is not an arbitrary novelty. 1t
is an organic growth from past expert
ence and past experiment.
The same remark can be made about
the new orders issued by Secretary of
Interior Ickes, allocating to each petro-
leum- producing State-under the pc
troleum code-a fixed quantity of petro-
leum which that State will be permitted
to export across its boundaries into
interstate commerce. The Hoover ad-
leum Economics Committee headed by
j. Elmer Thomas and Joseph E. Pogue
issued authoritative recommendations
to the petroleum producing States as to
| their productions and expectations of
petroleum. The precedent then set has
merely expanded now from the phase of
! persuasive recommendation to the
phase Of binding coercive command.
1 x K
| Federal ALLEGATIONS of petroleum pro-
duction cannot therefore be regarded
as an invention Of the passing moment.
They have long been rendered appar-
emily necessary by the failure of the
petroleum producing States to enforce
their own production control measures
That failure was frankly admitted by
| sentatives Of the petroleum producing
States in the hearings last Spring be-
fore the Interior Department and in
the hearings last Summer before the
National Industrial Recovery Admins
! tration.
Efforts at production control by local
action began in Oklahoma in 1927 1t
is six years of futility in the pursuit of
such action that has led now at last to
the imposition of Federal coercion, polite
ly called Federal assistance" The stu
alton was candidly declared to the Ma
tional Industrial Recovery Administra-
ton by Axtell J. Byles. president Of the
American Petroleum Institute, when he
said:
In the balancing of petroleum pro-
duction with consumer demand. the
petroleum industry cannot conduct its
business along sound economic lines
unless 1t has certain definite assistance
from the Federal Government"
The true novelty Of the moment in
the evolution Of the American petrole-
UNI industry is, Of course. in Federal
price control 1t is noteworthy that
this novelty is supported now by many
of the most conservative elements in
the industry. 1t is opposed, indeed, by
many other conservative elements, but
the price control combination of radical
elements and Of ex-conservative ele-
in the industry.
|
This combination Is represented on
the Planning and Coordination Com
mittee Of the petroleum code by H. R
Kingsbury of the Standard Oil Co. OF
California and by at least four others
among the IL members OF the COM
mittee selected from the industry.
Meanwhile, the three members Of the
committee selected by the Federal Gov
eminent may well be expected to 60
loyalty along with the oficial announce
ment made when the petroleum code
was published That announcement
was:
THE President will prescribe the
minimum wholesale price Of gasoline "
It must further be observed that the
petroleum code contains 81 stringent
detailed rules regarding the practices
to be followed in the marketing OF
gasoline to ultimate consumers. These
rules, again, are mere re-enforcements
and stabilizations of former endeavors
These rules, for the most part, have
gone through the furnace of attempted
| nlblic appltcation through the prO-