World Oil Glut

Archive Report

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 ...

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