Petroleum Division (8cd0e70b-ae09-4734-a531-199e3df02241)

Future of State and Federal Oil Regulation. BY NORTHCUTT ELY (Trans , vol 118 2400 words) The Interstate Oil Compact, ratified by six states and Congress in 1935, replaced the petroleum code, invalidated with other codes by the Schechter decision This compact endeavors, first, to conserve reservoir energy of oil pools through substantially uniform conservation measures by the states, second, it recognizes the state rather than the Federal Government as possessing the necessary police power for that purpose, third, it establishes an interstate advisory commission, so that orderly production in one state is not penalized by uncontrolled production in another, fourth, Federal interests are recognized in the control of hot oil, regulation of imports and fact-finding forecasts of supply and demand by the Bureau of Mmes It is not as complete an instrument as proposed by the Federal Oil Conservation Board in 1932, but is workable, and will be effective in proportion to the support given it by the industry Three results may follow First, now that fear of Federal control has subsided, the industry may lose interest in the compact and let it fall to pieces, second, if vigorously supported by the industry, the compact can accomplish most of the conservation objectives sought by the Federal control measures now believed unconstitutional, third, if the Compact fails, Federal regulation is almost certain to be revived, and can probably be sustained in connection with neutrality legislation, regulation of interstate pipe lines, and coordination of Federal and state gasoline taxes Nearly every step toward governmental regulation has originated within the industry state proration, the Federal petroleum code, Federal control of imports, Federal control of hot oil are examples The Compact shows a trend toward coordination between the powers of the industry, the state government, and the Federal Government If this arrangement fails through lack of interest by the oil industry, the next step is likely to be absorption by the Federal Government of the other two factors involved in the situation