New Economics in Oil Production

WHEN the price of crude oil was advanced on July 26, 1928, with some 4,000,000 bbl. daily of potential production shut in under proration regulations, and with as much more new production shortly available from semi-proved undrilled reserves, students of the oil industry were made to realize that a new order of things now prevailed in petroleum economics. A new interpretation of the law of supply and demand had taken the place of the archaic method of influencing current production by changing crude price levels. Proration had caused the change. The long period of over-production just experienced, the prospects of a potential over-supply far into the future, had set up certain forces which brought about some fundamental changes. Their cause, effect and future influence can best be developed by a detailed study of the history of the period since war-time regulation