Organized Production

One of the best liked and most politic men of Oklahoma, Oilman Ray H. Collins, hastened from Manhattan to Tulsa last week to persuade all Oklahoma oil operators to restrict their daily production and so help stabilize their industry. A committee of operators, conferring in Manhattan under the guidance of President Walter C. Teagle of Standard Oil Co. of New Jersey, and President W. S. Parish of Humble Oil & Refining Co., had asked him to go on the difficult mission. They represented ownership of three-quarters of the Oklahoma wells and to that extent expected success for Emissary Collins.

The Situation. In California, Texas, Oklahoma, there are vast underground reservoirs of crude oil into which men have drilled wells. They have been like boys, armed with straws, sucking lemonade up from great bowls. The harder a boy can suck and the more straws he can maneuver, the more lemonade he gets. If he stops to catch his breath or to wipe his nose, the other boys will suck up some share of his drink. Oil operators are such suckers, all ceaselessly aspirating oil from common, underground pools. Oil men are inclined not to trust one another.

Therefore, recently, there has been a great overproduction of crude oil in the U. S. Earlier in May the U. S. was producing 2,512,000 barrels of oil a day. This was approximately 250,000 more than the country was using daily. Therefore most operators had to take what money they could for their oil. Refiners at the same time were reluctant to buy more oil than they could sell. It is expensive to keep oil in storage tanks above ground. Prices have gone down, reflected indirectly in the recent reductions of gasoline prices (TIME, May 9). For the consuming public this situation is good; for the operators (including investors in oil properties) it is bad.

The Remedy. The Seminole Pool in Oklahoma produces 350,000 barrels of oil daily. It is a new oil district and is chiefly responsible for the present overproduction. If the Seminole wells could be shut off for a few days or if each well would restrict itself to produce, oil men estimate, only 200 barrels a day for a time, then consumers would use up the present excess. After a fortnight, supply should satisfy demand very evenly. It is Emissary Ray H. Collins' job to persuade Seminole Pool men to suck oil in unison, moderately.

Obstacles. All oil operators working in Oklahoma will not cooperate. As soon as the Teagle-Farish restriction program was broached, President E. W. Marland of Marland Oil Co. wrote: "The producers still talk of restricting production by cooperative action, though for 50 years their every attempt along this line has proven futile. . . . Apparently, chaos reigns--but not so. The law of the survival of the fittest continues to operate uninterruptedly, and the fittest are, as usual, earnest in the argument that there should be no other law. The large companies become larger. The small become smaller. The day of the individual producer is passing. The survivors of the struggle will enjoy happier times."

President E. B. Reeser of Barnsdall Refining Co. declined to agree; at once cut the filling-station price of his gasoline in Oklahoma by two cents a gallon--to 17-c-.

Henry Latham Doherty (TIME, March 28), head of the $650,000,000 Cities Service Co., has been reviving his health at Battle Creek, Mich.* He telegraphed to Mr. Teagle: "... I have spent far too much of everything worth while of value in life to follow meekly in further blunders. . . ."

* Last week, his 57th birthday, a telegram from 20,000 of his employes moved him profoundly. It conveyed their good wishes.