FUTURE OF OIL.

Otago Daily Times, Issue 21242, 24 January 1931, Page 17

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 farmulate —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 are, such as to permit the eternal existence of that overhanging shadow ‘ over-production.’ Stability, the remova) of that shadow, requires that we speedily seek and find a permanent solution. • "We must find an answer that will dispose permanently of the age-long methods wo have employed in the competitive development qf single pools. The method must be one which we may rely upon to yield economy in development and operation, to obtain greater recoveries from the lands, and lo provide for stabil ity of output as related to market demands.”

The answer Mr Reescr recommended was the application of “ some practicable form of uuitisation 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 apply were the properties merged. Unitisation 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 leader said: “The petroleum industry at this moment faces 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 very small, if indeed any, percentage of increase in the demand for its principal money product, gasoline.” Mr Reescr advised producing no more crude oil and refining no more products than could currently be sold at a profit. No economic reason can be found to justify continuous additions to petroleum stocks, he declared. The wise course, he held, was to'liquidate marginal or excess reserve stocks to the point of safely as rapidly as sound marketing conditions would warrant, meanwhile halting production operations to current requirements.