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rial, particularly steel, and in wartime, more particularly than either, of manpower. Nevertheless, the development of those processes is of great importance to national security as a means of supplementing our regular oil supply. The manufacture of synthetic liquid fuels from coal and shale has the considerable advantage of very extensive coal and shale resources in the United States.

I believe that the United States Government should not only support pilot plant operations in the synthetic liquid fuel industry, but also should support a few large scale plants sufficient to provide the engineering know-how and to advance technical development. The encouragement and promotion of the synthetic liquid fuel development. is an important part of the petroleum policy of the National Military Establishment. I should hope, I may interject, that that would be done under the aegis and responsibility of private business. It may be, however, there is a certain field in which the Government can be and should be of substantial help.

The utilization of foreign oil outside the Western Hemisphere brings me to the last topic of my testimony.

The Middle East oil resources at once become the focus of attention. Iran, Iraq, Kuwait, Saudi Arabia, Qatar and the Island of Bahrein are estimated to have over two-fifths of the presently known world's proved crude reserves, or a total of about 28.5 billion barrels, as compared with our 21.3 billion barrels. Last year these Middle East Sources accounted for 10 percent of the world's production, and I reiterate that the continental United States with 31 percent of the world's proved crude reserves supplied about three-fifths of the world's consumption, and the rest of the Western Hemisphere supplied another fifth.

The significance of these figures is accentuated by the fact that only 209 oil wells account for all of the Middle East oil production. By way of contrast, the United States' world position in crude oil production is maintained by some 440,00 producing oil wells. I recall that out of 27 wells drilled in the Middle East in 1946, 27 came in. From a national point of view, and I don't limit it to national security, I consider it most fortunate that American enterprise is leading in the development of the Middle East oil fields.

It is anticipated that the petroleum of the Middle East will replace petroleum from the Western Hemisphere going to the European areas, and that is a most important consideration in any discussion of the European recovery program. The conseqential benefit to our own pational security which derives from the replacement from this continent of oil for Europe with oil from the Middle East is, it seems to me, very apparent. The demands upon our own oil resources and those of the Western Hemisphere will be lessened, and the consequent savings will be more security as regards petroleum for ourselves. As I said before, the European recovery program will require that large amounts of petroleum products shall flow to Western Europe, and it is to our interest to see that this petroleum, to the extent practicable, is supplied from the Middle East.

At the present time, incidentally-and I think it is worth stating il this to dissolve some of the misunderstanding about current exports of oil-our total imports of petroleum are about in balance with our total exports at a figure of approximately 450,000 barrels a day. I

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note too that our petroleum exports are mainly refined products whereas we import more crude than products.

The trend of demand as against availability has become such that if military operations or individual living standards in the United States are not to be limited because of an economy of oil scarcity, we must adopt an active policy of favoring sizable importations of oil. We favor that importation to the extent that it provides needed supply and conserves Western Hemisphere resources, but not to the extent that it would discourage or depress United States exploration and the development of promising major petroleum resources.

As I indicated earlier, the military has obtained and proposes to continue to obtain petroleum products from sources outside the Western Hemisphere. Insofar as it is consistent with United States policy, the military will generally give priority in peacetime purchases to those areas of supply which appear to represent doubt ful accessibility during periods of major conflict, unless unreasonable costs are involved or encouragement is needed elsewhere.

I hope these remarks will be of some help to your study of the problem.

Mr. SHORT. Mr. Secretary, you have covered four very important. subjects in this field:

First, the importance of oil for our Military Establishment.

Secondly, the new organization that is to handle service petroleum needs.

Thirdly, our production and reserves of petroleum in the Western Hemisphere.

And then you told us something about the deposit of foreign oil. I would like to ask you just a few questions on some of these subjects.

I think we all gather from your statement that oil has perhaps become the most important single item of military procurement. Secretary FORRESTAL. Yes, sir.

Mr. SHORT. Well, that being the case, it naturally follows, does it not, that the American people must be prepared to do whatever becomes necessary to see that we have an adequate supply for our armed services in case of an emergency.

Secretary FORRESTAL. Yes, sir: again.

Mr. SHORT. In insuring that adequate supply for all three branches of our armed services, you presented several alternatives. One is to conserve, of course, widely the oil that we now have. Secondly, we could enter the exploratory field and perhaps even get secondary recovery of oil by Government subsidy, if necessary. You mentioned the tidelands fields, which is a very big one. Also the development of synthetics, as well as increased imports. And, perhaps finally, the possibility of the rationing of oil and gasoline.

Now, is it not true that the synthetic development of oil from natural gas, oil shale, and coal is perhaps our greatest known reserve in this country?

Secretary FORRESTAL. I think it is: yes, sir.

Mr. SHORT. Do you believe, then, that the time has arrived when we should develop the synthetic industry, enter that field perhaps more vigorously than we have heretofore, just as we entered the field of synthetic development of rubber during this last war?

Secretary FORRESTAL. Well, that is my view. I know it is not shared by everyone in industry, although I think a substantial number are coming to that opinion.

Mr. SHORT. Of course, the two big difficulties in that field are: first, we could not wait until an emergency begins before we could develop these synthetic fuels, because of the lack of materials and manpower: and, secondly, at the present time the cost is rather exorbitant; is it not?

Secretary FORRESTAL. Well, the figures that I have been supplied with indicate, on a rough guess, the capital required for the plant to produce synthetic fuel based on the use of natural gas, coal, and oil shale, runs about $8,000,000,000. If we translate that into tons of steel, manpower, and so on, it would at this moment make a very dramatic impact upon our already tightly strained economy.

Mr. KILDAY. For what production would that be, Mr. Secretary? Secretary FORRESTAL. Commodore Greenman, do you have any estimate of that?

Commodore GREENMAN. According to my information, Mr. Secretary, the $8,000,000,000 figure is based on a production of 2,000,000 barrels a day.

Secretary FORRESTAL. Two million barrels a day.

Mr. BROOKS. Mr. Secretary, how do you separate that, as between the process in utilizing natural gas as against coal?

Secretary FORRESTAL. How do I separate what, Mr. Brooks?

Mr. BROOKS. The cost figure. I mean, what proportion would be needed for converting natural gas into gasoline?

Secretary FORRESTAL. Investment costs in various types of synthetic liquid fuel plants are estimated to be as follows on the basis of a barrel per day of product: For a natural gas plant, $3,500; for a coal hydrogenation plant, $7,000; for a Fischer-Tropsch plant operating on coal, $6,000; and for an oil shale plant, below $2,000.

Mr. BROOKS. The utilization of natural gas involves a much simpler process than the utilization of coal; does it not?

Secretary FORRESTAL. I believe so.

Mr. BROOKS. They have been working on that down in my section of the country. It has been just a little too costly this far, I under

stand.

Secretary FORRESTAL. Well, I am not technically informed enough

to sav.

Mr. SHORT. Commodore Greenman, would you kindly come down and sit by the Secretary. You might be able to give some assistance on these technical matters.

In respect to the tidelands question, Mr. Secretary, is it your position that legislation opening these lands to commercial development must not be so restrictive that it will discourage commercial development?

Secretary FORRESTAL. That is my opinion. Now, what constitutes restriction is the issue.

Mr. SHORT. Well, has your Department been consulted in any way or manner in connection with the drafting of tidelands legislation? Secretary FORRESTAL. Yes, sir.

Mr. SHORT. I thought it had. Do you think the National Security Resources Board or the Department of the Interior, or both, should

have primary jurisdiction over these tidelands? Do you happen to know whether or not these agencies are actively working on this subject now?

Secretary FORRESTAL. Well, they are working actively in the preparation and drafting of a proposed bill which I think the President will send to the Congress. The precise form of that bill has not been completely determined. It is a complicated subject, as you know. Mr. SHORT. Very. There is a constitutional question, too. Secretary FORRESTAL. Yes.

Mr. SHORT. Isn't it correct, Mr. Secretary, to say that the Navy has in the past been quite concerned over these tideland developments because it might interfere with naval shipping, particularly on the

west coast?

Secretary FORRESTAL. I have an impression that the Navy has been so concerned, but I want to supply you with a more accurate answer than I can presently give.

Mr. SHORT. I just wondered what the outcome has been.

Secretary FORRESTAL. Will you make a note of that, Commodore? Commodore GREENMAN. Sir, the derricks in the tideland areas on the west coast do not interfere with surface navigation.

Mr. BROOKS. Mr. Chairman

Mr. SHORT. Mr. Brooks.

Mr. BROOKS. I don't want to interfere too much with the chairmanhe is doing a good job-but I would like to ask this: Is it your belief that the States should develop the tidelands? Down in my State they are going right ahead with the development of the tidelands.

Secretary FORRESTAL. Your State being Louisiana?

Mr. BROOKS. Louisiana, yes.

Secretary FORRESTAL. Frankly, I have not come to a conclusion, myself, on that, in answer to your question.

Mr. BROOKS. There is no navigation question down there, is there? Secretary FORRESTAL. There has been none.

Mr. BROOKS. We have gone perhaps farther out than any other State to develop tidelands.

Secretary FORRESTAL. I think you have gone out some 20 or 25 miles, haven't you?

Mr. BROOKS. Twenty-seven miles.

Secretary FORRESTAL. Whether that goes out beyond the 3-mile socalled sovereignty limit involves a good question for such a brilliant lawyer as your chairman.

Mr. BROOKS. Of course, the State of Louisiana adopted a 27-mile Sovereignty limit.

Mr. KILDAY. Of course you know that is a rather controversial issue. Secretary FORRESTAL. I understand.

Mr. KILDAY. In Texas.

Secretary FORRESTAL. Yes.

Mr. SHORT. It is controversial in California, too.

Secretary FORRESTAL. Yes.

Mr. SHORT. Mr Secretary, would the National Military Establishment like to insure the largest volume of imports of oil without injuring our domestic industry, in order to conserve what we have here in continental United States?

Secretary FORRESTAL. The answer is "Yes."

Mr. SHORT. Of course, the difficulty is deciding where that level is, or where that line is.

Secretary FORRESTAL. That is right.

Mr. SHORT. Who is going to determine what volume we should import.

Mr. DURHAM. May I ask a question

Mr. VINSON. Let him answer.

Mr. SHORT. Yes; I would like to get an answer. Who is going to decide what volume of imports we should have?

Secretary FORRESTAL. I think, like most American decisions, Mr. Chairman, it has to be arrived at by discussion among all parties interested and knowledgeable on the subject. I have discovered, as you have here, that you can get various opinions from different sources with equal conviction and they frequently don't jibe. So one has to try to arrive at the truth or what is best for the country out of a composite of many judgments.

Mr. SHORT. There is wisdom in a multitude of counsel.

Secretary FORRESTAL. That is right, sir.

Mr. SHORT. Mr. Durham.

Mr. DURHAM. Right at that point, Mr. Secretary, what is your present policy in purchasing oil from Iran or Iraq? How are you doing that?

Secretary FORRESTAL. Well, as I said, I think now the Navy is buying oil from the Middle East to the extent that it can without sacrificing too much in price, with consideration of where it is to be used. For example, when we were fighting off Japan, off Okinawa, the accessibility of that Middle East oil was of the highest importance because it foreshortened delivery both in terms of ships and time, one being a function of the other.

Mr. DURHAM. But on a percentage basis, what percentage are you getting from that section at the present time?

Secretary FORRESTAL. Of our current military demands of 343,000 barrels a day, 60,000 barrels come from the Persian Gulf, or about 17 percent.

Mr. DURHAM. You are making all the effort you can to purchase all the oil you can in Iran and Iraq?

Secretary FORRESTAL. That is my understanding.

Mr. DURHAM. Are you getting satisfactory consideration from these large companies?

Secretary FORRESTAL. So far as I know, we have had cooperation from them. We negotiate constantly. As I say, the question of price

Mr. DURHAM. It is primarily American oil, isn't it?

Secretary FORRESTAL. I believe that is the case, although whenever you talk oil you cannot talk oil in any area, as most of you know. It is like punching a balloon. You talk it one area and it comes out of the hose in China somewhere. The production and distribution of oil is a global and interrelated business.

Mr. DURHAM. That is true, Mr. Secretary. The only point in asking this question was to ascertain whether it is your policy to purchase all you can from that area, in view of the vast amount of reserves in that area and the depletion of reserves in this country.