Business & Finance: Gasoline Surplus

The heavy production of petroleum has affected the prices for crude oil less than that of gasoline. The latter is now lower than at any time since 1915; crude oil sold in that year at 60¢ a barrel, and is now $1.50 a barrel. This disparity results from the fine quality of oil produced in California and the midcontinent; it is light and easily refined, yielding 20% to 30% gasoline, compared with 15% previously obtained by producers. An important factor has also been the improvement of refining methods, whereby the proportion of gasoline obtained from crude oil is higher than previously.

Some experts claim.that the California production has passed its peak, and statistics bear this out so far; the week ending Sept. 15 saw a decline in the daily average production of 5,750 barrels over the previous week. A cheerful view of the oil industry was taken by Harry F. Sinclair, who pointed out the undoubted increase in consumption, owing to the continued increase in the number of automobiles operated. Present difficulties in the oil business are not due to declining consumption—that has steadily increased; it has been the sudden and excessive Western production that has increased stocks and driven down oil prices. Thus far the oil companies have stood the gaff well, considering the burden thrown on them by declining prices and mounting stocks. Very few have required security financing so far.