their products in keeping with present and future requirements. Such allotments are essential if the oil industry is to drill and develop additional sources of crude oil, build adequate pipe lines, tank cars, barges and other transportation facilities, refining capacity, and distribute sufficient petroleum products to meet the continuing expansion of the market. Adequate petroleum supplies are an essential element to the operation and growth of all industries. Unless the oil industry obtains an increased share of steel and other essential materials, the development of the nation's entire economy will be retarded.

4. All petroleum importers should continue to exert maximum effort to import crude oil and petroleum products to the extent necessary to supplement domestic supplies.

INSURING EQUITABLE DISTRIBUTION OF SUPPLIES

6. The problem of tanker capacity to transport needed supplies to the east coast has constituted a major issue during recent months before numerous industry and congressional committees. This committee can recommend nothing beyond steps previously outlined. We believe the seriousness of the problem is recognized and urge the greatest possible speed on the part of industry and government to increase the availability of tankers.

7. Many oil companies have already taken emergency steps to substitute tank trucks for tank cars, freeing tank cars for long hauls. This practice must be continued and extended wherever possible. To prevent equipment tie-up over week ends and holidays, oil companies should adopt 7-day-week loading and unloading schedules for the next 60 days.

8. Many exchanges and short-term loans of products between individual companies have been worked out in recent months in an effort to save transportation. These should be continued and further extended by individual company efforts. 9. It is believed that practically all petroleum supplying companies have individually adopted a policy of distributing equitably among the various categories of customers nad channels of distribution, all available supplies of fuel oils. This has been particularly urged by the recent report of the Senate Small Business Committee. If there remain any suppliers or distributors at any level who have not adopted such a policy, they are urged to do so at once.

10. The handling of hardship cases induced by the short supply situation should be treated at the local level by those who understand it best. Accordingly it is recommended that all action to alleviate hardship cases be handled by State and community committees.

11. Consumption of middle distillates must be reduced. The individual consumer must bring this about. All consumers should practice oil conservation. A complete pattern of suitable measures has been offered to the domestic consumer by the oil industry. Certainly the most prominent means of accomplishing this objective is carrying lower temperatures in all buildings where oil is used for radiation purposes. Comparable steps must be introduced by commercial and industrial users and by military and other governmental agencies. The oil industry and each individual company of the industry must give wide publicity to the necessity of the consumer reducing his needs. It is believed that the tankwagon driver affords a most effective means of disseminating this message. The tank-wagon drivers as well as other representatives of the industry who contact the public should be schooled in this need.

12. All consumers both domestic and industrial who have alternate or stand-by heating equipment which could use other fuels should be urged to utilize such facilities.

13. The rate of growth of demand for middle distillates must be checked. Since there is an over-all short supply of middle distillates, placing additional demands against the industry cannot but aggravate an already acute situation.

14. The next 60 days must be characterized as a period of inventory reduction of middle distillates among all consumers. The home owner should not request that delivery be made as long as his supply of fuel oil on hand is in excess of two weeks' requirements. The large consumer, buying in tank car quantities, should observe the same inventory limitation. The governmental agencies including the military, should limit inventories and to the extent possible serve current needs by inventory depletion. In local communities where supply is not adequate to meet total requirements, it is recommended that quantities delivered be limited as may be necessary to spread available quantities as equitably as possible among all users. In some areas limiting deliveries to 30 days' requirements may be adequate, while in others it may be necessary to restrict delivery to time periods of substantially shorter duration. This will necessitate the temporary abandon

ment of the keep-filled system of delivery now practiced by many distributors in substantial parts of the market.

15. Many States in the trouble zone have established State coordinators or committees to deal with current problems of distribution of burning oils. In some, such organization is established as a State agency and in others it is entirely a citizens' committee. Parallel structures are to be found in many local communities within the States. All members of the industry should instruct their representatives to cooperate with these agencies at the local level in their efforts to relieve legitimate hardship cases as quickly as possible. The oil companies distributing in each such local area must recognize the necessity of sharing the responsibility of meeting emergency deliveries. Such committees should insure I that wherever possible, emergency cases be supplied a quantity of oil adequate for a maximum of 2 weeks' consumption, contingent upon the customer's inability to secure supplies from his regular source, contingent upon his inability to substitute alternate fuels, and contingent upon his ability to receive, store, and pay for such merchandise.

16. It is the committee's understanding that exports of petroleum products have been again placed on the restricted list. Export licenses are now subject to review and approval by the Department of Commerce. It is believed that this system should be continued and that exports be limited to the extent possible consistent with over-all necessities of our international relationships.

17. The above series of recommendations for meeting the current heavy demand for middle distillates are recognized by this committee as creating future shortages of gasoline. It is believed essential, therefore, that the gasoline consumer, as well as the fuel-oil consumer, be urged to adopt conservation measures. Wide publicity should be given by the oil companies to gasoline consumers requesting them to curtail their requirements until the over-all shortage of petroleum products is eliminated. Specifically, a great deal can be done by formation of driving clubs, cutting down on unnecessary driving, reducing speed, and keeping the consumption unit adjusted for efficient utilization of fuel.

18. Either the Secretary of the Interior or the chairman of the National Petroleum Council with the approval of the Secretary, may appoint special committees from the industry as needed to advise local, State, or Federal authorities or the industry with regard to the application of the principles set forth herein. Units and individuals of the industry should be authorized to serve on such committees or on committees appointed by local or State authorities and should be authorized to take concerted action as may be deemed necessary to carry out the recommendations contained in this report. For the present the chairman of the council with the approval of the Secretary is requested to appoint regional advisory committees in PAW districts I, II, and III.

19. While most of the recommendations outlined above can be adopted by individual companies without the necessity of industry-wide agreements, the recommended program will be adopted more expeditiously and more completely if all companies are certain that the concerted activities here recommended will not be held to violate the Federal antitrust laws. The committee accordingly recommends that its plan be submitted by the Secretary of the Interior to the Attorney General of the United States pursuant to Public Law No. 395 and Executive Order No. 9919, and that the Attorney General's approval be issued in such manner that various features of the plan can be adopted in particular communities where the need for its use may arise without resubmission of the program for that particular community to the Attorney General for approval. The committee further recommends that in the event above recommendations are approved by the Attorney General, the Secretary of the Interior in issuing his written request to individual members of the industry for compliance with such plan, frame his request in such manner that the plan may be placed in effect immediately and everywhere needed. This procedure will avoid delays incident to securing clearance from the Secretary of individual requests in respect to each individual transaction and will facilitate prompt action in providing quick relief in this emergency.

20. It is recommended that within the next 90 days this committee review the accomplishments of the above program so that out of the actual experience during this period similar methods can be devised to handle the gasoline situation this summer, and heating-oil problems next winter.

If the above recommendations are approved by the National Petroleum Council, it is recommended that the plan be submitted immediately to the Secretary of the Interior for review and for clearance with ODT and the Department of

Justice.

Simultaneously, it should be given wide publicity. The national press services, magazines, and radio chains can render an unusual service to the public through publicizing the plan.

Respectfully submitted.

Robert E. Wilson, chairman, H. T. Ashton, Jacob Blaustein, Russell B.
Brown, H. S. M. Burns, Fayette B. Dow, John Dressler, R. G.
Follis, B. C. Graves, B. I. Graves, J. Parks Gwaltney, Geo. A. Hill,
Jr., Walter Hochuli, W. T. Holliday, Eugene Holman, W. Alton
Jones, B. L. Majewski, J. Howard Marshall, Clyde G. Morrill, I. A.
O'Shaughnessy, Sidney A. Swensrud, L. S. Wescoat, H. C. Wiess,
Russel S. Williams.

Mr. JOHNSON of Texas. Will that voluntary program result in any considerable savings?

Mr. BALL. I think the program of the industry that is being carried out already, and which has Government backing, is going to result in material savings. I don't think any voluntary programs can increase supplies to any material extent.

Mr. JOHNSON of Texas. My question was: Will the program reduce consumption?

Mr. BALL. I think it will help to reduce consumption, and I think it will help to get distribution at the point of greatest need.

Mr. JOHNSON of Texas. Will it reduce consumption to any appreciable extent?

Mr. BALL. Well, I look hopefully to the objective that the industry has set, and that the Government has agreed to, namely, that we can reduce consumption of fuel oil by somewhere between 10 and 15 percent.

Mr. JOHNSON of Texas. And if the President's order to the Government were applied to the country as a whole, how much would consumption be reduced?

Mr. BALL. I think it would reduce consumption by somewhat more than 15 percent.

Mr. JOHNSON of Texas. So you think the industry's voluntary program will result in about the same reduction of consumption as a compulsory program?

Mr. BALL. Well, I am not sure that a compulsory program-and a compulsory program, of course, could only be enforced by rationing— would

Mr. JOHNSON of Texas. Let us call it the Secretary of the Interior program, then. You believe the industry's program will achieve the same results as a program recommended by the Secretary of the Interior?

Mr. BALL. No. I think you would insure observance by everybody by a compulsory program. I think, however, that the voluntary program will, although not quite so surely and perhaps not quite so fast, achieve about the same results. That is my personal feeling about it. Mr. ARENDS. Mr. Ball, there is every indication that industry is completely willing to cooperate.

Mr. BALL. Oh, industry is cooperating in every way.

Mr. ARENDS. Definitely.

Mr. BALL. That, Mr. Chairman, brings me down to date, I think, on the short-range situation.

Now, turning to the longer look, the place to start is with our known reserves. And remember that when we talk about known reserves we are speaking only of the reserves that have so far been discovered.

The known reserves in the United States at the end of 1939, including crude oil, natural gasoline, and condensate, were 19,000,000,000 barrels. I am speaking in round figures. At the first of January 1947 there were 22,000,000,000 barrels. So between the first of 1940 and the first of 1947, during that 7-year period, we had increased the remaining known reserves in the United States by 3,000,000,000 barrels.

Mr. JOHNSON of Texas. Can you estimate those reserves rather accurately, Mr. Ball?

Mr. BALL. Those reserves can be estimated with a reasonable degree of accuracy. The estimates that I have given you are those of the American Petroleum Institute, and they are made not by any individual company, or by the institute itself, but by a series of committees of geologists which represent the best geologic talent of the country. Mr. JOHNSON of Texas. So those are the best estimates we have. Mr. BALL. Yes.

Mr. JOHNSON of California. Could I ask you a question right there? Mr. BALL. Yes.

Mr. JOHNSON of California. Based on your experience, how close has experience shown such estimates to be?

Mr. BALL. Well, that is something you never can determine because you never exhaust your reserves. Mr. JOHNSON of California. No. Over a 7-year span you increased the reserves by 3,000,000,000 barrels. Now, did the experience of your previous estimate show that you were very accurate in your estimation of what the reserves would be?

Mr. BALL. I thing the long-term experience shows that these reserves are reasonably accurate. They are inclined to be on the conservative side, but they are pretty accurate.

I have here, and will submit for the record, a table showing the known reserves of the United States by years from 1937 through 1946. (The table is as follows:)

TABLE 5.-Known United States petroleum reserves (barrels)

The 1946 figures for new oil are for crude oil only and do not include new condensate (included in previous years) which is estimated at approximately 205,000,000 barrels. *Includes condensate for comparison with previous years.

Data from American Petroleum Institute.

Mr. BROOKS. Mr. Ball, estimates in the past have been found to b very conservative, haven't they? For instance, take the great Eas Texas oil field when it came in. The estimates per acre were very low, compared to the yield already received.

Mr. BALL. Well, these estimates are made in this way: When a field is first discovered, naturally the estimate of its content is bound to b low because no one knows how extensive it is. After the Joyner well for instance, in East Texas, no one knew whether the East Texa field was going to cover 160 acres or the tremendous extent of the field that it proved to cover.

Mr. BROOKS. Your original estimate was about 3,000 barrels an acre, or something like that.

Mr. BALL. I don't know what the recovery rate per acre was. Mr. BROOKS. The estimates have constantly been increased; haven' they?

Mr. BALL. Yes. There are two factors in these estimates of re serve. One is new discoveries, and those are always underestimated I won't say always for each well, but I mean in the aggregate they are ultraconservative. Then the other factor is revision and extension of known fields. Those two taken together make the increment that you get for the reserves each year. Whereas it usually is 5 years from the time of the discovery before you know how big a field is ultimately going to be, the figures on total reserves are pretty sound and reason able estimates.

Mr. BROOKS. As time goes on don't the figures become more and more accurate?

Mr. BALL. Each year the estimate of total recovery from the East Texas field is more accurate.

Mr. BROOKS. Furthermore, with deep drilling, isn't the estimate more accurate?

Mr. BALL. Well, the deep drilling adds more discoveries. It is not a factor in the accuracy of the estimate.

Mr. JOHNSON of Texas. Isn't this a fair statement: Your best estimate is that we have 22,000,000,000 barrels in reserves, but that estimate may not be entirely accurate?

Mr. BALL. Well, as estimates of known reserves-remembering that they are only known reserves-I think they are accurate. They do not include additional reserves that may prove to be present in fields already discovered and, of course, do not include at all reserves that are in fields not yet discovered. That matter of the amount of additional oil we will find, and the rate at which we may find it, is one of the things I want to discuss a little later.

Mr. JOHNSON of Texas. I had been under the impression that some gross miscalculations have been made in estimating our known reserves. For instance, each time we have held a hearing the reserves in East Texas have been estimated at 10 years. Then, the experts come in again and we ask, "All right, how long do you estimate now?" and they reply, "Ten years." The field has been producing 20 years. and it still has a 10-year reserve. So I would conclude we have had considerably more reserves in that area than had been estimated.

Mr. BALL. Yes. They did not become known reserves until you got more and more development, and more and more experience as to the rate of pressure decline in the field.