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him, I thought, sufficient time to come up here for the opening. He will be requested to appear later.
Now, the same is true of Assistant Attorney General Victor Hansen, head of the Antitrust Division. Mr. Hansen has been in Europe, and will not be back until about the middle of the month. In his absence, Mr. Bicks, his Deputy, is here.
Mr. Arthur S. Flemming, head of the Office of Defense Mobilization, is present, as is Assistant Secretary of State Robert Hill. Also, Mr. H. A. Stewart, head of the Office of Oil and Gas, of the Department of the Interior, and Charles Kendall, the Chief Counsel for the Office of Defense Mobilization.
Most of these gentlemen participated in consultations with myself as Acting Chairman at that time, and the staff of both the Interior Committee and the Antitrust and Monopoly Subcommittee, conducted both in my office in the Senate Office Building, and in the office of Secretary Wormser, and later at the office of Secretary Seaton at the Department of the Interior.
I want the record to show that we had complete cooperation from all these gentlemen.
We have before us a most complex problem. The original order was approved by the Attorney General on August 10, 1956. That was followed, later on, by an amendment, and there have been different changes of one kind or another during the intervening time.
I had suggested to the Secretary of the Interior that the Middle East Emergency Committee, composed of 15 giant corporations, was not, in itself, a proper organization to represent the oil industry of the United States. I felt that representatives of independent refiners and independent producers should be placed on the committee. A representative of the independent refiners, the Frontier Refining Co., was placed on the committee. Several other individuals were invited by the Oil and Gas Division to act as consultants, and are sitting on the Committee in that capacity.
This is by way of acknowledgment of the great spirit of cooperation which I want the members of all three committees to understand has characterized the proceedings to date.
In order that we may set this hearing in the proper light, I should like to read a statement into the record.
Wherever a family lives in the United States, it is not farther away from the Middle East crisis that it is from the nearest oil and gasoline station. Nor, for that matter, is it any farther away than the nearest draft board if that family has a son of draft age.
The Senate Foreign Relations and Armed Services Committees are diligently considering the President's request for authority to employ the Armed Forces of the United States to resist Communist aggression against any nation in the Middle East area when that nation
asks for our assistance.
This committee, in cooperation with the Senate Committee on Interstate and Foreign Commerce and the Senate Committee on Interior and Insular Affairs, all of whom have jurisdiction over various phases of the petroleum industry, has assembled to confer with representatives of the executive branch of the Government about the details of the plan by which this Government is attempting to aid its Western European allies by substituting petroleum and petroleum products for the flow from the Middle East which has been suspended by the blockade of the Suez Canal.
Though there have been increased deliveries from this country to Europe since the plan was initiated, the unfortunate fact is that the shortage in Europe has not been satisfactorily supplied. On January 27 last, Assistant Secretary of the Interior Felix E. Wormser issued a public statement saying thatthe reduction in supply of oil for power and heat-namely, distillates and fuel oil—threatens to have the most severe impact. He then stated that the production of crude oil in the United States must be increased or there must be a reduction of domestic refining if the supply Europe needs is to be shipped abroadat anything approaching a satisfactory rate without endangering the United States supply.
Meanwhile, there have been received by this committee from various sources complaints that the increased price of crude oil posted in Houston, Tex., on January 3 last by Humble Oil Co., a subsidiary of the Standard Oil Company of New Jersey, has been followed by increases in the price of fuel oil distillates, gasoline, and other oil products to consumers in the United States. The increase in price was so sudden that it reflected economic reaction throughout the United States and Members of Congress were deluged with letters and telegrams of protest.
Returning to Washington from Wyoming in November, my attention was soon called to the creation of the Middle East Emergency Committee, and as acting chairman at that time of the Senate Judiciary Subcommittee on Antitrust and Monopoly, I found myself requested to answer many questions. I speedily found that Secretary of the Interior Fred Seaton, who had been named Administrator of the plan, and Assistant Secretary Wormser were ready to cooperate. It was, of course, obvious that the problem was one of great complexity. I conferred not only with the Department of the Interior and the members of the Office of Oil and Gas of that Department, but with Assistant Secretary Robert C. Hill of the Department of State, Arthur S. Flemming, Director of Defense Mobilization, and Charles Kendall, general counsel for that organization. Later, by invitation, I attended the meeting of the National Petroleum Council, headed by Mr. Walter S. Hallanan of the Plymouth Oil Co., as chairman. The National Petroleum Council is an organization of private corporations which for many years, under this and previous Administrations, has cooperated with the Government in providing needed stores of petroleum and petroleum products for the armed services.
It developed that the first step to designing a program was taken on October 12, 1956, when President Eisenhower submitted to Director Flemming a memorandum directing the latter to summon representatives of the National Petroleum Council to confer with certain Cabinet officers for consideration of the plan.
Thereafter, on October 29, 1956, Assistant Secretary Wormser addressed a letter to Mr. Walter S. Hallanan, chairman of the National Petroleum Council, in which, after having recited the fact that meetings complying with the President's suggestion were held on October 19 and 25, he requested the National Petroleum Council to make a study
of tanker transportation and confer with representatives of the Office of Oil and Gas in the Department of the Interior and with the Maritime Administration in the Department of Commerce.
On December 11, 1956, Mr. Flemming, Director of Defense Mobilization, held a press conference and issued a release in which he announced that he had requested the 15 oil companies comprising the Middle East Emergency Committeeto participate in an amended plan of action under the voluntary agreement relating to foreign petroleum supply. The original plan of action was approved August 10, 1956, and was published in the Federal Register. In this voluntary agreement there were listed 15 oil companies which may be properly designated as the largest in the world. The assets of all 15, excluding duplication, amount to $20,162,034,000, as of 1955. A full list of these companies, together with their assets and gross income and their net income after taxes and depletion, as of December 31, 1955, will be made a part of the record.
(The document referred to follows:)
(Middle East Emergency Committee)
1. Standard Oil Co. (New Jersey).
Standard Oil Co., New Jersey).
Co.) 10. Getty Oil Co.. 11. Venezuelan Petroleum Co. (96 percent owned by
Sinclair Oil Co.)
JOINTLY OWNED COMPANIES OWNERSHIP 12. American Independent Oil Co.:
Phillips Petroleum Co. (33.5 percent).
Ashland Oil & Refining Co. (12.7 percent).
The Texas Co. (30 percent).
Standard Oil Co. (New Jersey) (30 percent).
Standard Oil Co. of California (50 percent)--
The Texas Co. (50 percent) 15. Standard Vacuum Oil Co. (jointly owned by other
Standard Oil Co. (N. J.) (50 percent).
Total excluding duplication...
! Includes assets of subsidiaries in Western Eemisphere only. : Year ending June 30, 1956.
It will be noted that most of these companies are not only interested in Middle East oil, and oil produced in other areas of the world, but they are also interested in the production, the refining, and the distribution of oil products and gasoline in the United States. It is not too much to say that they operate throughout the United States.
There are many independent producers, many independent refiners, many independent jobbers, all of whom feel that what the big companies do has an immediate and vital effect upon their own operations. This was so great that when the extension of the Reciprocal Trade Agreements Act was under consideration in the Senate, a year or two ago, the Senator from West Virginia, Mr. Neely, who sits here beside me, offered an amendment intended to bring about the exclusion of 10 percent of the imported oil.
A copy of the amendment offered by Senator Neely will be inserted in the record at this point.
(The document referred to follows:)
(H. R. 1, 84th Cong., 1st sess.) AMENDMENT Intended to be proposed by Mr. NEELY (for himself, Mr. ALLOTT,
Mr. BARRETT, Mr. BEALL, Mr. BENDER, Mr. BIBLE, Mr. CARLSON, Mr. DANIEL, Mr. DIRKSEN, Mr. KILGORE, Mr. MCCLELLAN, Mr. MARTIN of Pennsylvania, Mr. MURRAY, Mr. O'MAHONEY, Mr. SCHOEPPEL, Mr. WELKER, and Mr. YOUNG) to the bill (H. R. 1) to extend the authority of the President to enter into trade agreements under section 350 of the Tariff Act of 1930, as amended, and for other purposes, viz: At the end of the bill add the following new section: Sec. Section 2 of the Act entitled “An Act to extend the authority of the President to enter into trade agrements under section 350 of the Tariff Act of 1930, as amended", approved July 1, 1954 (19 U. S, C., sec. 1352a), is hereby amended by inserting “(a)" after “SEC. 2." and by adding at the end thereof a new subsection as follows:
"(b) In order to further the policy and purpose of this section
"(1) the President shall take such action as is necessary to restrict imports of commodities whenever such imports threaten to retard the domestic development and expansion or maintenance of domestic production of natural resource commodities or any other commodities which he determines to be essential to the national security;
“(2) the total quantity of crude petroleum and petroleum products (including oil for supplies for vessels at United States ports but excluding oil for manufacture and reexport) which may be imported into the United States in any calendar quarter of any year shall not exceed 10 per centum of the total domestic petroleum demand (as determined by the United States Bureau of Mines) for the corresponding quarter of the previous year: Provided, That the total quantity of residual fuel oil which may be imported into the United States for consumption therein in any calendar quarter of any year shall not exceed 10 per centum of the domestic demand for residual fuel oil (as determined by the United States Bureau of Mines) for the corresponding quarter of the previous year: Provided further, That the quotas established under this subsection may be suspended by the President during any period in which he finds that fuel supplies are inadequate to meet current national consumption; and
“(3) the provisions of this section shall be effective notwithstanding the authority granted in section 350 of the Tariff Act of 1930, as amended, or any foreign trade agreement to which the United States is a party." Senator NEELY. Mr. Chairman, will you permit one brief interruption!
Senator O'MAHONEY. Yes.
Senator NEELY. Thirty-eight Members of the Senate, by actual count, supported this amendment, including a number of the distinguished Senators who are now sitting at this table.
Sentaor O'MAHONEY. The committee did not approve the amendment, but did adopt a provision which is part of the law. It is section 7 of the Trade Agreement Extension Act of 1955, 69th Statutes at
Large, pages 161, 166, Public Law 86 of the 84th Congress. The section reads:
SEC. 7. Section 2 of the act entiled "An act to extend the authority of the President to enter into trade agreements under section 350 of the Tariff Act of 1930, as amended," approved July 1, 1954, is hereby amended by inserting “(a)” after "Sec. 2” and by adding at the end thereof a new subsection as follows: "In order to further the policy and purposes of this section whenever the Director of the Office of Defense Mobilization has reason to believe that any article is being imported into the United States in such quantities as to threaten to impair the national security, he shall so advise the President and if the President agrees that there is reason for such belief, the President shall cause an immediate investigation to be made to determine the facts. If, on the basis of such investigation, and the report to him of the findings and recommendations made in connection therewith, the President finds that the article is being imported into the United States in such quantities as to threaten to impair the national security, he shall take such action as he deems necessary to adjust the import of such article to a level that will not threaten to impair the national security.”
Up to the present time the authority has not been exercised, but there has been a voluntary agreement, as I understand it, and the plan of that voluntary agreement is that the amount of imports shall not exceed a percentage of the imports of a given year-1954. That is about 16 percent, is it not, Mr. Flemming?
Mr. FLEMMING. Roughly.
Mr. FLEMMING. If I could interrupt, Mr. Chairman, I think that is nearer 10 percent than 15.
Senator O'MAHONEY. Nearer 10 percent than 15?
Senator O'MAHONEY. As I say, I recite these facts to show the interest which the local operators have, both the producers and refiners, in the importation of oil, and the effect that they assert to the committee is being reflected on their operations of increased importations which are said to be coming form Latin America and elsewhere into the United States. With respect to what the precise facts are, the record will show later.
Now, turning again to the 15 members of the Emergency Committee, the largest company is the Standard Oil Company of New Jersey. It is a member of the committee not only in its own right but also as the owner of 95 percent of the Creole Petroleum Corp., which operates in Latin America and which also is one of the 15. Not only is that the fact but Standard of New Jersey is a 30 percent owner of the ArabianAmerican Oil Co., and with Socony Mobil Oil Co. a 50 percent owner in Standard Vacuum Oil Co., both Arabian-American Oil and Standard Vacuum Oil being also members of the Middle East Committee. Socony Mobil sits on the committee as a corporation, as do all the others, in its own right and as a part owner of two other members of the committee. The Gulf Oil Co., third in size, as computed by its assets, is associated with the Anglo-Iranian Petroleum Co. in operation in Kuwait, a sheikdom in the Arabian Peninsula. The AngloIranian Corp., as an organization, has been controlled through stock ownership by the British Government. It owns 23.75 percent interest in Iraq Petroleum Co, and in that company Standard Oil of New Jersey and Socony Vacuum Oil Co. also own 23.75 percent stock interest.