Petroleum Industry Must Be `Lean & Mean,' Says Bailey

Article excerpt

The petroleum industry got what it asked for - a free market - now it has to be "lean and mean" to compete in it, Ralph E. Bailey, chairm an of Conoco Inc., said Friday in Oklahoma City.

Price decontrol, along with control of spiraling costs and inflation now make it possible to see how well, or how bad, the industry is doing, he said.

"Some will not survive," he said, "but those that do will be the best in the world at their business."

Speaking to the Oklahoma City Chamber of Commerce, Bailey predicted:

- The demand and price of oil will continue much as it is now through the rest of the 1980s.

- The world oversupply of oil will continue for five years, assuming no major upset in the Middle East, but by 1990 oil prices will firm, causing a resurgence in the petroleum business.

Conoco, and its parent DuPont, have pruned some units and closed unprofitable operations to remain competitive, he said.

Conoco has closed a refinery in Minnesota and sold one in California. It also has spent heavily to improve the efficiency of its other refineries.

The work force is also being trimmed. A company-wide early retirement program has been accepted by more than 2,000 Conoco employees and 9,500 from DuPont.

"We live in a world that is growing more interdependent and more competitive," Bailey said. "the signs are all around us.

The U.S. trade deficit in 1984 rose to $125 billion, representing millions of lost jobs in basic industries ranging from energy and agriculture to steel and automobiles, he said.

"So many of the petroleum-related jobs that have been lost here at home will never be regained."

Bailey said America is being "swamped" by imports, because:

- Other major markets are not as open as ours.

- Other economies are not growing as strongly as the U.S.

- The U.S. dollar has been skyrocketing.

A 50 percent rise in the weighted value of the dollar since 1980 has provided an advantage in cost for goods coming into this country, while U.S. exports are penalized to the same degree, he said.

To correct the problem, loopholes in existing rules governing imports should be closed and the International Trade Commission should more rigorously enforce the unfair trade practices laws, according to Bailey. …