Oil & Honors

When the Supreme Court invalidated Section 9c of NIRA last fortnight, it was dourly predicted that the oil industry would swiftly revert to pre-Rooseveltian chaos, that a flood of East Texas "hot oil" would sweep the price of crude down from $1 per bbl. to 25-c-.

As headlines died away and the price of crude remained at $1, it became clear last week that the Supreme Court's first anti-New Deal decision was more of a warning to Congress than it was a painful upset to the nation's oil men (see p. 17).

Only immediate result was retirement from the East Texas fields of the Federal Tender Board, which had executed President Roosevelt's unconstitutional ban on interstate shipments of hot oil. Its retirement, however, was by no means the signal for reopening every secret valve and bypass. A stronger Texas hot oil law went into action on Christmas Day, and despite the thuggery, bribery, judicial connivance and wholesale corruption that taint most oil operations in the East Texas fields, State control appeared to be working for once.

The gasoline market was jittery and hot oil shipments increased slightly but the flood of illegal oil which had been predicted failed to materialize. Word was passed to the big hot-oilers to keep the field quiet while legislation was pending in Washington. Bitterly opposed to Federal regulation, Texas was on its best behavior.

Furthermore, the Oil Code, undisturbed by the Supreme Court's decision, was still in force. That code was supposed to outlaw hot oil but, through an "error" which was not discovered for nearly a year, the pertinent section was missing from certified official copies.

The Administration, however, has no intention of confining its strenuous strivings for Federal regulation of a great natural resource to a mere code. But Vice President Garner and some of Mr. Roosevelt's best legislative friends are good Texas Democrats who mortally hate & fear the thought of Federal meddling in their State's biggest business. It was the Texas delegation that succeeded in shelving the toothy Thomas-Disney oil control bill in the last session of Congress. Even last week Texas' Congressman Sam Rayburn, who chairmans the powerful House Interstate Commerce Committee, took time out to thunder: "I will not vote to make one man dictator of the third largest industry in the U. S."

There was talk of declaring the oil industry a public utility but, while admitting that the idea had occurred to him, President Roosevelt indicated that he would first try a less earth-shaking method of regulation. Production control by interstate pacts, the industry's own nostrum now being advocated by Oklahoma's Governor Marland, seemed out as far as Washington was concerned. Senator Tom Connally of Texas, who fell over himself last year declining the honor of sponsoring the Administration's oil measure, introduced a joint resolution to provide the Government with a valid basis for reinforcing State proration laws at State lines. But what the President really wants is the power to 1) fix production quotas by States, 2) regulate interstate oil traffic and, if these fail, 3) to step into any oil State and set quotas for individual wells.

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