Oil's Crisis

After 13 weeks of haggling, Rumania last week signed an international oil pact with all the great oil producing nations except Russia. Terms of the pact are thought to bind Rumania to keep oil production down to 1930's level, to enforce further reductions in proportion to any drop in consumption below 1930's rate. But this news caused little cheer to oilmen in the U. S., for once again their industry faced a crisis.

The crisis started when great shipments of gasoline were made to the U. S. in time to escape the new Federal tax. These were not sold, overhung the market. Last week because of "conditions of oversupply and widespread price-cutting." Standard Oil Co. (N. J.) ordered one of the severest price reductions in history. The cut amounted to 2.2-c- in New Jersey. 3.-c- in all of the company's other States except Delaware where no change was made.

Usually gasoline price movements follow changes in crude oil prices. But last week crude remained at the levels it reached last April when the industry claimed to have "turned the corner." And herein lay the crisis. The narrow spread between crude and gasoline means small profits for refiners. Oilmen nervously watched production figures, feeling that the first surge of unwanted oil would upset the price structure. In Oklahoma, where troopers have dug up most of the illicit pipelines which secretly carried oil from shut-in wells to open wells, production was in hand last week. But enforcing proration has become increasingly difficult and the State's commissioners were reported almost ready to give up. Production in the East Texas field showed a tendency to mount despite the railroad commission's fixing a maximum "allowable"' for every well. Oilmen saw East Texas as their danger spot.

Harry Ford Sinclair said that a cut in crude would be followed by still lower gasoline prices, cried out: "This vicious circle is what has wrecked prices in all industries. . . . The industries that are giving away their product and their capital . . . are retarding improvement."

This file is automatically generated by a robot program, so reader's discretion is required.