Up Goes Oil

STATES & CITIES

Crude oil prices in Oklahoma and Texas began to climb last week. Martial law was apparently winning over economic law. The combined production in the two States was cut 60% by close to 1,000,000 bbl. per day. Refiners began to feel the pinch, posted higher offers for their crude supply. Operators held their breath hopefully to see what would happen next in the Mid-Continent Field (see map), that vast tract of flat sandy country stretching from the wheat fields of Kansas to the Rio Grande, from the backwaters of the Mississippi to the Rocky Mountains. In size and wealth it exceeds the California Field with its rich Kettleman Hills, dwarfs the once-important Eastern Field centering in Pennsylvania, and the Rocky Mountain Field (Teapot Dome, Salt Creek, et al.) to the northwest.

In Oklahoma where all flush wells had been closed down three weeks ago by executive order (TIME, Aug. 17), Governor William Henry ("Cocklebur Bill") Murray waited confidently for purchasers to meet his reopening price -- $1 per bbl. Refiners tried to dicker a compromise out of him at 79-c- but he rejected their pleas, suspected their good faith. He warned the Mid-Continent oil States: "Don't let this thing get away from you when the fields are opened again. We can't trust the oil men with it. They'd hog one another."

Texas Co. voluntarily boosted its price to 70-c- per bbl. which three other big purchasing companies promptly met. Phillips Petroleum Co. ran the top price up to $1, but Governor Murray refused to re-open the wells until all companies agreed to pay and maintain that price. Gasoline prices rose 2-c- per gal. One Tulsa filling station advertised: "Sad but true-Alfalfa Bill 5-c-, Phillips Petroleum Co. 4-c-, me 2-c- -Total 11-c- per gal." Only the 'strippers" (old wells producing less than 25 bbl. per day) continued to operate legally Capped were the flush wells in the Oklahoma City pool (usual production: 65,000 bbl. per day) and the Seminole pool (usual production: 115,000 bbl. per day), while around Tulsa oil production was virtually at a standstill.

In Texas Brigadier General Jacob Wolters and his 1,000 guardsmen met no resistance in closing in the "sore spot" of the industry, the East Texas pool, as decreed by Governor Boss Shaw Sterling. Ordered General Wolters: "Shut down or go to jail." And down they shut, the wells of Humble Oil & Refining (of which Governor Sterling was once principal owner and president), of Texas Co. (for which General Wolters is attorney), of Sinclair and Gulf and Shell and a host of small independents. Troopers zigzagged through the field, sealing valves, taking no excuses. Only three men were seized for operating their wells far off in the pine woods and they were later released. Here and there incendiary fires broke out. About 1 boom towns lounged oil workers--10,000 of them--debating whether to "jump a rattler" to another pool or await the lifting of martial law. When a few disgruntled oilmen tried to hold a mass meeting to protest martial law, General Wolters shooed them away, declared such a gathering would be an "affront" to the Governor. Where oil in East Texas sold last month for 10-c- per bbl. operators now held it for 60-c- or 65-c- or sold for 40 cents.

Meanwhile a Mid-Continent oil conference was called for Sept. 11 under the auspices of the Kansas Public Service Commission to devise a uniform reduction plan. Though Kansas' oil production is comparatively small, it itched to join Oklahoma and Texas in the fight against low prices.

The week before the application of martial law, U. S. oil production was:

Field (Bbl. per day)

Mid-Continent 1,634.904

California 507,000

Gulf Coast 148,368

Eastern 105,000

Rocky Mountain 94,441

Elsewhere 62,094

TOTAL 2,551,807

Mid-Continent Field Production

Oklahoma 420,835

East Texas 654,246

West Texas (Winkler) . . 204,953

Panhandle (Borger) 55,020 North Central Texas

(Burkburnett, Ranger). 78,149 East Central Texas

(Mexia) 50,051

North Louisiana (Oil City) 31,415

Arkansas (El Dorado) 38,305

Kansas 101,930 TOTAL 1,634,904

After one week of martial law, Oklahoma production fell to 264,500 bbl. per day, after two weeks was estimated below 120,000 bbl., a drop of more than 300,000 bbl.

Only field affected by Governor Sterling's martial law was the East Texas pool where production before closing ran up to 738,050 bbl. or almost half of the entire Mid-Continent output. With this field pinched out temporarily and the Oklahoma shut-in, oilmen figured a reduction of 40% in the total domestic supply this week. Governor Sterling was expected to lift martial law after 30 days when the Texas Railroad Commission, under the new conservation law, would prorate Texas oil production at 880,000 bbl. per day.

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