FUTURE OF OIL

Dunstan Times, Issue 3513, 16 March 1931, Page 3

FUTURE OF OIL

RESTRICTED DEMAND MEETING THE MARKET While the world is staggering under the weight of surpluses of all kinds of raw material, the oil industry is taking the lead in restricting its output to meet the demand, C. B. Reeser, president of the American Petroleum Institute. told the institute at the opening of its eleventh annual meeting at Chicago, says the ‘Christian Science Monitor.’ “The theory of conservation as applied to crude petroleum,” Mr Reeser, who is president of the Barnsdall Corporation, said. “ has now become an accepted policy in the industry, and this is the factor which has made it possible to formulate —with the aid of local government authorities curtailment programmes.” The problem of oil conservation has not however, been completely worked out. “The general restraint upon crude production which the industry has exercised is indicative of what producers can, and will, do to meet an emergency,” continued the oil institute’s president. “Our methods of capturing oil have been, and broadly speaking still aic, such as to permit the eternal existence of that overhanging shadow ‘overproduction.’ Stability, the removal of that shadow, requires that we speedily seek and line! a permanent solution. “We must find an answer that will dispose permanently of the age-long methods we have employed in the competitive development of single pools. The method must be one which we may relv upon to yield economy in development and operation, to obtain greater recoveries from the lands and to piovidc for stability of output as related to market demands.” The answer Mr Reeser recommended was the application of “ some practicable form of unitisation or unit operation ” of pools. Under this plan holdings are merged and the pool is operated as nearly as possible in connection with the methods that would applv were the properties merged. Uiiitisation was one of the principal topics scheduled for this convention. Many oil men regard it as the only effective means of dealing with crude oil overproduction. As regards the immediate outlook for oil, the industry’s leader said; “The petroleum industry at this moment fa /os a condition that it has faced only once before in its history—namely, the almost certain prospect that during the coming six months’ period there will be a verv small, if indeed any. percentage of increase in the demand lor its principal money product, gasolene. Mr Reeser advised producing no more crude oil and refining no more products than could currently be sold at a profit. No ec( lomie reason can he found to justify continuous addition to petroleum stocks, he declared. The wise course, he held, was to liquidate marginal or excess reserve' stocks to the point of safety as rapidly as sound marketing conditions would warrant, meanwhile halting production operations to current requirements.