and the refineries which refined approximately one-half of the oil produced in Oklahoma, you can readily see that the oil industry is our No. 1 nonagricultural industry.

Curtailment has followed-and must continue to follow-oil imports. This is true because our domestic production is more than sufficient to meet the Nation's needs and because sound conservation policies demand restriction of domestic production to a point consistent with the national market demand for oil.

It follows that, if part of the national market demand is met by foreign imports, our domestic production must be reduced to provide for the use of such imports. Therefore, domestic curtailment in ratio to foreign imports is inevitable.

The 1940 census (the last official count) shows that there were at that time 50,000 people in Oklahoma employed either directly in the production of oil and gas or in affiliated industries.

Any curtailment of the industry presents a serious unemployment problem. At the hearing in Oklahoma City on April 28 of this year an official of the Oil Workers International Union testified that about 18,000 workers had lost their jobs in the industry throughout the Nation. We know that Oklahoma has suffered its share of this unemployment.

Current reports of our State employment security commission show that the situation is growing worse and more widespread throughout the oil communities, with no hope for betterment.

Commission reports show that employment in the Oklahoma oil industry has decreased every month, except one, since last November, and there was no gain in employment during the excepted month.

During the first 4 months of 1950, Oklahoma oil industry employment decreased 3.2 percent as compared to the first 4 months of 1949. This represented an average monthly loss of 1,850 jobs.

The functioning of the State and local governments are largely dependent upon the oil and gas industries. During 1949 the State of Oklahoma received direct from gross production taxes $20,480,197.56, which is more than 16 percent of the total revenue of the State. As a result of the curtailment in production, the first 9 months of our present fiscal year show a loss under the same period of the previous year of $1,070,609.91.

Many further losses of revenue to the State of Oklahoma immediately follow as a direct consequence of the reduction of production and production values in Oklahoma. The most direct and immediate is that of income tax revenues. It may be safely stated that the value of the production so reduced is all on the profit end, and the top income tax bracket end of the incomes of the oil producers, inasmuch as it goes without saying that for practical purposes expenses and other items deductible by the taxpayers come out first, that is, from the first oil produced by any given taxpayer.

Since the over-all income tax rate on the value of this unrealized production for such 9 months' period would run 5 percent, the State accordingly lost an additional $1,070,609.91 from its income tax revenues.

These losses to the governmental revenues of the State are direct and actual. The figures given above tell only a small portion of the story with respect to revenue and revenue losses. The petroleum industry is a basic source of income to the people of the State of Oklahoma, second only to their agricultural production. Every dollar lost by reduction in production or market value-every reduction in the pay roll of any oil company-has a continuous chain reaction and affects the amount of income tax, sales tax, use tax, cigarette tax, and beverage tax. Practically every dollar paid, not only by the first recipient of such a dollar, but also by each taxpayer that services, supplies, or in any way deals with such first recipient is affected.

Unrestricted imports of crude and products into this country have had a very material effect on Oklahoma producers, and if continued will prove disastrous to our State. During 1949 we produced 150,000,000 barrels of oil, or approximately 3,500,000 barrels less than in 1948. This represents a loss of almost 10,000 barrels daily average, and of $7,500,000 in value. This despite the fact that our capacity to produce without waste is now at least 550,000 barrels daily although production since January 1, 1950, has averaged only 401,000 barrels daily.

Furthermore, our daily average production for the first 4 months of 1950 was more than 19,000 barrels a day less than during the first 4 months of 1949. These figures indicate that the impact of oil imports will be approximately twice as great in 1950 as it was in 1949. Oklahoma-and other oil-producing States-have a genuine basis for alarm.

Restriction of production in Oklahoma caused by excessive imports is a particularly difficult problem to handle. As mentioned above, we have approximately 55,000 wells. Approximately one-half of our production comes from 50,000 stripper wells with an average daily production in March 1950 of less than four barrels each. The other half of our oil is produced by the remaining 5,000 wells.

It was, therefore, necessary during the cut-backs made in Oklahoma production during 1949, and the early part of 1950, to do practically all of the cutting on the 5,000 wells which produce only half of our oil. As an example, wells in one pool in Oklahoma had in March of this vear been reduced from the December 1948 allowable by 72 percent. Wells costing more than a quarter of a million dollars to drill and complete have had their allowables reduced to as low as 35 barrels daily.

This means that the operator of the well would-without considering the dry holes he may have drilled-be from 10 to 15 years getting his money back. Obviously, no independent operator, nor few, if any, major companies, will continue development under these circumstances. And drilling is becoming deeper and deeper all the time.

The most disastrous effect of continued unrestricted imports in Oklahoma, however, would be on our stripper wells. Thousands of these wells are fast approaching the economic limit of operation. This was demonstrated during the recent pipe shortage, when hundreds of our stripper wells were abandoned because the pipe that could be salvaged was worth more than the oil to be recovered would pay in years.

A well that is averaging less than four barrels a day cannot be cut-it can only be plugged. Many of our strippers are one-man wells. That is, the owner lives on the lease and does all of the labor in connection with producing the lease. His total income is generally no more than a living wage. These stripper wells represent many millions of barrels in recoverable oil.

Although so far we have avoided reducing the allowables on these stripper wells a point will be reached where the old and smaller wells will have to sustain a portion of the cutbacks.

This would be tragic, since most of these wells are operating on a very narrow margin. If, and when, it becomes necessary for them to share a portion of the reduction in allowables, I am sure that the operators will find it necessary to abandon many of them. This would mean that oil, which these wells are capable of producing, would be lost to Oklahoma and to the Nation forever. With so much research being done on secondary recovery methods, it is of the utmost importance that these wells be saved. There is much reason to believe that through improved recovery methods, their periods of production can be prolonged.. The reserves of oil under the stripper well throughout the Nation constitute a substantial portion of our known and developed reserves of oil-an essential commodity in peacetime and a strategic material in time of war. Yet by permitting unrestricted imports to absorb the domestic market we are faced with forced abandonment of many of our old wells which would mean the permanent loss of a vital natural resource.

The people of Oklahoma are willing to assist the people of the world in rehabilitation and increased foreign trade aimed at bettering the standard of living, but we think it is unwise and short-sighted to do so at the expense of weakening our own economy to a point that soon we would be unable to make any contribution to our friendly Nations.

Much has been said about the need to import oil so as to maintain the dollar purchasing power of foreign countries which support the export trade from the, United States. The false argument is advanced that decreased exports of cotton tobacco, and automobiles would bring about curtailment of these domestic industries. The argument overlooks the fact that a barrel of oil produced in Oklahoma means a greater purchasing power for other American goods and a far greater contribution to our economy than does a barrel of oil imported from the Middle East or South America. In 1949 the purchasing power of the Oklahoma oil producers was reduced below that of 1948 by 31⁄2 million barrels or more than $7,500,000. This does not include the lost purchasing power of the refiners and related industries.

I am advised that in a recent statement to this committee, Hon. William L. Thorp, Assistant Secretary of State for Economic Affairs, said that restrictions on foreign oil imports are unnecessary and quoted me as saying to the Interstate Oil Compact Commission at Biloxi, Miss., "The oil industry today is in one of the healthiest conditions that it has enjoyed for many years."

As the author of that statement, I wish to make it very clear that I referred to our domestic situation as measured by potential production, market demand, and

and the refineries which refined approximately one Oklahoma, you can readily see that the oil industry industry.

Curtailment has followed-and must continue t true because our domestic production is more tha needs and because sound conservation policies production to a point consistent with the nation It follows that, if part of the national market our domestic production must be reduced to Therefore, domestic curtailment in ratio to f The 1940 census (the last official count) 50,000 people in Oklahoma employed either gas or in affiliated industries.

Any curtailment of the industry preAt the hearing in Oklahoma City on A Workers International Union testified jobs in the industry throughout the suffered its share of this unemployme

Current reports of our State emp situation is growing worse and more with no hope for betterment.

Commission reports show that decreased every month, except or in employment during the excer

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siana has become of primary importance to the entire io an even greater extent, the industry has become a vital operation of the State government, the schools and other portance of oil to Louisiana, I have for some time been growing problem of foreign oil and the resulting effects upon I am, of course, also concerned about the effects increasing aving upon our national economy and employment throughout oil industry is widespread through our Nation. Oil and gas 26 States and there is leasing and exploration activity in others. **e oil and gas produced annually is greater than any other natural I as become a key element in our economy and is essential to the of our way of life. Thousands of communities are absolutely pon the income generated by oil and gas production. In addition to ance to our peacetime economy oil is indispensable to us in time of war. an industry so basic to our peacetime well-being and our national security ved the Congress cannot stand idly by and permit it to be weakened. the problem now presented by imported oil. There is a limit to which our my can absorb low-cost foreign oil and still maintain an adequately strong vigorous domestic industry that is readily available in time of need. In my on this limit has been exceeded and if the welfare of the American people is be served oil imports must be curtailed.

This has been a matter of growing concern to us in the oil States ever since the close of World War II. The tremendous sources of foreign oil have been developed rapidly, which have brought about a present world surplus condition. These available oil sources are now seeking markets, and since the United States is the most desirable, not only because it is a ready-made and fully developed outlet but because it provides a source for obtaining dollars so vitally needed by foreign governments, it can be expected that unless definite steps are taken to cope with the problem there will be increasing pressures for more and more imports. It is for

this reason that last year when an extension to the Trade Agreements Act was before the Congress I supported the amendment proposed by Senator Thomas of Oklahoma, which would have established a quota on oil imports permitting a reasonable sharing of our domestic markets with foreign oil but prohibiting an unrestrained flooding of our home markets.

Oil was first discovered in Louisiana in 1901 and since that time development has been rapid. Today our State is the third largest producing State in the Union. In addition to being an important producer of crude oil, the State is also a large refiner of oil. At present Louisiana has 17 refineries capable of processing about one-half million barrels daily.

In addition to crude oil, we also have large natural-gas reserves and at present Louisiana is the second largest producing State of natural gas.

The importance of the oil and gas industry to our State, which is widespread throughout 57 of the 64 parishes, is indicated by the fact that the oil and gas industry each year is estimated to spend within our State over $300,000,000 for salaries, leases, equipment, rentals, exploration, and other activities.

Almost one-fourth of the total land area of the State is either productive of oil or is under lease. This means that thousands and thousands of farmers, landowners, and royalty owners benefit directly from lease rentals, lease bonuses, and royalty payments. It is an important source of economic support to the economic

newly discovered reserves. In the same statement to the Interstate Oil Compact Commission I paid special tribute to State regulatory agencies, which have worked so effectively in preventing waste especially above ground.

I now wish to amplify and emphasize the statement I made at Biloxi by saying that the healthy condition of the oil industry is due primarily and almost exclusively to State regulatory agencies, which, by reducing domestic production in ratio to the rising tide of oil imports, have prevented absolute chaos in our oil industry, which otherwise would have resultd from these imports.

I have already stated what has resulted and what will result if it is necessary for State regulatory agencies to follow the present trend of reduced domestic production.

The oil industry will-within a very short time become decidedly unhealthy from the standpoint of employment, potential production, and discovery of new Meanwhile, the tax structures of oil-producing States will be in critical

reserves.

jeopardy.

The Nation cannot afford to permit a continuation of the shift of dependency from domestic to foreign oil. The present trend in this direction must be stopped. It is a problem beyond the control or authority of the States. It is a national problem and one that can only be met by Congress. If we are to prevent further unemployment and further injury to an essential industry in peace and war, the problem of excessive imports must be solved.

Mr. Chairman, on behalf of the Governor and myself, I thank you for allowing me to make this presentation.

Senator NEELY. We thank you for coming and for your testimony, Mr. Congressman.

(The resolution referred to follows:)

[S. Con. Res. No. 3]

CONCURRENT RESOLUTION Memorializing the Congress of the United States to bring to the attention of the United States State Department the immediate need of drastically curtailing the importstion of crude oil from foreign countries to the United States until such time as there is a need for the importation of crude oil to take care of the market demand for crude oil within the continental United States

Whereas it appears that the increase in stocks of crude oil and refined products have increased 105,000,000 barrels during the last year, resulting in a curtailment in production of oil in Oklahoma and in other States of the Union because of lack of storage facilities, and

Whereas above-ground storage of crude oil in abnormal amounts results in great waste of natural resources, and

Whereas the importation of crude oil in the United States during the past year have increased approximately 150 percent, and that approximately 600,000 barrels of crude oil is being imported daily into the United States, and

Whereas such importation of crude oil results in building up of the abnormal amount of the stocks of crude oil and refined products on hand, which has caused Oklahoma to decrease the allowable production of oil approximately 40,000 barrels daily, and

Whereas the importation of crude oil from foreign countries is a direct threat to the stability of the oil industry in Oklahoma and in the other oil-producing States, and to the tax structure in Oklahoma, and

Whereas, unless the importation of crude oil from foreign countries is materially decreased, Oklahoma will be forced to curtail the allowable production of oil within the respective producing areas, and

Whereas the importation of foreign oil is a direct threat to the military security of the United States of America in that all initiative for the future development of the oil resources is stifled, and

Whereas the petroleum industry has continually developed new methods of discovering new resources when there is a proper demand for oil, and

Whereas the country is primarily dependent on American oil in time of war and these resources are only discovered when initiative is not stifled: Now, therefore, be it

Resolved by the senate of the twenty-second legislature (the house of representatives concurring therein), That the Congress of the United States bring to the attention of the United States State Department the important fact that the importation of crude oil from foreign countries to the United States should be drastically curtailed until such time as there is a need for the importation of crude oil to take