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BANCROFT LIBRARY 
 
 THE LIBRARY 
 
 OF 
 
 THE UNIVERSITY 
 
 OF CALIFORNIA 
 
 WALTER WADSWORTH BRADLEY 
 
 1878-1950 
 
 Walter W. Bradley was born in San Jose and 
 received the degrees of B.S. and E.M. from 
 the University of California. From 1912 to 
 1946 he was associated with the California 
 Division of Mines, serving as State Mineral- 
 ogist for the last eighteen years of that period. 
 His published works relate to mining, proc- 
 essing, and geology. This book is from his 
 private collection, presented to the Bancroft 
 Library by Mrs. Alice Roberts Bradley. 
 
9f J&>t '^^ 
 
 CONSERVATION 
 
 AN ADDRESS BY 
 
 M. L. RE QUA 
 
 Vice-President of the Sinclair Consolidated Oil Corporation, 
 
 before the American Petroleum Institute, 
 
 Washington, D. C. 
 
 November 19, 1920 
 
 With the Compliments of the 
 
 UNION PETROLEUM COMPANY 
 
 PHILADELPHIA 
 
 UNin^' PETROLEUM COMPANY 
 
 OF CALIFORNIA 
 
BANCROFT 
 LIBRARY 
 
 CONSERVATION 
 
 An Address by 
 
 M. L. REQUA 
 
 Vice President of the Sinclair Consolidated Oil Corporation, before the 
 
 American Petroleum Institute, Washington, Z>. C, 
 
 November, 19, 1920 
 
 IT WAS with considerable pleasure, and much trepidation, that 
 I accepted the call of the president of the Institute to address you 
 upon the subject of CONSERVATION. Pleasure, because it 
 would afford me an opportunity to face again an audience of oil men 
 and renew old acquaintances once more while perhaps presenting to 
 them some thoughts that may be worthy of consideration; trepidation, 
 because of my conviction that I should fall far short of doing justice 
 to a subject which must with each succeeding year become more and 
 more of paramount importance. 
 
 In the future, when most of the great problems of today are solved, 
 our descendants will find before them in ever increasing importance the 
 vital question of Conservation; and in the far distance, when the world 
 is dying and the last human beings are eking out a miserable existence 
 fighting for the last grains of wheat or drops of water, it is Conservation 
 that will be uppermost in their minds. 
 
 Today we are blest with fertile fields where the yellowing grain 
 ripens beneath the rays of the summer sun; where the green meadows 
 furnish sustenance to countless herds; where the locomotive, the auto- 
 mobile, and the airplane transport us from place to place at speeds 
 undreamed of by our ancestors; where modern civilization in all its 
 complexity of industrial and social relations pulsates in rhythmic har- 
 mony with the demands of the peoples of the world; where modern in- 
 dustry, affording livelihood and vocation to millions of people, is made 
 possible only by continuity in the supply of raw materials. But we 
 have witnessed another picture during the past six years. We have 
 seen the ghastly spectacle of a world from which was banished con- 
 servation of human life and of all forms of property; and we want no 
 more of it. In Russia we have witnessed a debacle so profound that 
 civilization as we know it has fallen, and had the World War continued 
 another year all Europe might well have been involved in the same a^^ul 
 
downfall. If it had been so, it would have been because of the wreck 
 of all forms of Conservation. We prize life and conserve it; we believe 
 in the right of property and its conservation, and because we do believe 
 in the conservation of life and property we want to return to normal 
 ways. We want to avail ourselves of the unbounded opportunities 
 that beckon us ever forward. But, keeping in mind the lessons of the 
 past six years, we would realize that if we are to enjoy in fullest measure 
 those opportunities we must conserve our resources rather than waste 
 them with prodigal hand. 
 
 We are beginning to realize that we cannot with impunity draw 
 indefinitely and wastefully upon our natural resources; we cannot shut 
 our eyes to the evolution that is continuous from generation to genera- 
 tion, or as individuals burn the candle at both ends, without sooner or 
 later being confronted with a day of reckoning. The seriousness — or 
 perhaps the hopelessness — of that day is entirely dependent upon the 
 speed with which each individual in the nation is made familiar with the 
 facts and is educated through proper and wise efforts to an intelligent 
 comprehension of the fundamentals involved. Whether this education 
 will assure upon the part of the public intelligent and constructive 
 demands, in place of those ill-considered and unwise in character which 
 have been so much in evidence in the past, depends in large part upon 
 industry itself. 
 
 The nation does not stand still, either in population or in industrial 
 growth; and with its growth there arise contemporaneously problems 
 of one kind and another that have been or will be settled either intelli- 
 gently and satisfactorily through anticipation by industry and at times 
 by co-operation with Government, or bungled by legislators largely 
 lacking in the necessary knowledge prerequisite to intelligent action. 
 Many — the largest majority, in fact — of those problems can, I think, 
 be settled with little or no governmental legislation; but should that 
 eventually become necessary, in some cases, honest presentation and 
 co-operation with Government must lead to results far more satisfac- 
 tory and intelligent than those produced by some of the methods 
 practiced in the past, from which have resulted conditions that, to 
 state it mildly, are on a level with sabotage and syndicalism or the 
 activities recently exposed in the building trades investigation con- 
 ducted in New York City. Those methods never have and never will 
 work satisfactorily, over any considerable period of time, and the sooner 
 certain factions in industry realize that "Honesty is the best policy" 
 and that the "Golden Rule" is something more than a mere academic 
 theory, the better off a lot of people — both Government employees and 
 private citizens — are going to be. 
 
Government, on its part, has an obligation to perform, that may be 
 summed up in the words of Theodore Roosevelt, who said: *'This nation 
 must get out of the business of politics and into business of government." 
 We must demand of our public oflScials that same high type of citizen- 
 ship which we demand of our individual citizens; the welfare of the 
 individual and the party must give way to the public welfare; and if 
 both Government and Industry will approach in this spirit the problems 
 that are with us today and that are to arise in the future, satisfactory 
 solution is a foregone conclusion. 
 
 In handling our great national problems of Conservation we shall, 
 of course, make little or no headway unless and until the weight of 
 public opinion is thrown affirmatively into the balance in favor of the 
 proposal, whatever it may be. And in turn it may be truthfully said 
 that public opinion can be aroused only by proper presentation of a 
 meritorious cause. Given such a cause — and I believe we have it in 
 Conservation of Petroleum — and given the necessary machinery for 
 dissemination of the truth, I, personally, have no fear but that our 
 American people will find the correct answer. 
 
 But in order that the people may be made cognizant of the facts, 
 it is necessary that someone or some organization gather those facts 
 and give them the widest possible circulation. If we are to achieve 
 success, it goes without saying, I think, that the facts must be truthfully 
 presented and that mutual confidence must be established, as between 
 the public on the one hand and the purveyor of facts upon the other. 
 Anything short of this will render nugatory any effort, regardless of 
 the time and energy that may be expended. 
 
 These facts must be statements of truth, presented in the form of 
 cold unemotional statistics and precise statements that speak for them* 
 selves and that need no specialist or expert to construe them. And 
 unless the case can be successfully presented in this manner, to the total 
 elimination of the sophistry of the trained orator, I will agree that the 
 case must go unproved. 
 
 For work of this kind I know of no instrument so well fitted for the 
 task as the American Petroleum Institute. I believe it is officered by 
 men of high integrity, animated by a spirit of service that comprehends 
 equal justice alike to its members and the public; and if this is so, it 
 is able to render invaluable aid to the industry which needs and must 
 have above everything else the respect and confidence of the public. 
 Given that respect and confidence. Government supervision, control, 
 or regulation becomes purely an academic discussion of an entirely 
 unlikely event. 
 
 You all know, I think, my views upon the subject of co-operation 
 and my belief that without industrial co-operation within the industry. 
 
and between the industry and Government, we shall in the future fall 
 far short of giving to the public the high type of service which has been 
 so markedly characteristic of the activities of the petroleum industry 
 in the past. And should we fail in this service, we invite public criticism 
 that will be quickly translated into Government investigation and har- 
 rassment, which in turn spells lessened efficiency. From the purely 
 selfish standpoint of self-preservation, therefore, we must co-operate. 
 And it is also true that without co-operation there can be no conservation. 
 
 Let us, then, link these two words together as the slogan of the 
 petroleum industry: Conservation and Co-operation — wise and bene- 
 ficial alike to the public and the industry. I can conceive no valid 
 excuse, should we fail in the effort to translate these two words into 
 constructive and effective action. 
 
 Unfortunately, Conservation, in the minds of many, has become 
 confused with hoarding — the withdrawal from immediate use; in short, 
 sabotage as related to raw materials. For years the coal of Alaska 
 has remained unmined, in large part because of regulations impossible 
 of performance when balanced against commercial necessity and a profit 
 justifying the investment. The water-powers of the West have in the 
 past failed to receive adequate development and utilization because of 
 similar folly in promulgation of regulations; and it is only after ten years 
 that any solution of the leasing of withdrawal petroleum lands has been 
 forthcoming, and even after these years of weary waiting, that measure, 
 as I view it, leaves much to be desired. 
 
 It is not this type of conservation I have in mind, but rather the 
 type so well defined by S. S. Wyer, who was, during the war period, 
 connected with the Oil Division of the United States Fuel Adminis- 
 tration. He says: 
 
 "True conservation is not hoarding, but the wise use of natural 
 resources; and it implies not merely the preserving in unimpaired effi- 
 ciency, but also a wise and equitable exhaustion with a maximum 
 efficiency and a minimum waste. * * * Conservation, therefore, 
 demands intensive rather than extensive use; takes cognizance of 
 equitable distribution; aims to bring about social justice, and means 
 the greatest good to the greatest number — and that for the longest time." 
 
 That we need Conservation seems so self-evident as to require little 
 argument save to differentiate as between the genuine article and the 
 impractical and bogus article foisted upon the West by Eastern theorists. 
 The late J. A. Holmes, formerly Director of the Bureau of Mines, has 
 well said that 
 
 "* * * both in legislation and in public opinion we must main- 
 tain, as essential, a rational basis for the conservation movement, which 
 recognizes (1) the rights of the individual to property and to reasonable 
 
profits in his investments and his labor, and (2) the paramount rights 
 respectively of the community, of the state, and of the nation to safe- 
 guard the future as well as the present welfare of its citizens." 
 
 So, while it is important that we practice conservation — that is, 
 use our heritage wisely and well — we can prove that, most of all, its 
 highest development and practice should be, must be, by those who 
 win the minerals from the earth's crust. In many a lonely canyon, 
 upon many a rugged mountain-side and desert waste throughout the 
 West, stand idle mining plants once the scene of feverish activities, 
 now peopled only with ghosts — abandoned and decaying; forlorn senti- 
 nels upon the highway of progress; marking the passing of some portion 
 of our natural resources; grim reminders of the fate that in time will be 
 the destiny of all our mineral reserves. Because the outcrops of those 
 deposits were upon the surface — easily found and easily exhausted — 
 they afford striking example of the truth of the statement that our 
 natural resources are far from limitless. 
 
 Our national and individual life is dependent upon the products 
 won from the soil by the husbandman, hewn from the forests by the 
 axeman, or torn from reluctant Mother Earth by the driller or the miner. 
 By proper conservation and by renewal of soil ingredients the products 
 of the farm may be reproduced indefinitely. Reforestation may renew 
 the trees of our forests, that are now being exhausted four times faster 
 than they grow; but the minerals of the earth, once removed, are gone 
 for all eternity. Turn, therefore, where you will, you face the problem 
 of Conservation in some form — whether in the field, the forest, or the 
 mine; but most acutely of all in the mine, where we are dealing with a 
 wasting asset that, once exploited, leaves as a heritage for future gene- 
 rations, only scars and gashes upon the surface of the earth. 
 
 Much has been said in the past in criticism of the extravagant and 
 wasteful manner in which America has developed and exploited her 
 natural resources. It was inevitable, I think, that it should have been 
 so. And yet, was it really waste? The very profusion and seeming 
 limitlessness of our resources made for extravagant development and 
 consumption. Why should we conserve., when products were a drug 
 on the market and the available supply apparently without limit? 
 There was apparently neither reason nor necessity. Nor must we forget 
 that the very speed with which we grew was made possible only by 
 ignoring waste and making prodigal use of what we had at hand. 
 
 The technology of all industry has grown with the industry itself; 
 methods of yesterday are obsolete today, and those of today will be 
 looked upon tomorrow with amazement because of their crudity. 
 It has been so in the Petroleum industry. The standard or rotary rig of 
 today, the methods of transportation, refining, and distributing are the 
 
outgrowth of years of effort in perfecting the tools of the trade; and the 
 methods which now seem wasteful or inefficient were when first used 
 the acme of perfection. 
 
 I have no quarrel with those venturesome spirits who from Penn- 
 sylvania to California gambled with Fortune in an effort to "strike oil." 
 They had the spirit to do and to dare; the courage of their convictions 
 in attempting to wring petroleum from the unwilling earth; and to them 
 all credit is due for the pioneer activities that in their results are little 
 short of miraculous. They were of the bone and sinew that builded 
 the nation, and because they have passed the nation is the poorer. 
 They labored under enormous handicap, doing the best they knew how, 
 but, somehow, some way, somewhere, producing the material that over 
 the last sixty years has, with electricity, most profoundly effected the 
 growth of modern civilization. 
 
 The growth of Industry may be divided into three epochs: The 
 period of pioneering, the period of rapid development, and the period 
 of maturity. The pioneer period was marked by dearth of capital and 
 distribution facilities and surplus of natural resources. Under these 
 conditions resources were necessarily exploited inefficiently; the main 
 consideration was to get out the product and market it as best might be. 
 There was in those days a strong justification for resource waste; it 
 was the only answer to the problem. 
 
 I have little patience with the Europeans who attempt to criticise 
 our pioneer activities, and attempt to compare our conditions with 
 their own. There is no comparison possible. There — an old civilization, 
 a settled and dense population, and short distance to travel from place 
 to place. Here — a continent to be conquered and peopled, a civiliza- 
 tion to be created, vast distances to be overcome; in short, a new world 
 to be fashioned for the habitation of man. And it was done. And if, 
 in the doing, those who pioneered the way fell short of discharging full 
 obligation — as conceived today by urban dwellers in the East or in 
 Europe — those of us who were ourselves a part of it, or who are the 
 descendants of those who did fashion the nation, may rest content in the 
 knowledge that there has been written into the pages of history an 
 achievement that needs neither apology nor defense. 
 
 The period of development has followed the day of the pioneer. 
 Capital acquired through hasty and makeshift extraction of our natural 
 resources has been used in creating yet other activities ; population 
 attracted by the prospect of rapid acquirement of wealth has invaded 
 the wilderness, crossed the mountain ranges and deserts, and gazed upon 
 the waters of the Pacific, and now rolls back upon itself to populate the 
 few remaining vacant spots in the great inter-mountain regions of the 
 West. 
 
We have passed two of the great periods of our growth, and we are 
 now face to face with the third and last period, wherein it becomes 
 necessary to scrutinize not only our resources, but also our methods of 
 utilization, to the end that the maximum use may be obtained. Depre- 
 ciation, depletion, amortization, are no longer academic terms, but are 
 very real and practical issues. And with it all, of course, is the need to 
 consider how best we may conserve our reserves which are to furnish 
 the justification for the enormous investment representing our manu- 
 facturing and distributing facilities that function satisfactorily only 
 through the continuous flow of raw materials. 
 
 We have rounded the turn that marks the division between callow 
 youth and mature age; we have created our capital, attracted our labor, 
 and now the need is for co-ordinated development and rational con- 
 servation, which is the very essence of practical effort in that it en- 
 deavors to prolong production and increase quantity without interference 
 with consumption. In its broadest sense, the wise and full utilization 
 of our natural resources, in the future, is a very vital as well as a very 
 practical issue. The past is buried with the ages — water over the dam 
 turns no mill wheels; and we have therefore to do only with the future; 
 and in so doing it is well that we must keep our eyes looking ever for- 
 ward, lest we confuse the problems of past generations with those 
 vastly different ones we shall have to solve in the future. What has 
 been, has been; but that is neither reason nor excuse for assuming that 
 we can successfully apply in the future the methods that have been used 
 in the past. 
 
 Having sketched for you, in rough outline, some of the fundamentals 
 underlying the Problem of Conservation, I shall address myself more 
 particularly to the Problem of Conservation as related to the present 
 and future of the petroleum industry. I shall not attempt to do more 
 than point out some of the unsatisfactory conditions that can be, 
 I think, successfully attacked by the industry. I appeal more in the 
 questioning mood, asking, is it not possible for the industry through 
 co-operation, to find ways and means to bring about more satisfactory 
 conditions? 
 
 Criticism is an avocation indulged in with great glee by many 
 theorists who attempt, with all the cock-sureness of ignorance, to 
 dictate methods and policies. I shall not, I hope, be guilty of such 
 an attitude; but there are questions to be asked of the industry that 
 deserve a respectful hearing and an answer. That answer cannot be 
 made lightly nor unthinkingly, but rather only after deep reflection 
 and debate. To answer the questions satisfactorily will require extended 
 co-operative investigation. 
 
For years the Bureau of Mines has been studying the problem of 
 increasing the recovery of petroleum from oil sands as best it could 
 with the appropriation available, and has expressed the opinion that 
 only 10% to 20% of the oil underground is being won. Is it commer- 
 cially possible to recover greater quantities, and how? What is the 
 industry doing, co-operatively or individually, to recover more oil from 
 the oil-bearing formations? Is there any co-operative study being 
 given to this problem? 
 
 Do you know what California has done? Do you know the Cali- 
 fornia State Water Commission has, in each field, peg models, cross 
 sections, well logs, water maps, and all necessary data for centralized 
 study of each field? Do the fields east of California have similar faci- 
 lities under co-operative control? If not, then why should not the 
 States pass legislation similar to California? Or will the industry 
 perform the task as a voluntary effort? 
 
 For over four years the conservation of oil and gas has been under 
 State supervision in California. 
 
 The great source for anxiety in California, as elsewhere, is, of course, 
 from the infiltration of water flooding productive areas and reducing 
 production. In speaking of the activities of the California Department, 
 R. P. McLaughlin, the State Supervisor, says that State legislation 
 was the outgrowth of a demand upon the part of oil operators for some 
 means of combating damage from underground water which was flooding 
 many of the fields. This damage has been greatly reduced by the 
 uniform methods of well drilling which have followed scientific study 
 and state supervision. The work of the State Supervisor is largely 
 advisory and is based upon the detailed study of underground condi- 
 tions, which, besides its direct aim of controlling water, has led to the 
 discovery of productive formations, which had previously been ignored. 
 
 The natural gas reservoir in the Elk Hills field has furnished wells 
 making over one hundred million cubic feet daily. This discovery was 
 directly due to the work of the Department. 
 
 In the Coyote Hills a great number of wells were actually drilled 
 through an upper oil zone without productiveness being recognized. 
 The Department recommended that water be shut off above the zone, 
 and wells bailed dry to test. The result has been several wells which 
 flowed at the rates of from 400 to 10,000 barrels of oil per day. 
 
 In the Kern River field one well in a group of eight was plugged, 
 and increased the total daily oil production from 135 barrels to 207 
 barrels, and reduced the water production from 1,758 barrels to 121 
 barrels. 
 
In another group of eleven wells, repair work reduced the daily 
 water production from 15,927 barrels to 240 barrels, while the oil pro- 
 duction increased from 25 to 59 barrels. 
 
 Following these demonstrations many similar repair jobs have been 
 carried on by property owners without an initial investigation by the 
 Department. 
 
 It would be an easy matter to carry the discussion on into the 
 various branches of the industry. Neither time nor space will permit 
 detailed discussions, however, but, speaking in broad terms, I may say 
 that the Conservation Bureau of the Oil Division of the Fuel Adminis- 
 tration estimated that by inspection, supervision and co-operation, the 
 Bureau, during its existence of less than a year, effected a total conser- 
 vation in fuel oil, natural gas and kindred products that, translated 
 into money, represented approximately $5,000,000. Unbelievable in- 
 efficiency was reported by the inspectors, and as a result of the activities 
 of the Bureau I am prepared to make the specific charge that the 
 consumption of fuel oil, natural gas and gasoline is inexcusably wasteful. 
 The petroleum industry has only indirect control over consumption, 
 but over production, transportation, refining and distribution it has a 
 very direct control. Unless efforts looking to conservation are central- 
 ized in some organization such as the American Petroleum Institute the 
 desired ultimate result cannot be attained, no matter what the activities 
 of the individual units of the industry may be. And if such work is 
 undertaken by the American Petroleum Institute, men properly qualified 
 for the work must be employed to do that and nothing else. 
 
 Upon one occasion it was suggested to me that any conservation in 
 consumption means the lessened sale of petroleum products, and was 
 therefore inimical to the interests of the industry. Carried to its 
 logical conclusion, reasoning of that sort spells Government Control; 
 for unless industry is sufficiently alive to its obligations, as trustee for 
 the public, the public will find ways and means to prove that industry 
 has just that obligation resting upon it. 
 
 More and more it is being recognized that great industries dealing 
 in the basic commodities essential to the industrial life of the nation 
 owe a service obligation that must be discharged. The service rendered 
 by the petroleum industry in the past has been of a singularly high type. 
 That type of service must be continued in the future, but, because of 
 new and complex problems entering into the situation, its continuity 
 is possible only through Conservation and co-operation — neither of 
 which can be successful without the other. 
 
 The Bureau of Mines is on record as believing that 10 or 15 million 
 barrels of gasoline are lost each year, in this country, through inefficient 
 
storage and handling, and that at least one-half of this gould be saved. 
 Can the industry prove that this statement is right or wrong? And, if 
 right, why doesn't the industry find ways and means of correcting 
 the situation? 
 
 The Bureau of Mines has compiled figures showing that refinery 
 losses average approximately 4 per cent of the material run. Can 
 these losses be reduced? Is there any joint discussion among refinery 
 superintendents? Do they ever meet and talk things over? I am 
 aware that economic pressure is the greatest incentive to Conservation, 
 but a proper understanding of the responsibility resting upon the oil 
 industry, as the trustee of the people in the administration of a wasting 
 national asset, will, I think, add even greater efficiency to that due 
 solely to a desire for increased profits. And this awakening in itself 
 will be the source of greater company profit by conserving and making 
 available material that would otherwise be wasted, without profit to 
 anyone. 
 
 In this connection I must again emphasize the need for greater 
 co-operation and more extensive pooling of knowledge on the part of 
 oil refiners. There is too much false mystery concerning the processes 
 in use by the average refinery. The industry would gain if there were 
 less attempt to maintain secrecy about processes which are really known 
 to all. I would invite your attention to the attainments of the Auto- 
 motive industry, whose engineers for many years have been accustomed 
 to come together in annual meetings and make common property of 
 their advances. The units of an industry go forward or fall behind in 
 unison, and in the long run the furtherence of technical proficiency 
 rather than its restrictive application is for the general good. 
 
 Burned under boilers, fuel oil is at best wastefully consumed, and 
 at worst is losing in every barrel 20% to 30% of lubricating stocks that 
 we shall some day need, and need badly. Over any long period of time 
 its future use in this manner is without excuse or justification. Employed 
 as a fuel in the Diesel or semi-Diesel type of engine, the saving amounts 
 to as much as 75% of the oil burned; and economic pressure will, of 
 course, force greater and greater use of this type of engine, especially 
 for marine work. I seriously question whether the marine steam-engine 
 is not today obsolete. Certainly with over 140,000 gross tons of Diesel- 
 equipped shipping now under construction in the United States, and 
 the large foreign fleets in operation or building, the Diesel type is no 
 longer experimental and must, in future, I think, supersede steam- 
 driven units with ever-increasing rapidity, because of absolutely econo- 
 mic reasons if for no other. A recent report of Lloyds indicates that 
 16.3% of the world's tonnage is now employing fuel oil, and already 
 
 10 
 
1.7% of the world's tonnage is converting fuel oil into power by means 
 of the Diesel type of internal combustion engine. Since the United 
 States is planning a great expansion in foreign trade and is building 
 a substantial merchant marine, we will ignore a most potent point of 
 superiority if we neglect the significance that motor ships have upon 
 the situation. 
 
 The growth of requirements for gasoline, far in excess of production 
 by old methods, has forced a diversion of fuel oil from its industrial 
 role into the rank of marine and motor fuel. Because of this diversion, 
 the gas industry has found it increasingly more difficult to obtain its 
 accustomed quotas, and then only at higher prices. 
 
 Is the industry making any concerted effort to meet this new prob- 
 lem? Or is the individual interest given entire precedent to the exclu- 
 sion of any consideration of public need? 
 
 The requirements of automotive transportation, particularly truck 
 and tractor, are growing so rapidly that a supply of motor fuel can only 
 be assured for future years by giving the utmost attention not alone 
 to economy of operation, but also to the more difficult problem of 
 adapting the engine so as to permit the maximum increase in the fuel 
 supply. The problem of co-ordinating engine and fuel is thought by 
 many engineers to represent one of the most important issues now 
 occupying the field of automotive transportation. Is the co-operation 
 between the automotive industry and the petroleum industry in the 
 solution of this problem effective? Is it serious, and can it be made 
 still more satisfactory? 
 
 In the past I have frequently referred to the pivotal importance 
 of lubricating oils, and I need not emphasize to this audience the fact 
 that the machinery of our industrial age is entirely dependent upon 
 ample supplies of mineral lubricants. There is wide room for research 
 not only in the production of these oils, but in the use of lubricating 
 oils as well. It has been estimated that in the United States needless 
 losses arising from imperfect or faulty lubrication run to as much as 
 50% of the power generated. Is there any co-ordinated effort being 
 made to improve this condition? 
 
 I should be remiss in my review if I did not call to your attention 
 the means of conserving petroleum by the development of supplemen- 
 tary resources. The usefulness of oil is so great, and the requirements 
 for oil products are so insatiable, that it is safe to say that the production 
 of petroleum cannot keep pace with the needs of civilization. Should 
 we double the output this coming year the net result would merely 
 be to double the range of requirements dependent upon petroleum. 
 Irrespective of the size of our future production, therefore, we shall 
 
 11 
 
face a demand of even greater proportions. In recognition of this 
 condition, and as insurance for continuity, we should not neglect, in 
 proper time, to make easy the way for our resource allies. The oil 
 shale industry, the coal retorting industry, the power alcohol industry, 
 with their potentialities and their limitations, deserve our close con- 
 sideration. While they may superficially appear as competitors, they 
 are, fundamentally, our allies. When the time is ripe I believe these 
 supplemental sources of supply can be developed by the petroleum 
 industry more advantageously than by any other agency. 
 
 No branch of industry has been more wasteful in the past or needs 
 greater effort toward Conservation than the natural gas industry. 
 Judged by the results of investigations made during the war period by 
 the Oil Division of the U. S. Fuel Administration, the situation is tragic. 
 I might better say pitiable, or perhaps both terms should be used. No 
 more fertile field exists for real conservation; none more urgently re- 
 quires it. Production reached its maximum in 1917 with a marketed 
 output of nearly eight hundred billion cubic feet; since when the decline 
 has been continuous until it is now estimated that there will be only 
 six hundred and fifty billion feet produced in 1920, or a decline of nearly 
 20%, notwithstanding the increased demand due to normal increase of 
 population and industry. 
 
 It was estimated, during the same investigation, that more gas was 
 lost than ever reached the consumer, and that, of the portion passing 
 meters, 80% performed no useful service, owing to inadequate or 
 improper appliances. 
 
 As I speak I have before me in my mind's eye a photograph of a 
 pile of natural gas mains, torn up during the war period. Electrolysis 
 and rust had eaten them full of holes to an unbelievable extent, and 
 careful measurement by the Bureau of Standards, before tearing them 
 up, showed a line loss of 40%. 
 
 Man with all his skill has never been able to make a cornmercial gas 
 equal in quality to the natural gas we have so prodigally wasted. Be- 
 cause of its seeming abundance, its price has been low — with resultant 
 waste. No saying is truer than that *'we do not value the thing that 
 costs us little or nothing." Because of diminution in supply, with 
 consequent necessity for increased price, it is obvious that the use of the 
 product must and will be more efficient in the future, but, as an added 
 incentive, use should be denied to those who do not consume it econo- 
 mically; and equally, of course, companies whose lines are leaky and 
 whose methods are wasteful should be penalized in full measure. 
 
 It is the function of our public service bodies to see that rates are 
 such as to permit proper maintenance; given which, no excuse for 
 
 12 
 
avoidable losses should be tolerated. Lines should be metered at intake 
 and outflow, and results carefully scrutinized; devices for burning the gas 
 should be examined, and only those of proved efficiency permitted; in 
 short, every effort should be put forth to see that past waste be elimi- 
 nated and that our remaining supplies — admittedly relatively meager — 
 are conserved to the greatest possible extent. 
 
 I have been told more than once that my faith in the ability of the 
 industry to govern itself is misplaced; that the individual interest was 
 supreme and often ran counter to public interest; that selfish considera- 
 tions precluded the success of my highly idealistic and impractical belief; 
 that because certain very necessary results had been accomplished in 
 war time it did not at all follow that similar results could be expected 
 or accomplished in time of peace; and that, some day, I should awaken 
 and find myself disillusioned. 
 
 Notwithstanding the prophecies of disaster, I am still strong in 
 my belief; if for no other reason, because I think it a matter of industrial 
 self-preservation. The underlying fundamental truth seems to me 
 absurdly simple. Either the industry must, through self-government, 
 prove its ability to meet and successfully deal with the economic forces 
 confronting it, or, sooner or later, those forces will compel recognition 
 and action on the part of the Government. It is not a question of ignor- 
 ing a condition, but rather of choosing the course to be followed. For 
 we shall, regardless of our wishes, be forced to follow some road — either 
 that of industrial co-operation and conservation, or of Government 
 dictation. 
 
 Government aid may be required. When it is, it can be asked for; 
 but the task is emphatically one for the industry itself to perform, if it 
 is to be done efficiently and properly. And so long as it is done efficiently 
 and well, there is neither cause nor justification for governmental 
 interference. 
 
 Because I have seen the tragic inefficiency and waste of Govern- 
 mental Washington I am convinced that the petroleum industry can 
 most efficiently perform its service through self-government and regu- 
 lation, asking for legislation only to make more effective rational acti- 
 vities. I have a horror of Government control or supervision, save in 
 its broadest terms, because I know that it spells less efficiency on the 
 part of the petroleum industry; but it is obvious that that control 
 will be exercised if we, the petroleum industry, fail in self-government. 
 
 It is, I think, an axiom of government that "best governed is least 
 governed"; but, on the other hand, that doctrine can only be successfully 
 applied when the citizens en masse recognize this civic responsibility 
 and bring the weight of public opinion to bear upon those recalcitrants 
 
 18 
 
who refuse such recognition. Legislation, if you will, and of the most 
 drastic character — but not until the industry has proved itself unfit for 
 the accomplishment of its task — and only then for those who have 
 proved their unfitness. 
 
 That there is real cause for anxiety in the event of the industry 
 proving unequal to the task can be shown by quoting a statement in 
 the "New York Times" of November 6, 1920, made jointly by Senators 
 Edge and Calder — both Republicans, and both inclined to be conser- 
 vative — in which, among other things, they say; 
 
 "We are opposed to Government regulation as a policy, but the 
 Government must assume responsibility for its people, and we will 
 recommend a bill for entire control of the industry, just as far as possible 
 under the Constitution, unless prices are materially reduced by Decem- 
 ber 6." 
 
 This was said of the coal industry, and it is because I do not want 
 any similar statement made regarding the petroleum industry that I am 
 so insistent that you practice co-operation and conservation. The pro- 
 duction of petroleum is a form of mining; it deals with a wasting asset, 
 and you are therefore obligated — both on the score of public service 
 and private gain — to utilize that asset most efficiently. 
 
 We must make it our task to present to the public the problems of 
 the industry, truthfully and adequately, to the end that we may retain 
 that confidence and co-operation necessary in permitting us freedom 
 of action in the performance of satisfactory service. And in so doing 
 we shall come to realize that our responsibility as trustees in the ad- 
 ministration of one of the nation's greatest assets, our obligations to the 
 public, to our stockholders, and to ourselves, can be satisfactorily and 
 successfully performed only by the practice of Co-operation and Con- 
 servation, 
 
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