Cooperative Development of Oil Pools

A GROWING uneasiness in the oil fields indicates that doubts are arising as to the efficiency of the present technical, economic and legal arrangements affecting production. Recent documents of the federal government, debates in state legislatures, editorials in the daily press and statements of oil company executives re-echo the notion that the present methods of producing oil satisfy neither the business man nor the public. Such intimations are of utmost importance, since oil is a vital clement in modern industry and dependence upon it increases as new uses develop. SECTION I-PRESENT SCHEME OF COMPETITIVE EXPLOITATION IS WASTEFUL The oil industry has convinced itself, for very good reasons, that the present scheme of competitive exploitation results in losses, both in terms of quantities of oil and in terms of profits. The story of these losses is familiar enough, and it is necessary only to distinguish and summarize briefly certain factors that are of importance to the following argument. Oil pools are exploited under a competitive economic system based on private ownership and contract; the hope of profits attracts capital and enterprise, and competition is supposed to serve as a regulative factor. Whether such a scheme of industrial organization works is partially dependent on the ability of the producer to withhold or produce is commodity as he sees fit, in accordance with the dictates of market demand.