The greatest treasure hunt in U.S. history is in full cry. Above the green of North Dakota wheatfields rise the spidery towers of oil-drilling rigs. On the plains of Utah, shirt-sleeved crews set off dynamite blasts and, from the vibrations, map the subterranean oil-bearing strata. Over Alabama cottonfields fly planes with strange; antenna-like tails, which pick up magnetic waves and thus record geological formations below. In West Texas, wildcatters, trucks loaded with tools, inch across the prairies like gypsy caravans.
By turning up oil where it has never been found before, the hunt is transforming whole regions. Denver, center of the furious drilling activity in the new Denver-Julesburg oilfields (see map), is already talking cockily of eclipsing Houston as the oil capital of the world. In Montana and North Dakota, whose saucerlike Williston Basin contains immense oil treasures, the Big Sky country's cattle and wheat economy is getting ready for a tremendous upsurge of industry. Men in the area foresee pipelines, refineries and plants turning out "petrochemicals" (TIME, May 12), oil's new frontier.
The great oil boom has also churned up a parallel treasure hunt in the nation's securities markets. For investors, oil's lure is threefold: 1) as wealth in the ground, where its value is likely to keep abreast of inflation, 2) as the raw material of the new petrochemical industry, and 3) as the beneficiary of a "depletion allowance" which permits 27½% of income from producing wells to be plowed back before taxes are computed, thus giving oilmen a tax edge over most other industries. As a result, in two years the stocks of some of the biggest & soundest U.S. companies (Standard of Indiana, Socony, Texas Co., Shell, etc.) have more than doubled in value, while riskier Canadian "penny" oil stocks have made incredible climbs (one stock rose 4,700%, from 23¢ to $11.25). Many a wary trader thinks the speculation in stocks has gone too far. But, while almost every other industry is worried about its sales and profits, the oil industry (whose profits climbed 21% last year) finds its market growing.
The Big Gamble. Not even at the peak of World War II was the U.S. using as much oil as it is now. Since war's end, U.S. oil consumption has risen 60%, from 4,912,000 barrels a day to 7,915,000, and is continuing to rise on an average of 7% a year. To keep pace, the oil industry spent a record $3 billion last year, drilled more wells (44,516) than ever before, and proved up 2.2 billion more barrels of new oil reserves than the nation consumed during the same period. To meet the still greater demand this year, the industry will spend an alltime record of $3.9 billion, drill 45,446 new wells.
Since the best way to find new oil is to drill unproved territory, one out of every four of these wells will be a wildcat. Every wildcat, costing anywhere from $50,000 to $1,000,000, will be a gamble with 8-to-1 odds against it.