The Oil Leasing Policy of the New Administration

Report Outline
Economic Situation in the Oil Industry
Exploitation of Public Lands
Criticisms of the Hoover Policy
Special Focus

A sweeping change of government policy regarding the exploitation of petroleum deposits on government lands was announced by President Hoover on March 12, In answer to a question submitted to him at the White House press conference, Mr. Hoover said: “There will be no sale or disposal of government oil lands, no matter what category they lie in, of government holdings or government controls, except those which may be mandatory by Congress, In other words, there will be complete conservation of government oil in this administration.” The President, it was explained, spoke with reference to public land and government reserves only, and no mention was made regarding the conservation of privately controlled petroleum deposits held for or in the process of commercial exploitation.

Shortly after President Hoover's pronouncement, Secretary Ray Lyman Wilbur of the Department of the Interior, announced on March 16 that “the Federal oil conservation policy announced by President Hoover will be energetically executed toy the Interior Department,” Secretary Wilbur followed his statement by appointing a committee of three (the Commissioner of the General Land Office, the Director of the Geological Survey, and the Solicitor of the Department) to pass upon outstanding permits to prospect for oil and gas on Government lands and to make recommendations as to which of those permits should be cancelled. More than 5000 applications for oil and gas permits on public lands pending in the General Land Office at the time of Mr. Hoover's announcement were rejected and registers of local land offices were instructed not to receive new applications.

Immediate Background of New Policy

There is sufficient indication that the President was well prepared to make a decision with reference to further oil exploitation on public lands. Mr. Hoover was a member of the original Oil Conservation Board, appointed by President Coolidge on December 19, 1924, and served on the Board until his resignation as Secretary of Commerce in 1928. In the five years of its existence, the Oil Conservation Board held numerous hearings, conducted extensive investigations into the economic problems of the oil industry, and published a series of reports covering its. activities. It is notable that Mr. Hoover concurred in the first report of the Board to the President, made in September, 1926, which declared for, “the more intelligent handling of Government-controlled oil sources on public and Indian lands.” This report also pointed to the evils in the leasing law, which made mandatory the offering of 100,000 acres of Osage Indian lands for oil exploitation each year, regardless of whether the oil market warranted extra production.1