Statement on Oil Imports and Production.

I HAVE RECEIVED several hundred telegrams from the West and Southwest either inquiring or making suggestions as to the situation in the oil industry.

In order to make the matter clear I may state:

"In order to prevent enormous waste of gas and oil and to prevent the ruin of the independent oil producers, the Federal Oil Conservation Board brought about over a year ago, under the leadership of Secretary Wilbur, an almost entire restriction of production from the newly discovered, great oil pool at Kettleman Hills, California, a large part of which is the property of the Federal Government. The State authorities of Oklahoma have brought about similar restraint upon an enormous new pool discovered at Oklahoma City. Coincident with these efforts, the State commissions working with other producers of California, Oklahoma, and Texas, brought about proration agreements amongst themselves. A third great pool has been recently developed in eastern Texas, upon which no proration has yet been brought about, but I am advised that the Governor is making an effort to bring it about. The question of prorating of imports has been under agitation as also having a bearing upon the problem.

"We import approximately 105 million barrels of petroleum and its products per annum and export about 156 million barrels, the imports coming largely from certain South American and Mexican oil pools.

"The consumption of the United States is approximately 900 million barrels per annum, the imports thus representing something over 11 percent and the exports about 16 percent of the total.

"On the 29th of January the Oil Conservation Board recommended to Congress that authority be given to the Federal Trade Commission to effect proration of imports, it being the Board's hope that a proration of production in the foreign pools exporting to the United States could [be] brought about as well as a proration of imports into the United States. No action was taken by Congress upon this recommendation nor upon other plans proposed by the independent oil producers.

"On March 5, therefore, the Board, with my approval, requested that importers should each voluntarily prorate their production from foreign pools and their imports into the United States, in order to give mid-continent and California fields an opportunity to further readjust their position. The Board considers that in the present situation a substantial reduction in imports can be brought about without distributing the price of oil to the consumer, the Atlantic Seaboard can be supplied from domestic storage. These negotiations are making favorable progress. But such action would have little effect, however, unless the east Texas pool shall be prorated on the same basis as other new pools. It it believed that if these two results could be brought about, the industry will soon readjust itself."