Evening star., 1947-12-28
BigDernand
FOrU.S.Oil
Output Greater Than
Before War, but
Still Short
By Henry Lyon

6CaCSS pass 1TOIIl SCdTClIy W p4cilCS
to scarcity in oil. The war brought
scarcity, but, strangely, cessation OF
fighting seems to have had little
effect upon the overall picture
Of petroleum supply and demand
Right now the demand is virtually
equal to the capacity to produce
and the United States produces two
thirds Of the worlds total output Of
petroleum.
Again are heard the admonitions
OF those who predict exhaustion OF
reserves within the lifetimes OF
stockholders. Scientists are prodded
along in their search for a means of
harnessing atomic energy. New fuels
are sought.
To say that the demand balances
the supply does not mean that the
petroleum demand has not changed
in character in 20 years. It has.
The pattern Of the demand is ever
changing and the Economics" of the
industry is now debating whether
it Is more profitable to fix the pat
tern in this mold or that. The pat
tern is dictated in part by profit
considerations and in part by con-
sumer preferences and the way OF
life"
Shift to Oil Is Widespread
John L. Lewis recently charged
that the leaders in the oil industry
deliberately set about to sabotage
the use of coal fuel in heating.
More oil is going to heat homes.
Motorists show no inclination to
use less gasoline and the prospect
is that there will be greater-not
a lesser-volume of petroleum prod
ucts used by motorists.
The shift" to oil is widespread.
Ships and locomotives and airplanes
all have upped demands considerably
over prewar. The demands OF heavy
trucks have been greater than any
one supposed possible 10 years ago.
No attempt is made here to detail
the allocations to products that
drain the supply but merely to indi-
cate how great this drain is IN
separate directions controlled by
demand, supply, price and other
factors that include policy on the
part of Government as respects
exports, imports and administration.
Apparently there is no attempt
anywhere within the industry to
keep processes secret, since most OF
them are shared at a price, with
the result that there Is efficient
processing Of petroleum throughout
the industry.
Some Urge Import Balance
1t seems q far cry back to the
period Of previous scarcity-the era
before the discoveries OF rich pro-
ducers In East Texas. During the
depression of the '20s so much oil
was shipped in from outside sources,
principally Mexico, that a duty OF
q cents a barrel was put on it-a
duty since reduced by half. There
is considerable debate now in some
quarters on whether or not the
United States should encourage the
drift toward an import balance.
The export import balance Is now
about even.
When the East Texas gushers
flooded the American market the
researchers and Congress lost in
terest, certainly most of their en-
thusiasm, In the hunt for synthetic
fuels, but with the prices OF crude
and gasoline advancing, and with
the scarcity picture getting no
brighter from year to year and from
season to season, there is consider
able prospect that synthetic fuels
will become more and more COM
petitive. The feasibility of making
oil from coal and natural gas has
long since been accepted by the
large operators.
Demand Seems Unsuitable
With the war behind us, radical
readjustments have taken place. At
one time during 1s45 we were able
to make 100000 barrels. OF aviation
gasoline alone daily. Quickly the
airplane demand fell off and the
inevitable shifts in the face OF the
industry, altered by the laws OF de-
mand, took place rapidly. This can
not be said without at the same
time stressing the fact that demand
seems Unsuitable. Crude oil pro-
duction is racing along at rate
IS to 81 per cent higher than be-
fore the war.
The 1e47 demand for motor fuel
was per cent greater than in 1946.
Kerosene demands increased II per
cent, residual fuel oil demand in
creased 8 per cent, distillate fuel oil
demands increased 18 per cent, de-
mands for all other types of oils
was up IS per cent. The monthly
gasoline demand is at 66.2 million
barrels.
In the face Of this picture there
Is considerable difference of opinion
as to what the prospects are of ex-
hausting the domestic reserves. In
recent times explorations were able
to uncover more oil reserves than
had been tapped in all previous ex-
plorations. There is some reason
for believing that wildcatting will
continue to bring in new reserves;
however, the prudent view seems to
be that, after time in the not too
far distant future, steps must be
taken to level off production in
order to prevent exhaustion.
Br01Un
fCantin,1ed Nr,rrn Page C.1A