Mr. Chairman, I tried, as you know, earlier this afteroon to give you their arguments and to give the arguments on the other side. Senator O'MAHONEY. Dr. Flemming, I still say, you are the best witness that we have had before us. Mr. FLEMMING. See what you say 3 weeks from now. Mr. FLEMMING. I appreciate the point all right. Senator O'MAHONEY. The committee will stand in recess until 10 o'clock tomorrow morning. (Whereupon, at 4 p. m., the committee adjourned, to reconvene at 10 a. m., Wednesday, February 6, 1957.) EMERGENCY OIL LIFT PROGRAM AND RELATED OIL PROBLEMS WEDNESDAY, FEBRUARY 6, 1957 UNITED STATES SENATE, SUBCOMMITTEE ON ANTI-TRUST AND MONOPOLY, OF THE COMMITTEE ON THE JUDICIARY AND SUBCOMMITTEE ON PUBLIC LANDS, OF THE The subcommittees met, pursuant to recess, at 10 o'clock a. m., in the caucus room, Senate Office Building, Senator Joseph C. O'Mahoney presiding. Present: Senator Kefauver (chairman of the Subcommittee on Antitrust and Monopoly); Senator O'Mahoney presiding; and Senators Wiley and Dirksen of the Subcommittee on Antitrust and Monopoly of the Committee on the Judiciary. Senator O'Mahoney (chairman of the Subcommittee on Public Lands), Senators Carroll and Barrett, of the Subcommittee on Public Lands of the Committee on Interior and Insular Affairs, and Senator Smith of Maine. Committee and subcommittee staff members present: Donald P. McHugh, co-counsel, Antitrust; James De Maras, Jr., research consultant, Public Lands; Gareth Neville, assistant counsel, W. B. Watson Snyder, consultant; Peter Chumbris, counsel for minority, Antitrust; Carlile Bolton-Smith, counsel, to Senator Wiley; Louis Rosenman, attorney, Paul Banner, economist, Wilbur Sparks and George Clifford, attorneys, Antitrust. Also present: Robert Murphy, professional staff member, Senate Interstate and Foreign Commerce Committee; and Stewart French, chief counsel, Committee on Interior and Insular Affairs. Senator O'MAHONEY. The committee will come to order, please. The first witness is Mr. Wormser, the Assistant Secretary of the Interior for Mineral Resources, who has been under the Administrator having direct charge of the Government participation in this plan for the shipment of oil to Western Europe. STATEMENT OF FELIX E. WORMSER, ASSISTANT SECRETARY OF I deeply appreciate the opportunity to outline for you recent activities of the Department of the Interior to meet a serious oil shortage in Western Europe. The American people want, more than any other thing on earth, peace. Our every activity in this Western European oil crisis has been based upon the security interests of the United States and the firm realization that our security is best achieved by a peaceful world and that the economic and industrial security of our friends in Western Europe is necessary for the preservation of peace. The policies that have guided us in recent months were established by this Government and have been carried out since World War II in the bipartisan determination that the economic rehabilitation of Western Europe and its industrial stability were essential to the security of our Nation. I want briefly to review this background for you because it is the setting in which our recent determinations with respect to the European oil crisis caused by the Middle East situation had to be made. The personal interest of the President in this matter is directly attributable to its impact on world peace, and his burning desire for progress toward a firm and lasting peace. This Department had long recognized that the world is engaged in an ideological struggle on the outcome of which may determine the future freedom of the peoples of the world not yet enslaved. In one part of the globe are the Communist countries bounded by an Iron Curtain. In another part of the globe are the free peoples of the world now mobilized to preserve their freedom. These areas of conflicting basic philosophy of government meet, geographically, in the Middle East. The United States Government long ago recognized the security implications for ourselves in a healthy Western European economy. On November 6, 1951, the President transmitted to Congress a report of the Economic Cooperation Administration that said in part: It is the aim of the ECA to help Western Europe rearm within the framework of an expanding economy while preserving and maintaining the gains that have been made through the help and economic assistance since 1948. Public policy of the United States as expressed in 1950 by the Congress, in passing the Defense Production Act that year, is: It is the policy of the United States to oppose acts of aggression and to promote peace * The United States is determined to develop and maintain whatever military and economic strength is found to be necessary to carry out this purpose *** It is the intention of the Congress that the President shall use the powers conferred by this act to promote the national defense, by meeting, promptly and effectively, the requirements of military programs in support of our national security and foreign-policy objectives. The United States has long been committed to the free world security inherent in the economic and military rehabilitation of Western Europe. In the 6 fiscal years of 1948 through 1953, Congress appropriated $25 billion for economic and military assistance to free, friendly foreign nations allied with us to preserve the security of the free world. Most of this has gone to Western Europe. Following World War II, we concluded that the economic rehabilitation of Western Europe and its industrial security were essential to stopping the spread of communism. In the postwar era, including not only congressional appropriations but the investments of our citizens, we have invested close to $50 billion in the economic and industrial rehabilitation of our friends in Western Europe. That investment will be lost if our friends in Western Europe cannot be supplied with petroleum products; for this rehabilitation is based upon an economy in which the postwar increases in energy have been largely met by petroleum. There has been in these postwar years a marked increase in the mechanization of Western Europe, in the use of tractors on the farms, diesel engines on the railroads, and petroleum-powered equipment in their industrial plants. This winter the absence of adequate petroleum supplies in Western Europe could have meant cold homes and dark factories with unemployment and its inherent destructive result on the economy of Western Europe. This we could not permit. Further, we have given Western Europe large quantities of tanks, combat vehicles, motor transports, and aircraft. All the implements of defense from the submarines under the water to the airplanes in the sky are fueled by petroleum, indispensable to every military operation. Petroleum products not only move men and machines for the military, but the transportation systems that carry workers to the factories. move food from the farms to the cities, and transport manufactured goods from the factory to the consumers. The essentiality of petroleum to security is indicated by the fact that over 60 percent of the tonnage the United States moved overseas in both World War II and the Korean conflict was petroleum or its products. This essentiality is further shown by the fact that oil tankers were the primary target objective of German submarines; and that the collapse of Japan followed soon after United States submarines operating in the Far East were able to seal off Japan from the petroleum of the East Indies. Of course, it was futile to mechanize Western Europe if petroleum could not be made available to it. The demand created by this mechanization is indicated by the fact that in the postwar years the demand for petroleum products in Western Europe increased at the rate of approximately 14 percent a year compared with an increase of approximately 7 to 8 percent a year in the United States. The European demand for petroleum products continues to increase, with the further mechanization of their economy, at about double the rate of increase in the United States. The committee will be interested, I believe, in the quantities representing this European demand. At the close of World War II, foreign petroleum demand-outside the United States and excluding Russia was 2.2 million barrels a day. By 1952 this demand had increased to 4.2 million barrels a day and is currently about 6 million. barrels a day. The demand in free Europe and west Africa exceeds 3,200,000 barrels per day. Crude-oil production in Western Europe, however, is insignificant. In 1952 total Western European crude oil production was 60,000 barrels a day. At present, 196,000 barrels a day are produced-still a very small amount as follows: Western Germany, 75,000 barrels; Austria, 45,000 barrels; France, 25,000 barrels; Netherlands, 22,000 barrels; Italy, 15,000 barrels; Turkey, 7,000 barrels; Yugoslavia, 6,000 barrels; and the United King. dom, 1,000 barrels, a total of 196,000 barrels. 90507 57-pt. 1- --8 |