The President's News Conference

THE PRESIDENT. I haven't any matters here for quotation or direct answer, but I have got a variety of questions this morning, and they bear on various subjects.

FEDERAL RADIO COMMISSION

They get back to the Radio Commission as to whether or not we will have the appointments before Congress convenes. I am in hopes we will have it settled this week.

THE SITUATION IN MEXICO

I have some questions bearing on the situation in Mexico, and this is merely background for your own information. They largely are questions asking what the progress is in the situation in Mexico

The original outbreaks in Mexico embraced eight states. The revolution has been cleared in all except two states and part of a third. It is confined partly to Sinaloa, practically wholly in Chihuahua and Sonora. The Mexican Government has circumscribed the revolution and driven it into the extreme north. The original states where there were outbreaks included Vera Cruz, Coahuila, Zacatecas, Nayarit, Durango, Sinaloa, Chihuahua, and Sonora; and as I have said, the states of Chihuahua and Sonora are in control of the revolutionists and part of the state of Sinaloa.

OIL CONSERVATION

Another matter of purely background material for you is in the matter of the oil conservation or the measures, rather, suggested by the American Petroleum Institute.1 The questions presented by that institute are entirely apart from the administrative action on the public domain. They have no relationship as the public domain supplies less than 2 percent of the oil of the United States, and the action that we took in that case was for the purpose of conserving future supplies of oil and had no particular relationship to the immediate situation.

1 In March, directors of the American Petroleum Institute agreed to restrict 1929 production to the 1928 basis.

The Petroleum Institute has been cooperating with the Federal Oil Conservation Board over the last 4 or 5 years. That Board was established by President Coolidge to study the problem of oil conservation as a national issue--a national problem. I think I am the only member of it at present in Washington, and I can perhaps give you a little background on that work that the new members would not be so familiar with.

The Board took up the study of that problem from two points of view--the scientific point of view as to what scientific method would assure the longest life of our oil supplies and what economic measures were desirable, also. They developed the fact that one of the difficulties in oil production, or one of the causes of great wastes in oil production, was overdrilling--too rapid exhaustion of the fields; that where there was intense drilling there was the relaxation of and exhaustion of the [p.55] gas from oil pools, the consequent diminution of the gas pressures of the oil pool, and consequently a less total product from a given pool of oil than would be the case of better regulated drilling. There was also involved in it the problem of the waste of gas itself into the air itself without commercial use. The Board recommended that there should be a regulation of drilling that would secure the maximum production of oil from a given pool; that the feverish drilling of offset and competition wells and overdevelopment of fields at the initial stages are destructive of the total national oil supply.

It also had a certain economic phase, in that with regulated drilling it would be possible, to a remote extent perhaps, to prevent periods of intense overproduction with consequent demoralization of the industry, followed by periods of famine and extravagant prices for oil.

But in any event, the work of the Board revolved entirely around the question of the regulation of drilling on to a scientific engineering basis. The question then arose in the Board as to what governmental action could be taken to bring such activities into force. The Board assembled a committee comprised of three representatives of the American Bar Association, three from the Petroleum Institute, and three from the Government, to study the question of governmental action. That committee concluded, as had the previous advisers of the Board, that drilling of oil wells is entirely an intrastate question; that there was no authority in the Federal Government for the control of oil drilling. They explored the various possible uses of constitutional provisions, such as national defense and the interstate clause, et cetera, and concluded that there was no authority for Federal legislation; that such action must be taken by the individual States, under State authority. To some extent that has been done by the States, and more of it is in progress.

The Board decided that there was nothing they could suggest in the nature of agreement between oil companies for the restriction of production, their belief being that the key of the situation lay in the control of drilling, not in the stifling of production itself through interstate agreement; that in any event interstate agreements, they were advised, would be a violation of the Sherman Act, and they were also [p.56] advised that action by Congress to release or to authorize agreements to that end would, as in the case of other industry, imply also the regulation of the industry as to price of their products; that where the Government had substituted combination for competition, as in the case of the railways, it was necessarily accompanied by regulation and that, obviously, in the handling of a great producing industry became a blind alley that no one would have faith in. And that is the situation on the Oil Conservation Board down to the opening of this administration.

Tomorrow, I understand, they have a meeting with the members of the industry, and I thought perhaps I could give you a fair view of what has taken place in the past as the new members of the Board have scarcely had time to apprise themselves of the very large amount of work that has been done and the various proposals that they have confronted and determined upon.

I have nothing else that I can enter upon this morning except questions of appointments, and I am still not ready to make any answer in that direction.

Q. Mr. President, has any committee of the Petroleum Institute an appointment with you ?

THE PRESIDENT. No, they are meeting with the Oil Board.