Subsidy for Strippers

Petroleum Administrator Harold L. Ickes, who mortally fears a U.S. oil shortage, wanted a boost in crude oil prices in order to spur production. Economic Stabilizer Fred M. Vinson, fearful that this might squeeze about $500,000,000 more from the U.S. consumer, flatly refused. Still Mr. Vinson agreed that the price of oil in many a U.S. field is too low. Last week, OPA came up with its routine solution: a subsidy for the oil industry. Estimated cost per year: $40,000,000 to $60,000,000.

Little of the subsidy cash would go to the big integrated companies. (They and the Oil Congressmen prefer Mr. Ickes' plan for a price boost.) OPA tailored its plan to fit only the small operators of the 200,000 "stripper" wells--the marginal producers who turn out some 15% of all U.S. oil. Squeezed between rising costs and OPA's ceilings many a stripper has been forced to plug his wells and go out of business. And once plugged, the wells are often ruined by salt water seepage.

To keep these marginal fields flowing, OPA has cautiously permitted price increases in some 72 U.S. fields. But it has been stymied by the fact that many a stripper has only a hazy idea of costs, only knows that he is losing money. To get around all this, OPA's subsidy plan arbitrarily defines a stripper field as any producing nine barrels per well, or less, per day. All such strippers would be subsidized on a scale ranging from 35-c- per barrel for 5 barrel wells to 20-c- for the nine.

But PAW Administrator Ickes had little to crow about. OPA coolly brushed off his main contention--that an overall price increase is needed to boost wildcatting and thus uncover new fields. OPA pointed to figures showing that wildcatting is now at an alltime high; in all, estimated 5,000 wells will be sunk this year, a whopping 1,500 over last year's record high. As OPA sent its plan along to Stabilizer Vinson for approval, it hoped that it had taken the steam out of the drive for an overall crude-oil price increase.

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