Damage done to date

Imports of foreign oil-particularly residual fuel oil—have had adverse effects on the American economy as a whole.

American-produced coal and United States petroleum are being displaced in heavy volume. Employment and traffic are reduced as a direct and costly result. Oil imports in 1949 averaged 642,000 barrels daily-i. e., 234,000,000 barrels for the year-a 70 percent growth since 1946. One-third was residual fuel oil-the kind burned under boilers-and nearly all of the remainder was crude giving a relatively high yield of residual. This residual-a fuel pushed into the market to displace United States coal and petroleum-is the main product derived from foreign oil. Imports began to build up excess oil supply in 1948 which caused storage tanks to bulge with the residual product. Consequently, dumping residual was resorted to through the medium of price slashing. Prices that averaged $3 per barrel in New York Harbor in 1948 were steadily cut. More price reductions followed as imports and residual continued to increase in 1949.

The net result was that residual made serious inroads into the coal market in a year's time, but to do it the price had to be lowered by as much as one-half. Residual prices dropped, but there was no reduction in the price of gasoline and other refined products as the general consuming public had been led to believe would ensue. Those who expected benefits from imports of foreign oil really got nothing; some cheap residual for the moment, yes, but no savings on their automobile or tractor gasoline.

A million barrels of dumped foreign residual oil would displace 250,000 tons of coal and 250 mine workers. It would take $750,000 in freight revenue from the railroads alone and idle 250 transportation workers. Multiply this many times and the extent of the damage is revealed.

In 1949, the imports of foreign oil supplanted about 150,000,000 barrels of American petroleum production and resulted in surplus residual oil of 100,000,000 barrels which displaced 25,000,000 tons of coal. This meant that 25,000 miners and 25,000 transport workers lost their jobs. The coal industry lost $125,000,000 in gross income and the railroads $75,000,000 in freight revenue. The Nation, States, and cities lost tremendous sums in purchasing power and taxes, all from this dangerous flow of alien oil into the United States. Resultant unemployment in the coal and railroad industries-brought about by foreign oil-added materially to heavy relief burdens of States and cities.

Future impact of foreign oil

In the immediate future-1950, for example-displacement of American coal and oil by foreign oil can be double what it was in 1949, and more in each succeeding year, if the import trend continues. A loss of 50 million tons of coal. Unemployment for 50,000 miners and 50,000 transport workers. A revenue loss of $250,000,000 for the coal industry and $150,000,000 for the railroads.

Not too many years ahead, if imports continue to increase at the present rate, a major part of the entire American fuel supply may come from foreign sources. This possibility spotlights the import program as one endangering national security and welfare. Once this country becomes dependent upon foreign oil, the flow of imports has to be maintained at high levels; otherwise there will be a critical fuel shortage.

Furthermore, if excessive imports of foreign oil are permitted, the country's fuel and transportation capacity surely will shrink in alarming proportions. Inadequate fuel from American sources and curtailed transportation certainly will stunt the United States economy and weaken national defense.

American coal, petroleum, and transportation are unable to shoulder the heavy investment of maintaining stand-by fuel capacity for which there would be no use unless the day comes when the imports of foreign oil are cut off by war or other reasons. Maintenance of their normal places in the United States economy is necessary if they are to remain strong and capable of fueling the America of the future.

Time is a factor, too. If imports cease suddenly, new United States mines and wells and transportation cannot be brought into operation overnight. Meanwhile, there will be fuel shortages here. Assurance of a full fuel supply-so vitally needed for the country's defense, security, and welfare-is better than speculation that oil imports will never be disrupted.

Equitable law is needed

Foreign oil presents a problem of national significance, the solution of which can come only through treatment having essential regard for the Nation's defense, security, and welfare. When imports of foreign oil are adjusted to a sensible

basis-by appropriate congressional action-America will be saved from the serious dangers now confronting the United States fuel economy. An equitable law, which will prevent excessive imports, is urgently required. Such Federal legislation is needed to encourage the domestic fuel industry to remain vigorous. American industries-coal, petroleum, and railroads-must be enabled to meet the Nation's fuel needs at all times. Their business growth should be forever encouraged. Future development in these key United States industries likewise needs a clear go-ahead signal. Such encouragement and development can be brought about by reducing imports of foreign oil to a level where they will only supplement rather than supplant American fuel capacity.

NATIONAL COAL ASSOCIATION,

Washington 5, D. C. Mr. BUCKLEY. There is an additional exhibit, designated as No. 2, which sets forth that imports in February 1950 were at a rate of 698,000 barrels per day and in March 1950 at a rate of 885,000 barrels per day.

Petty's Oil Letter, dated May 6, 1950, estimates that oil imports during the month of April 1950 may top 900,000 barrels per day. (Mr. Buckley submitted a paper designated by him as exhibit No. 2, as follows:)

EXHIBIT NO. 2

Imports of foreign oil, February and March 1950, barrels imported daily and monthly

Mr. BUCKLEY. It is most significant on examining these exhibits to note the increase in oil imports in the months subsequent to September 1949. This, as you may recall, was the month in which the Reciprocal Trade Agreements Act was extended until June 1951, after defeat in the United States Senate by one vote of the Thomas amendment which would have restricted oil imports to 5 percent of domestic consumption. Immediately thereafter, imports of foreign oil showed substantial increases up until the present month, for which no figures are presently available.

The seriousness of the situation is best indicated by the various. studies that have been made by respective committees of the United States House of Representatives. I refer particularly to the House Select Committee on Small Business. That committee conducted a series of hearings throughout the country on the effect of foreign oil imports on the independent oil producers of the United States. The printed record of those hearings covers 560 pages and indicates the seriousness with which the members of that committee regarded the problem.

There are appended hereto as exhibits 3, 4, and 5 portions of the report which that committee, through its chairman, transmitted to the President of the United States on January 26, 1950.

(The documents referred to follow :)

EXHIBIT No. 3

United States imports of crude petroleum and refined products by 11 principal importing companies, 1948, 1949, and company estimates for first 6 months of 1950

Source: Figures for individual companies submitted by companies to subcommittee of the House Small Business Committee.

Total import figures from U. S. Department of Commerce.

Figures for "All other imports" for first 6 months of 1950 included at same rate as average of actual of these imports during first 10 months of 1949.

Figures for second 6 months of 1949 are based primarily on actual imports but partially estimated for last 2 months where actual imports are not available.

NOTE. Since the compilation of these tables, the Texas Co. and the Standard Oil Co. (New Jersey) have reduced their estimates for the first 6 months of 1950 by approximately 17 percent and 7 percent, respectively.

JANUARY 1950.

EXHIBIT No. 4

United States imports of crude petroleum by 11 principal importing companies, 1948, 1949, and company estimates for first 6 months of 1950

Source: Figures for individual companies submitted by companies to subcommittee of the House Small Business Committee.

Total import figures from U. S. Department of Commerce.

Figures for "All other imports" for first 6 months of 1950 included at same rate as average of actual of these imports during first 10 months of 1949.

Figures for second 6 months of 1949 are based primarily on actual imports but partially estimated for last 2 months where actual imports are not available.

NOTE. See note exhibit 3 in re Texas Co. and Standard (New Jersey).

JANUARY 1950.

EXHIBIT No. 5

United States imports of refined petroleum products by 11 principal importing companies, 1948, 1949, and company estimates for first 6 months of 1950

1 No imports of products in 1948 on which to base percentage change. Source: Figures for individual companies submitted by companies to subcommittee of the House Small Business Committee.

Total import figures from U. S. Department of Commerce.

Figures for "All other imports" for first 6 months of 1950 included at same rate as average of actual of these imports during first 10 months of 1949.

Figures for second 6 months of 1949 are based primarily on actual imports but partially estimated for last 2 months where actual imports are not available.

NOTE.-See note exhibit 3 in re Texas Co. and Standard (New Jersey).

JANUARY 1950.

Mr. BUCKLEY. The Asiatic Petroleum Corp. has submitted figures to that committee indicating that its average imports for the first 6 months of 1950 would increase 529 percent to an anticipated importation of 61,600 barrels per day.

I might add at that point that the Asiatic Petroleum Corp is neither a producer in the United States nor a foreign producer. They act primarily as a sales agency or broker, and sell the oil that they import to other importers for use in this country.

However, under date of May 17, Austin Tex.-as disclosed in the "New York Journal of Commerce" on May 18-Mr. John S. Walstrom, vice president of the same company, advised the Texas Railroad Commission that they were presently bringing in 94,000 barrels of residual fuel daily so far this year and expect to maintain a 90,000barrel rate for the 12 months of 1950.

This same Mr. Walstrom had testified before-page 227 of the printed hearings-that in 1947, Asiatic Petroleum imported 12,663,000 barrels; that in 1948, this rose to 16,126,000 barrels; and that in the first half of 1949, the total imports of this company was 13,700,000 barrels and stated that that rate of importation would be substantially the same for the last half of 1949, or a total of 27,400,000 barrels.