242 OUR USE OF THE LAND 



FEDERAL CONTROL OF OIL LAND 



The reason for this was that petroleum, which was a new 

 fuel, was first thought to be very scarce. There was another 

 cause for the attempts to restrict oil production. This is the 

 fact that oil has a production problem quite different from 

 that of any other valuable mineral. If you drill an oil well close 

 to another person's property, you may draw the oil from under 

 his property. Therefore, to protect himself, the other man will 

 put up an oil well to get that oil before you do. You can easily 

 see how this caused a great many oil wells to be drilled as soon 

 as oil was discovered in any particular region. But all of these 

 wells produced so much oil that prices fell rapidly. And as the 

 prices of oil fell, the oil companies drilled more oil wells so 

 they could get enough oil to sell to make a profit. Finally, 

 prices fell so low that new drilling stopped until demand could 

 catch up with supply. 



The first attempt to control the production of oil came in 

 1924 when the Federal Oil Conservation Board was founded. 

 This board tried to get producers to agree to control produc' 

 tion. Unfortunately, this attempt did not succeed. Oklahoma 

 through its Corporation Commission limited production in 

 the Greater Seminole area to 450,000 barrels a day, 22 and 

 divided this amount among the various producers in the 

 area. In 1928, Oklahoma made this a statewide system. In 

 1931 the Secretary of the Interior endeavored to get the 

 governors of Texas, Oklahoma, and Kansas to form an inter' 

 state compact whereby they would try to get the producers 

 to agree to limit production of oil in these states. However, 

 small companies frequently refused to meet these agreements 

 and proceeded to drain the oil fields. The big companies, on the 

 other hand, were prevented by the antitrust laws from making 

 any strict agreement about the production and price of oil. 



22 National Resources Board Report, op. cit., p. 407. 



