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The production of petroleum in New York in 1940, totaling 4,999,000 bbl., was only slightly under the amount produced in each of the previous three years. The year 1940 started auspiciously with a posted price on Jan. I of $2.75 a barrel. Four price reductions, beginning in May, resulted in August in a low of $1.85 a barrel, after which two increases brought the year's closing price to $2.15 a barrel. The favorable crude price at the beginning of the year stimulated an increased drilling program, especially in the water-flooding districts. In the Allegany County region, which accounts for about two-thirds of the state's oil production, 886 wells, including water-intake wells, were drilled; 200 more than in the preceding Year. During the closing months of the Year there was a marked decline in the number of wells drilled. The unfavorable position in which the industry found itself before midsummer was due largely to the loss of export markets for its high-grade lubricants, constituting approximately 25 per cent of its business. As a result of this situation, runs to refineries were curtailed as much as 30 Per cent at the middle of the Year. Improvement in market conditions toward the end of the Year found the stocks of available crude at an almost record low. Deep DRILLING with the gradual exhaustion of some of the important natural and flood-oil-produc-ing areas of the Allegany and Bradford pools, overproduction will not be a serious problem in the future. The possibility of finding new territory or deeper producing sands has been further lessened by the drilling of additional deep wells for gas in and about the present oil fields. Many of these wells drilled to the Oriskany sand-stone were over 4000 ft. deep and have tested the entire thickness of the Devonian formation, the upper 2000 ft. of which contain all the important oil-producing strata in the state. Water-flooding It is thus evident that the problem of the New york oil producers is not one of find-ing new supplies but of obtaining as much 6 oil as possible from the old developed fields that during the 60 years of their life have 1 produced I 3o,ooo,ooo bbl. of oil. Although a few floods were in operation before I9I9, when the production of oil by flooding was 1 made legal, the output for that year amounted to only 85I,000 bbl. From 1919 I on there has been an almost constant increase, which during the past four years has averaged well above 5,000,000 bbl. annually. During the last 22 years, which constitutes the period of important flooding operations, 651337,000 bbl. of oil have been produced in the state. Careful estimates indicate that between one-third and one-half of the oil fields are being flooded or are already watered out. Some of the flooded and watered-out areas include territory with unusually thick sands, which were highly productive during the early history of the fields. From a recent study of operations in the New York oil fields, it is estimated that about 65,ooo,oo bbl. of oil