Production and Price Situation in Oil
Discovery of vast new petroleum deposits and continued existence of developed production capacity in excess of consumption demand have created a condition of actual and potential oversupply in the oil industry that is unprecedented. The worldwide ratio of proved reserves to annual production has widened from about 20 to 1 before World War II to nearly 43 to 1 today. At the end of 1959 the industry had a “spare capacity at the wellhead” approximating eight million barrels a day—one-half in the United States and Canada and the remainder in Venezuela and the Middle East. The excess production capacity “intensified competition for outlets and was a major cause of weak prices in the international markets.” 1
The oil surplus has ...