Economics of the Petroleum Industry

THE petroleum economics session," held on Wednesday morning, Feb. 20, 1929, presided over by Campbell Osborn, chairman, proved to be of un- usual interest and resulted in serious and constructive discussion of the papers presented. The first paper on the program, "Gasoline Economics and Refinery Operation," was by H. J. Struth, petroleum economist of the Gulf Publishing Co., Houston, Tex. While this paper was intended to cover the re- finery situation, it also presented the author's reasons for believing that the oil producer should give cognizance to gasoline demand as a most reliable barometer by which to parallel the production of crude petroleum. The discussion which followed brought out some interesting points in connection with the immediate outlook for the industry as a whole during the present year. Some advanced the opinion that, regardless of the out- come of proration efforts, the refiner is in a position to conduct his operations on a reasonably profitable basis, provided that he exercises control over them. This would mean running less crude and resorting to wider utilization of cracking to produce the gasoline demand. Thus, if the refiner uses diligent care in scheduling his still runs, the producer will be obliged to carry over a large stock of crude this year, unless he is able to keep production below the limits prescribed by the demand for gasoline.