Abstract

In the ten years from 1965 through 1975, the oil industry in the free world will be on the move in a decade of unrivaled expansion, unsurpassed consumption, and unprecedented technology.

It will be an age of superlatives, not only on the international scene but also in the United States. Domestically, shock waves resulting from the reappraisal of the late 1950's have run their course and an industry that is leaner, wiser, and more sophisticated stands poised for the challenges of a new era.

For the U.S., there will be no turning back to conditions and methods of operation in the so-called good old days of the mid-1950's. Technology has wrought too many changes. But of greater importance, the industry has adopted new ways of looking at itself, employs fresh and more efficient methods of doing business, and takes more aggressive and realistic attitudes toward its problems.

The opportunities in the next decade will be great, and so will the risks as oilmen vie for new markets, new reserves, and new and improved ways of drilling, producing, and getting petroleum to market.

Earlier this year, the Journal sensed that something out of the ordinary was brewing in the oil industry. For months, a team of Journal editors has dedicated itself to determining the reasons for this new sense of expectancy.

In this country and abroad, interviews were conducted with oilmen, bankers, government leaders, and economists — anyone who had a knowledge of current oil events and a sense of the future.

Trends and present industry performance were researched, and an exhaustive analysis made of the numerous industry and government forecasts to find a common core of agreement and to clearly define guideposts to the industry's future.

And the Journal's original impression that the industry was on the eve of a strong upsurge domestically — as well as unparalleled expansion abroad — was verified beyond a doubt.

Despite an ingrown resistance to optimism that had built up domestically, it was found that the upturn will sweep the U.S. along with much of the expansion. The improved growth rate of the domestic industry is coming just as surely, and nearly as sharply, as the setback which occurred a few years ago.

Ten years ago the proper approach to any oil and gas forecast was to start with exploration, then carry on through the steps of getting the oil produced, pipelined, processed, and sold. But a decade has switched the focus of forecasting.

With today's long supply of oil, gas, and other hydrocarbons, the customer is getting the attention of forecasters. Stress is upon how this abundance of oil, gas, or other hydrocarbons will be used, at what price and in what places. In other words, the forecast spotlights first the customer's demand, then how it will be supplied.

More than ever in the next decade, political factors will be on center stage. These include, domestically, the federal policy on import controls which did not exist 10 years ago, but which must be considered before any meaningful forecast can be made on where the nation's refiners will obtain their crude oil. Not only will producers have to live with more federal control, they'll face more regulation by the states as well.

In other parts of the free world, government policies will be even more influential. Operators will be able to make decisions in many areas only on the basis of what government will allow.

The future of the industry is linked inextricably to new and improved techniques, and the next 10 years will be an even more impressive period of technology.