Mention has been made of war, but you remember what happened in Mexico in time of peace. The Mexican Government decided, "We are going to take over all the oil industry of this country." And they took it over. It seemed like they had a right to do it. They didn't pay for it, and by government ownership, they have ruined it. So I say there is not only that danger in case of war, but danger even in peace, that any foreign supply may be cut off. And remember this: If in time of peace we don't prepare, if we don't provide an abundant accessible supply of petroleum, that is an open, plain invitation, as I view it, to a foreign aggressor to attack us. And when attack comes, if we are not ready, it means possibly that our existence as a free nation may terminate. So I can't overemphasize the importance of the question that we are trying here to present to you. We have here in America the men, we have the national resource, we have the brains, we have the money, to make ourselves independent of all other sources of liquid fuel supply, and to look the future in the face with courage and confidence. First as to our resources, just very briefly. It seems the more oil we need, the more we have produced. And as has been well said, there is no danger in the foreseeable future of any shortage of oil. We can make gasoline from petroleum and from gas, but think of the shale. Think of it, gentlemen, 300 billion barrels of shale oil in our own State of Colorado. That is the estimate of the Bureau of Mines. Six to eight times more than we have discovered from the beginning of time, in the way of liquid fuel. And Colorado isn't the only State that has shale oil. There is Wyoming, Utah, and in time there will be a great many other States. And then there is our coal. Think of the coal, trillions of tons of it. It just happens that in our State, excluding some of the low-grade lignite coals of North Dakota, we are the second State in coal resource. Wyoming and Colorado together have more than half, a good deal more than half, of the coal supply. And coal also can be converted into liquid fuel, that will serve the purpose just as well as petroleum. Furthermore, as to the supplying of oil in this country, Mr. Franklin has told you about the stratographic traps. Experience has told us that about half of the oil in this country is in stratographic traps. And yet I would say nine-tenths or a greater percentage than that of the oil fields found so far have been structural traps rather than stratographic. But above all else, we have got the brains. When it comes to brains, remember what the technical men did on cracking oil. They doubled at one stroke the value of our petroleum supply, by making 1 gallon do the work of 2. It was our brains that developed the seismograph, with which great vats supplies of petroleum have been found. You just trust to the American people and to the brains of the American people, and methods will be found of finding the structural traps. I just happened to bring with me a book put out by the American Association of Petroleum Geologists, entitled "Possible Future Oil Provinces of the United States and Canada." And there is here a map which shows that possibly a quarter of the United States is possible oil territory. And how much of that will turn out to be oil producing I don't know. All I do know is that if there ever is a shortage, just come out to the Rocky Mountain area, and God bless you, we will give you all the liquid fuel you will need for the next thousand years if necessary. Just one thing more. There is lots more I could say, but I know the time is late. While I am on my feet, I want to refer to something you don't appreciate; something that none of you appreciate, and that is the value of the personnel of the oil industry. And I am referring not to the big men but to the little men, the independents in the oil industry, the workers. And gentlemen, if you slacked down the oil industry, if you put these men out of business, if you say to them, "We are going to depend on foreign oil," you have done an incalculable harm, because never again will this country see such an aggregation of talent, brains, industry, ambition, as represented in the oil industry today, as has been shown by their accomplishments. For instance, the wildcatters. The wildcatter of the type that has made America, the pioneer, the boy that goes out and spends his money and finds something and does something, and makes two blades of grass grow where there was one. It is that spirit that made us what we are, and that is the spirit of the wildcatter. And the roughneck: that well describes his occupation. He is the boy who does the hard work. And yet everyone, nearly everyone of these boys in the oil industry, dreams of the time when he will own his own well. Then there is the lease man. And let us not forget the technical men, the men like the boys who have discovered cracking, and who know how to drill wells 3 miles deep and how to produce every barrel possible, the seismograph men, and the men in the refinery departments. And lets also not forget the men in the State regulatory bodies of this Nation and the members of the Interstate Oil Compact Commission. I am here to defend them. No matter from what source the attack may come, I want to say that they have done a magnificent job. The conservation of oil and gas in this country, under the authority of the State regulatory bodies, has been one of the greatest accomplishments in the history of our Nation. Take, in Texas, the work done by the railroad commission. They have made a field that was supposed to contain 2,000,000,000 barrels of oil produce approximately 2,000,000,000 with 4,000,000 left. Conservation practices as enforced by State agencies gave us the oil to win the war. All we say is: You can't run the oil business on half speed. You can't shut it down. It has to go forward or disintegrate. This is the question which I think the Congress must decide. Break it up, or let us go ahead. Btu remember the operating personnel of the industry is irreplaceable. It is almost as valuable as the oil itself. And just one other thought. It is sometimes argued that a lot of the big oil companies are making money. Well, you know why it is. Because of the income tax, or some other purpose, they base their profits on discoveries made maybe 5 or 10 years ago, when the cost was a third of what it is now. If you take costs at what they were before there were these inflationary increases in prices and wages, of course you show a big profit. But with the independent, that is not so. If he goes out to find oil, he has got to pay present day price. He has got to pay wages that are doubled or trebled. He has to pay for materials that are up two or three times. He has to drill wells maybe two or three times deeper. More wells drilled are dry. Considering his costs, the present price of oil gives him very little profit. Yet we must remember that the independent wildcatter is responsible for 80 percent of all the oil ever discovered in America, and we dare not put him out of business. Now, as to this market, Senators, there has been no greater commercial prize ever dangled before the human imagination than the prize of the American market for gasoline. We have some four or five American importers, and I think there are some two or three Europeans, two at least, and I think three. Let us forget the Americans. We will assume that there are Americans in business as well as in patriotic declarations. But as far as the foreign companies are concerned, do you think they are going to leave this market alone and let the American oil industry exist or foster it, when they have oil to sell and they have more oil to sell than they can sell in Europe. And if you let the bars down and leave the doors open so that foreign oil can be imported here without limit, you will destroy in the end the American industry and one of the most marvelous and successful organizations that has been put together by men. Thank you. The CHAIRMAN. Thank you very much, Mr. Downing. Mr. BROWN. You have been very patient with us, and that is all of our witnesses. There are two telegrams from New Mexico witnesses who could not come, and I would like to have those placed in the record, if I may.. The CHAIRMAN. They may be inserted in the record. (The telegrams referred to are as follows:) WIRT FRANKLIN, Mayflower Hotel: ARTESIA, N. MEX., February 17, 1949. Imports serious threat to oil industry on us. Some method of control necessary if industry is to remain strong. NEW MEXICO OIL AND GAS ASSOCIATION, ARTESIA, N. MEX., February 17, 1949. WIRT FRANKLIN, The life of Mayflower Hotel, Washington, D. C.: Know of no one better qualified to represent small oil producers. thousands of small producers depend upon regulation of imports especially after the whipping we have taken for the past 10 years. Likewise it would seem to many of us that it would be to the advantage of the country to retain as many independents as possible actively engaged in trying to find additional reserves. FRED BRAINARD. Senator MARTIN. Mr. Chairman, I would like to suggest if it is not in your statement there, Mr. Brown, that the committee could well use information on the domestic requirements of the United States for oil, information as to how much is now being imported daily, and, I think, information as to where it is imported from? I think that would be valuable information, Mr. Chairman, for this committee. Mr. BROWN. We will be very glad to furnish it. The CHAIRMAN. If that is not covered, please cover it, Mr. Brown Mr. BROWN. We will be glad to furnish that information, sir. (The information requested is as follows:) UNITED STATES OIL SUPPLY AND DEMAND, 1949 The domestic consumption of petroleum and products in 1948 averaged 5,760,000 barrels per day according to the United States Bureau of Mines, representing an increase of between 5 and 6 percent over 1947 consuption. A further increase in the neighborhood of 5 percent in 1949 would be a normal expectation indicating a probable domestic requirement this averaging perhaps 6,050,000 barrels per day. In comparison with these demand figures, actual production in the United States during December 1948 was 6,123,000 barrels per day according to the United States Bureau of Mines. In other words, recently attained rates of output appear now to be more than adequate to meet all the 1949 requirements without considering the increased availability that normally results from continuing exporation and development. For example, the comprehensive industry report on future petroleum supplies, completed in November of last year, shows a probable availability in 1949 ranging up to 6,300,000 barrels per day from domestic sources. Further evidence of the adequacy of domestic supply is found in the fact that oil inventories have increased by all-time record volumes and are about 110 million barrels or 20 percent above last year. On February 17, 1949, Secretary of the Interior J. A. Krug stated in a letter to Senator Connally that Meanwhile, although demand for oil in the United States continued to increase, the supply of oil increased even more rapidly, so that at the end of 1948, the United States had reestablished domestic self-sufficiency. United States imports of crude petroleum and its products year 1948 by quarterly 1 Based on October and November average. Prepared by the Independent Petroleum Association of America based on data from the U. S. Department of Commerce. Senator MARTIN. There is one other thing, Mr. Brown, I would like to suggest to you. The judge referred to the work of Senator Millikin, and Senator Johnson, and Senator O'Mahoney, and the study or laboratory work that had been done. There might be entered into the record the work that is now being done just south of Pittsburgh by the Standard of New Jersey and the Pittsburgh Consolidated Coal Co., where it would look to me that in a couple of years they will probably be producing quite a little oil and gasoline and commercial alcohol, and so forth. That would, I think, aid this committee. The thing that has been a surprise to me, Mr. Chairman, is the amount of our discovered reserves. It is very encouraging to have that amount. Senator Williams and I have been calculating that what we have right now is going to take care of present consumption for almost 12 years. And that is about as good as anything we have had in the history of the United States, as far as reserves for the future are concerned. Mr. BROWN. And we are encouraged that each year we have been able to find a little more. The information requested by Senator Martin is not available to us but could undoubtedly be obtained directly from the companies involved. The CHAIRMAN. Very well. Senator MARTIN. Of course, I do not know whether they want to develop that very fast. There was something brought out here that I think, if you do not have it in your statement, ought to be expounded a little further, and that is that some of these men who are American companies are very anxious to sell as rapidly as possible their discoveries in European countries; because in case of war, we know that that probably would be cut off. In the high strategy of war, the desirable thing is to have your supplies within your own lines. Mr. BROWN. We will develop that. I think I have it fairly well covered, but I will check to be sure, and if not, I will be glad, with the chairman's permission, to supplement that at the right time. Thank you very much. Senator MILLIKIN. Mr. Chairman, may I ask whoever is the State Department representative here today to come forward, please? Will you see if you can get that information as promptly as possible? Mr. CORSE (Carl D. Corse, Associate Chief, Division of Commercial Policy). Yes, sir. (The following information requested by Senator Millikin was supplied by the State Department :) Hon. WALTER F. GEORGE, United States Senate. DEPARTMENT OF STATE, Washington, February 23, 1949. MY DEAR SENATOR GEORGE: On Monday Senator Millikin made a series of requests for information, including a list of individuals going to Annecy and a statement of their qualifications and background. The composition of this delegation has not yet been determined by the President and the Secretary of State. It is expected, however, that the delegation will consist entirely of experts from the various agencies participating in the interdepartmental trade-agreements organization. As soon as the membership of the delegation is known, the information you desire will be sent to you. Sincerely yours, ERNEST A. GROSS, Acting Assistant Secretary |