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Mr. NEVILLE. On page 6 of your statement you say in effect on the 7th of January the European requirements data were made known to you by Mr. Stewart?

Mr. ROBINEAU. Yes, sir.

Mr. NEVILLE. Could you tell us of what this data consisted? I mean, what were the facts made known to you at that time?

Mr. ROBINEAU. They told us the number of barrels of crude oil that had been run by the European refineries before Suez, what the yields were from those barrels of crude oil.

They told us the changes in the yield, percentages that were made following Suez, and they told us some of the European requirements as to the shortage of American dollars and their need for heavy fuel oils and distillates instead of gasoline, and gave us some percentage figures to that effect.

Mr. NEVILLE. Did they tell you what the requirements were that needed to be supplied from the United States market at that time?

Mr. ROBINEAU. Yes, by differential they gave us what was being supplied from other sources other than the United States, and what the total shortage was, and what they hoped to ship from the United States.

Mr. NEVILLE. Do you recall that figure? Mr. ROBINEAU. They hoped to ship 500,000 barrels a day from the United States.

Mr. NEVILLE. Was that just of crude?

Mr. ROBINEAU. That was just of crude. That is the only thing they had in mind.

Mr. NEVILLE. Was this information used as the basis for your figures in the letter to Mr. Stewart?

Mr. ROBINEAU. Yes, sir.

Mr. NEVILLE. Where you gave gasoline 24 percent, kerosene 3 percent, and so on?

Mr. ROBINEAU. Yes, sir, those are the figures that were used.

Mr. NEVILLE. Was the Interior Department in agreement with the accuracy of those yields as you have them set forth in that letter?

Mr. ROBINEAU. No. They pointed out some things that they said I had misunderstood in the figures. The 8,800,000 barrels a day refinery runs, for instance, they said was closer to 8,400,000, but whether they gave me the wrong one or I misunderstood it, but we based this letter to Mr. Stewart on the information as we understood it that particular day, and then there is a correction sheet in here, as we stated, on some of these prices that take into account the corrections they made, together with some corrections made by other refiners to whom we have submitted this, have pointed out what they thought were errors in our mathematics.

Mr. NEVILLE. On page 7 of your statement you state that the pressure on domestic crude supplies and crude oil prices would have been minimized—that is not an exact quote--if your plan or the plan you have outlined had been followed. In your opinion, would this have avoided the price increase on crude?

Mr. ROBINEAU. In my opinion it would at least have delayed it. It might not have avoided it because I think thhe price of crude

would eventually have to go up because of increased refining costs.

Mr. NEVILLE. I was wondering whether or not you had discussed with anyone in Interior the possibility of your plan alleviating or reducing the necessity for a price increase?

Mr. ROBINEAU. Discussing it is hindsight because they didn't give us an opportunity to discuss this thing until after the price of crude had gone up. I don't say that was deliberate, but the timing was such.

Mr. NEVILLE. My next question is based on page 10 of your statement. You say, "confusion and indecision in top policy," and so on. Do you know on whom you would care to place the blame for this confusion?

Mr. ROBINEAU. I don't think I can except to make it a departmental blame, because I don't know just who is supposed to make decisions, because certainly in our opinion when Suez happened they should have called not only the people who had an actual financial interest in the European oil picture into consultation, which they did they called them into consultation—but in addition they should have called other segments of the oil industry, producers, refiners, whether independent or major, to get a cross section and to get the benefit of everybody's judgment.

That could have been done in a few days, and I am sure that out of that it would have been pointed out it was dangerous; you created an unusual pressure on crude oil, if you just shipped crude oil, that you had a surplus of products.

They should have then come out with the statement-it wouldn't have to be an elaborate statement—that they needed a 5-percent reduction in gasoline yields in this country to furnish enough fuel oil and residual products to take care of Europe, and I assure you that this industry as a whole—there may have been some companies who would not have cooperated—the industry as a whole would have cooperated. They did in the last war and they have done so every time they were called upon, provided they knew what they were supposed to do.

Mr. NEVILLE. Do you know who made the decision to turn this responsibility over to men of this kind ?

Mr. ROBINEAU. No, sir; I don't. Mr. NEVILLE. Thank you very much, Mr. Robineau. Senator OʻMAHONEY. There are no more questions, Mr. Robineau. The committee is very much indebted to you for your excellent paper and your ready answers.

Mr. ROBINEAU. Thank you, sir.

Senator O’MAHONEY. Before we adjourn, I want to announce that the committee will be recessed until tomorrow morning at 10 in this room. Secretary Seaton will be the principal witness. He will be accompanied by Mr. Hugh Stewart, and by Dr. Flemming, formerly head of the Office of Defense Mobilization. An effort will be made to hear Paul Hadlick tomorrow afternoon.

(Whereupon, at 4:45 p. m., the committee adjourned, to reconvene on Thursday, February 14, 1957, at 10 a. m.)

EMERGENCY OIL LIFT PROGRAM AND RELATED

OIL PROBLEMS

THURSDAY, FEBRUARY 14, 1957

UNITED STATES SENATE,
SUBCOMMITTEE ON ANTITRUST AND MONOPOLY,
OF THE COMMITTEE ON THE JUDICIARY AND

SUBCOMMITTEE ON PUBLIC LANDS, OF THE
COMMITTEE ON INTERIOR AND INSULAR AFFAIRS,

Washington, D.C. The subcommittees met, pursuant to recess, at 10:05 a. m., in the caucus room, Senate Office Building, Senator Joseph C. O'Mahoney, presiding.

Present: Senators Kefauver (chairman of the Subcommittee on Antitrust and Monopoly), O'Mahoney (presiding), Wiley, and Dirksen, of the Subcommittee on Antitrust and Monopoly, of the Committee on the Judiciary.

Senators O'Mahoney chairman of the Subcommittee on Public Lands), Carroll, and Barrett, of the Subcommittee on Public Lands, of the Committee on Interior and Insular Affairs.

Committee and subcommittee staff members present: Donald P. McHugh, cocounsel, Antitrust; James De Maras, Jr., research consultant, Public Lands; Peter Chumbris, counsel for minority, Antitrust; Carlile Bolton-Smith, counsel to Senator Wiley; Louis Rosenman, attorney, Antitrust; Paul Banner, economist, Antitrust.

Stewart French, Chief Counsel, Committee on Interior and Insular Affairs.

Senator O'MAHONEY. The committee will come to order.

Mr. Secretary, we are very happy to have you with us this morning, on your return from your tour of Alaska and other points.

I see behind you several of the Interior Department staff, and Dr. Flemming and the Chief Counsel of the Office of Defense Mobilization. Do you want any of these seated beside you, Mr. Secretary?

485

STATEMENT OF HON. FRED A. SEATON, SECRETARY OF THE

INTERIOR, ACCOMPANIED BY ARTHUR S. FLEMMING, DIRECTOR, OFFICE OF DEFENSE MOBILIZATION; HUGH A. STEWART, DI. RECTOR OF THE OFFICE OF OIL AND GAS, DEPARTMENT OF THE INTERIOR; EDWIN G. MOLINE, OFFICER-IN-CHARGE, ECONOMIC ORGANIZATION SECTION, OFFICE OF EUROPEAN REGIONAL AF. FAIRS, DEPARTMENT OF STATE; J. RUEL ARMSTRONG, SOLICITOR, DEPARTMENT OF THE INTERIOR; CHARLES H. KENDALL, GENERAL COUNSEL, OFFICE OF DEFENSE MOBILIZATION; AND RALPH S. FOWLER, OFFICE OF OIL AND GAS, DEPARTMENT OF THE INTERIOR

Secretary SEATON. Mr. Chairman, I think that it would depend, perhaps, on the trend of the questioning, if you don't mind.

Senator O’MAHONEY. I beg your pardon?

Secretary SEATON. I think perhaps that would depend on the trend of the questioning, if you don't mind. There are many of these areas I cannot speak to responsibly.

Senator O’MAHONEY. With respect to the trend of the questioning, we will follow your desire.

Would you prefer to present your statement without questioning first so that it will be a continuous presentation, and then have ques. tions follow?

Secretary SEATON. Well, Mr. Chairman, if you and the committee would be so kind, I would appreciate being permitted to complete the statement.

Senator O’MAHONEY. Very well, we will proceed in that manner. Secretary SEATON. Thank you.

Mr. Chairman and gentlemen of this joint committee: It is a pleasure to appear before you to discuss the oil to Europe program. I realize fully the grave responsibilities you have in reviewing this program, and I welcome your interest in it.

I think we can agree on certain facts. In accordance with the provisions of the Defense Production Act of 1950, as amended, the President by Executive Order 10480 delegated to the Director of the Office of Defense Mobilization the function of approving agreements in the interests of national defense and designated other agencies of the Government to make recommendations to the Director with respect to agreements and programs within their spheres of defense activity.

The Department of the Interior was assigned the latter responsibility for petroleum. With respect to oil agreements, these assignments of responsibility by statute and by Executive order are, in order of execution, as follows:

1. The Secretary of the Interior to consult with industry to encourage the development of voluntary agreements for purposes of national defense and to recommend that such agreements be approved.

2. The Director of the Office of Defense Mobilization to review the recommendations of the Department of the Interior, consult with other interested defense agencies and if appropriate, make the defense finding.

3. The Attorney General to review the proposed agreement and, if he determines that the advantages to the national defense outweigh the adverse effects on the competitive free enterprise system, to approve the agreement.

4. The Director of the Office of Defense Mobilization to request the individuals to participate in the agreement and to extend immunity from the antitrust laws and the Federal Trade Commission Act with respect to those actions authorized by the approved agreement.

5. The Secretary of the Interior to supervise the conduct of operations under the agreement.

On May 8, 1956, before I became Secretary of the Interior, there came into existence the Voluntary Agreement Relating to Foreign Petroleum Supply, as amended. This was an agreement under which plans of action designed to meet emergency situations could be developed.

The Middle East Plan of Action, I might point out, was not approved until August 10. This agreement was formulated by the Department of the Interior in cooperation with the oil industry; it was approved by the Office of Defense Mobilization and the Attorney General.

On July 26, as you know, the Egyption Government nationalized the Suez Canal.

Pursuant to earlier discussions, on July 31, 1956, Dr. Flemming wrote to me about the possibility that there might soon arise any of three alternatives related to the availability of foreign petroleum supplies. These alternatives were:

1. Loss or stoppage of the Levant pipelines.
2. Stoppage of the Suez Canal.
3. Loss of both 1 and 2 above.

Director Flemming suggested that I might appropriately find that an emergency existed and therefore request the Foreign Petroleum Supply Committee, created by the May 8 agreement, to prepare a plan, or plans, of action to meet this emergency.

On August 1, 1956, I informed Dr. Flemming that I concurred in the position he had taken in his letter of July 31, and I had therefore determined that a threatened emergency existed outside of the United States which required an immediate plan or plans, and that as administrator of the May 8 agreement, I would request the Committee to submit to me a proposed plan or plans for the solution of such petroleum supply problems as we might encounter. A copy of my letter went to the Attorney General.

Mr. Hugh Stewart, Director of the Office of Oil and Gas of the Department of the Interior, was requested, as Chairman of the Foreign Petroleum Supply Committee, to prepare such a plan or plans and to submit them to me in writing. I might add here that he has held highly responsible positions in the Department since November 7, 1949.

On August 10, 1956, the Department submitted to Dr. Flemming a plan to implement the May 8 agreement. This proposal, which called for the establishment of the Middle East Emergency Committee, was the product of suggestions of the Petroleum Supply Committee, our Oil and Gas Division, the Office of Defense Mobilization, and the Department of Justice.

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