The Waterbury Democrat., 1942-11-03


 million barrels in October lea2, The stocks are still decreasing, not only because of in- creased consumption and demand, but also because of limitation of oil transportation facilities and restric, tons on production ia some fields, l In short, no oil reserve has been built up for war purposes.
 The remedy which the petroleum industry suggests is to do more ex- ploring for new oil fields and bring in more new wells. To pay for this exploration it is proposed that the prise of crude oil from wells already in production be increased by some trifiing few cents barrel.
 From other sources come other arguments in opposition 10 the case for an increase in the price of crude. First and foremost is this matter of restrictions on pro- duction. begun back in MIRA days and continued during the 6epres- sion as one means of stabilizing the price. of keeping down excess pro- auction, or maintaining production in balance with demand.
 orc SETS QUANTITIES.
 The way it works out now is that every month the ofice of the Petroleum Co-ordinator for War makes recommendations to the oil producing states as to the quantities that should be brought to the ground to meet the expected de- mand. The states in turn under their prorationing laws determine how much field and from each well in that field.
 The states have their own pen alties for violations of these pro- rationing orders. though the states are not bound to accept the pro- duction limitation made by Wash- ington. The federal government, however, through the Connally hot oil act, prohibits interstate ship ment of petroleum produced in excess of state regulation.
 U. s. production is now run ming around four million barrels a day Maximum production this year has been four and a quarter million barrels a day. but that is by no means the maximum that could be produced if the prora- tioning controls were lifted. No- body knows what U. s. produc- ton from wells already drilled would be if they were permitted to produce all they could And if the country is faced with a short age of oil. the question naturally arises as to why wells already in production should not be permitted to produce all they can?
 TWO OBJECTIONS
 Only objection raised against un- limited production is that it might lead to the exhaustion of the fields bleeding the oil fields to death soon- CT than sound conservation practice calls for. A secondary objection is that if production controls are re- moved now, it will be difficult to get them back after the war is oyer.
 Both points smack good deal of oil business as usual.
 Taking time out to explore for new fields is a gamble and fur thermore it runs right into scarcity of steel for casing and pipe even if new wells sllould be found. Also. if there is a transportation bottleneck for petroleum products. why discover new fields which will require use of still more criti- cal materials for the construction of additional pipeline or other transportation facilities?
 If prorationing restrictions were removed for the war, you might see the price of crude oil go down. thereby cutting the cost of the war instead of raising it. as an increase in the oil price would do.
 The alternative to having the price for wildcatting paid by the consumers in the form of an in- crease in the prize of crude oil products is to have 1t paid by di- rect government subsidy. Some oil men have testified that no. tEey are too patriotic to want sub- sidies-preferring the price in- crease instead = but Secretary Of the Interior Harold L. Ickes has come out in favor of subsidy. |