Papers - Petroleum Economies - Problems of Petroleum (With Discussion)

The evolution of the oil business is one of the great industrial romances of modern times. First used as a medicine, then as a lubricant, then as an illuminant, and finally as a motor fuel, each change in its principal usage caused large increases in consumption. Producing Successes The producing branch of the industry responded ably to the demands made upon it. Never was there a famine, rarely any threat of scarcity, and stored inventories were gradually accumulated to form comfortable working stocks. Originally an erratic and hazardous undertaking, the discovery and development of oil fields has made such strides as to classify now as a science. When storage stocks were low, production in close balance with consumption, and demand trending sharply upward, considerable concern was expressed over future needs. Price was very responsive to fluctuations in supply under those conditions, and quotations for crude and refined oils exhibited wide swings. A very different situation exists today. Consideration of the statistics only since the war will show how recent has been this change. In the 10-year period from 1918 to 1927 inclusive, we produced in the United States 6,100,000,000 bbl. of crude and imported 900,000,000 bbl., our total supply being 7,000,000,000 bbl. The consumption was 6,600,000,000 bbl., thus adding to stocks 400,000,000 bbl., an accumulation of somewhat less than 6 per cent. of the total supply. During that period virtually every field was promptly developed as soon as discovered and nearly every well in the country was producing at full capacity. With the maximum production of the wells required to take care of the rapid increases in consumption, with storage stocks moderate and proven reserves very slight, the producing division of the industry acquired a tempo not needed now. Potential Surplus Today the situation is vastly different. The economic consumption is about 2,700,000 bbl., with current production slightly in excess of that.