OIL AS A WAR ALLY

Dominion, Volume 11, Issue 49, 21 November 1917, Page 5

OIL AS A WAR ALLY

SUPPLIES A MATTER OF CONCERN IN AMERICA

OUTLOOK REVIEWED

Oil has been a eubjeot of deep official eoDcern in Washington ever since the. war broko out (saya a New York "Evening Post" correspondent). To-day It U. more of an offioial concern vhan ever, for tho Unitod States is now at war un its own account, and whon a nation oi 103,000,000 people goes to war, in addition to all the other nations at war, it. bearing on supply, demand, and production immediately becomes a question of paramount importance. Oil, therefore, presents itself to' this Government a'* this time' in two aspects: (1.) What can oil do to win the war? (2.) What can war <io to deplete, if not destroy, the oil supply? At the risk of appoaring to reach a conclusion in advanco of a recital of the. facts Tjpon which the conclusion is based, it is only fair to say that student* of tho oil question, as it bears upon the ■war and the future supply, 6eem, eo fai ns Washington is concerned, to bo divicU ed into two schools. Tho first school it thoroughly pessimistic as to the ability of the oil resources of the country to meet the heavy demand now being madd ■upon it at home and abroad. _ The_ seconu echool is more or less pessimistic ovei the immediate outlook, but hopeful thai the etrenuous efforts which are being put forth, and: the sacrifices which can be made, if necessary, will eventually save tho day. The situation is abnormal. The solution of the problem, if the demand eventually exceeds the supply and drains the reserves, may have to bt abnormal compared to practice heretofore. An Oil King's Warning. There are plenty of authoritative expressions to be had to warrant these assertione. For instance, Mr. A. C. Bedford, president of the Standard Oil Company of New Jersey, and chairman oi the Committee of Petroleum of the Advisory . Comission of the Council of National Defence, made a statement on July 23, in which he said in part: "In view of the abnormal conditions confronting the nation by reason-of the war it is peculiarly important thatthfc country should understand the serious situation now prevailing in the petroleum M Mr. Bedford then went on to point out that while the country ie producing crude oil at tho rate of about 300,000,0% barrels a year, it ie using this oil at the rate of 335,000,000 barrels a year, and the demand is constantly increasing, beconaly the stock of resorves of oil throughout tho country are again decreasing. Dr Van H. Manning, in a recent statement before the Senate Committee on Public Lands, not only estimated a decrease of 9,300,000 barrele in production this year, but he also estimated that at I the present Tate of production and consumption the reserve supplies of ofta in the TJnltcd States will be totally exhausted in 1920. Before entering into o detailed discussion of these important topic* under the general heading of the oil situation a few general observations will not bo amiss There 13 no disposition in Washington to revive officially the recent controversv between the Navy and Interior . Departments over the California oil-; fields. That eituation arose betoo the j United States entered tho war, and the , controversy was brought to its present • Btatus some time ago. Nevertheless, the bearing of the California situation on the general oil problem cannot be wholly 12nored. At the present writing the UU- ! fornia oil-fields, for various reasons, are practically removed from the national equation, although they are among the most 'productive in the United States. For the present California oil producers will do well to supply, the immediate | jieeds of their own vicinity. _ _ | The reasons for this condition are apparent upon study, and ono of. them, the lack of bottoms to cany oil by sea, has nothing to do with the domestic controversy. The real-war problem of this Government ig to carrj; oil in sufficient quantity ana as expeditiously as possible to. the places where it is needed. Submarine warfare has. been as great n menace, proporßonately speaking, to the oilcarrying trade as any other. At this time, not only with tho oil demands of the Allies in Europe increasing rapidly, but with the United States preparing to throw into the field an immense military organisation as dependent upon oil and its products as any other, it has 'become neceesaTy to assemblo for transportation along the most direct routes possible the bulk of tho oil-carrying ships. This has resulted in a readjustment of the transportation problem in the Southern and Western oil-fields particularly. With the reduction in tank tonnage the Pacific fields have been largely out off from the bottoms necessary to transport oil. Thore aie no pipe lines across the Kocky Mountains, hence the California field is largely eliminated. Whon it is further considered that immense withdrawals of oil lands by the Government have taken place in California; that the money received by oil producers on tho naval reserve lands in that State, now under legal controversy, has all been impounded with the exception of enough to pay the actual cost of pumping, it can readily bo understood why ■the California oil-field is now In a bad way from a national standpoint. Tho mid-Western fields nro not so handicapped in the matter of transportation for the reason that they have pipe lines to the Gulf which can be used when bottoms are available, and four pipe lines connecting as far East as New Jersey, through which the bulk of the oil now being used for war purposes ia being transported.

Mexico May Help. There is yet another field which is a disturbing factor in the oil situation, because of th.e unceriaioty involved in its future, and that is tho Mexican held; it is well known that Great' Britain has been considerably dependent upon this field for naval purposes, and the United States has also been a, large importer from the Tampico district. The unsettled conditions in Mexico have for many months put tho oil industry in that section on a precarious footing, and at the present time a sqluewhat divided jurisdiction still remains as a cause of friction and uneasiness. Oil which now pours into the pipe lines in the Tampico fields is taxed by a local authority, and it is taxed again for the direct benefit of the Carranza Government when it comes out at the other end. Tho increase in taxes is not only burdensome in itself, but the possibilities of political caprico, which may manifest itself at any time in peculiar ways, constitutes a menace not to be overlooked at uny time. As long as the present status can bo maintained it is probable that this field will continue to do as well as at present; but nobody is now in a position to Bay definitely that this status can bo maintained, much less improved.

Allies Need Huge Supplies. Tho latest available statistics relating to the oil industry, as it is affected by tho present war conditions, are contained in a compilation prepared by tho Bureau of Mines nud tho Geological Survey for the Council of National Defence in the latter part of May. The roport was prepared at tho request of Mr. Bernard Baruch, of New York, a membor of tho advisory committee of that body, and was recently called to the official attontion of Congress in connection with pending oil legislation. The report immediately recognises the fact thiifc the war in Europe is as much an "oil war" as a battle of "blood and iron." The problem before the oil industry of this country Iβ thus stated:— "A consideration of the present etatue of tho petroleum industry in the United States and ite intimate relation to the progress of the war brings forcibly to the mind of ft close observer, first, that our Allies must have petroleum in inoreasinaly lurße quantities; second, that the UniW States must furnish tho bulk of 'it, and, third, that the country is facing » shortage in petroleum, and some of its prodncte." Interesting Figures. Reviewing the possible prodnction of oil in this country this year, the report goes into detail on the situation in the various oil-fiolds. The conclusion is reached that thoro will bo no additional production this year in the Appalachian fields unless now transportation faoilihes nro prorided for the Kentucky fields, in

whioh oase production may be increased by 1,000,000 barrels only; that the Lima, IM., field will do well to maintain its production of 4,000,000 barrels of last year, whieli figure represented n reduction of 81 per cent, in the production of 1015; that there is not only no prospect of an increase in the Illinois fields, but a possibility of a decrease of 1,000,000 barrels; that the imd-contmcnt field in Kansas and Oklahoma " W"* 1 ? t0 show a decrease of 10,000,000 barrels, while the Texas fields may increase their output by 2,000,000 barrels; that tho Caddo, La., field nmv show a decrease ■ of 2,000,000 barrels, tthile the fcrulf u>asv i field should hold its own. I The Wyoming field, with a greater po- ' tential supply than is now being utilised, like California, is cut off from consideration for lack of transportation facilities. Tho Californinn fields, while P™^ sl . art increase in production • of 2,f™>™' barrels, ehow a falling off of 12,000000 barrels heretofore he'.d in reserve. Tho net result shows a falling off in production of 9,300,000 barrels this year, but, it is pointed out, now pools in any of tin , districts might materially change tho estimates. , In dienssinj? tho stocks of oil on hand held by nipo-line companies, and not including field storage, a decline of 9 per cent in the six months between Juno SO, 1910, and December 81 is noted. It ia further estimated that 43,810,000 barrels will bo drawn from the reserves to meet the demand this year; that the etoclai remaining on hnnrl at the end of this year will amount to only 106,790,000 barrels, and that, at the same rate of I production and' consumption, all reserve .stocks will be depleted completely by June, .1930. , , By districts, the estimate concludes that, unless tho Kentucky field finds a better outlet for flush production than it now has, there is no possibility of lie Appalachian and Lima, Ind., fields showing an increase in reserves this year. Last year tho reserves in the Illinois field decreased 4,700,000 barrels, or 40 per cent., and, because of Illinois s declining production, a further decrease this year, rather than an increase, is liiOked for. Tho mid-continent field./ from whence has come hitherto the great reserve stocks, showed in March of thie year a decrease of only 1,000,000 barrels, as against the reserves held on January 1, lillG, but the possibility of increasing that reserve is discounted by the doclino in production and the increased domand for oil. The Caddo, Texas, and Gulf Coast fields, all of which marked a decline in reserves last year, are not expected to increase them this year. The Wyoming field has not shown sufficient aollity to accumulate stores in reserve to affect tho general situation, and in California, where the reserves fell off last year in the stupendous figure of 85 per cent., the average decline in reserves for twenty-one months has been a million barrele a month. At present the production is averaging 8,000,000 barrels a month, and the consumption 0,000,000 barrels a month, the 1,000,000 barrele deficit coining from tho remaining reserve supply. Between June, 1915, and December 31, 1916, the reserves in the whole United States fell off 20,000,000 barrels. ■ , . . ' , So far as importation is concerned, the- report indicates that . tho United States could bp affected only by the I Mexican situation. Last year Mexico I exported 42,000,000 barrels of crude oil, or H por cent, of tho total marketed prouucTion. If, by ohance, this supply should fail the .United States and its Allies at this ttmc. and •if tho estii ronte'd decreaso in production of 9,000,000 'Barrels for 1917 should materialise, it Is apparent that this country would bo called upon to find, somewhere. some how, 51,000,000 barrels more oil than It did Fast year. Over and beyond this, however, is the estimated increase in normal consumption alone of 41,000,000 barrels, and the estimated increase of normal consumption due to war, practically all of which would be taken over by the Navy alone, is 20,000,000 barrels more. In fact, this latter figure may be further increased, if not doubled, before the year is out. This combination of fipmros, at the minimum, would require 81,000,000 more barrels of oil, leaving a deficit at tho end of tho year of 112,000,000 barrels. If this must he, taken from tho known reserves of 150.fi00.000 barrels, it is evident that tho reserve stocks on January 1 next, provided the estimates nro realised, will amount to only 38,600,000 barrels. Of course, if the Mexican situation shows no change, this figure will bo proportionately increased.

Shortage of Gasolene, A reduction in tho normal demand for oil and its products is emphasised by Mr. Bedford in his recent statement as one of the sure methods of enabling this country to meet the oil problem. In his statement Mr. Bedford said:—"The public will have to economise in tho use of gasolene. Sufficient gasolene should be available to provide for all tho normal uses of automobiles. But pleasure riding should be curtailed. People should look upon their automobiles as necessities, to be used only when needed. Not a gallon of gasolene should be used in the present emergency except for some useful end."

The railroads on the Pacific Coast alone used 84,000,000 barrels of oil to run their engines Inst year. More and more oil-burning ships aro being built and the Nary Department has adopted a settled policy which will call for oilburning vessels wherever possible. Many industries aro changing their wev plants to oil burners. Tlio normal incre.»S3 ia coteuinption, yoirs, for the past tm yww. 1915 nnd 1916 respec:wciy, lias ban* 12 and 13 per cent. If it holds good this year, it means that tho normal consumption in 1017 wilT be 353,000.000 barrels, against a production of '286,990,000 barrels. The above estimate is based on normal consumption only. Finally, Mr. Bedford concluded his statement to the public by an appeal for increased oil-prorlucHon us follows:— "Tilverv oil-producer in tlie country should be encouraged as a patriotic effort to secure the utmost possible output of crude oil. The present expense of drilling now wells is very great ;>nd increasing, and tho results are often discouraging. But there is oil to bo had if producers in thi> oil business will redouWfl Hieir efforts to get it out if the ground."