Petroleum Recovery

Few industries are as unstable as that which is concerned with the production, refining and distribution of petroleum. It is always either a feast or famine. Until only a few weeks ago, the famine element seemed uppermost; overproduction had created a great surplus of crude oil for the oil companies to carry, prices were declining precipitously, and disaster was frankly anticipated by the trade. But meanwhile the consumption of crude oil and its byproducts, continued to increase. The huge production of automobiles demanded greater amounts of gasoline than ever. Large office buildings and hotels have adopted oil heating systems. Some railroads not only burn oil in their large locomotives, but are taking up running motor engines on their spur tracks for short haul traffic. Unless new oil fields are opened, the large stocks now overhanging market will be diminished, prices will rise, and a period of prosperity in oil industry will follow. Already this tendency is discernible in the advancing prices in the Midcontinent.

The regular cycle in the oil industry seems to be: 1) activity in oil shares as they rise in price; 2) inflow of new capital into the oil business; 3) advancing prices for crude and fined petroleum; 4) overproduction. Just now we seem to be stage in 1, with 2 and 3 beginning. Several years will probably be consumed before the oil is as flat and unprofitable as it was last fall.