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are fairly common today and many under construction range from 200,000 to more than 300,000 tons.

The committee also reported that refining capacity in Europe and the Caribbean would be tight for the two quarters but adequate to meet needs.

The companies which participate voluntarily in the Emergency Petroleum Supply Committee are:

Amerada Petroleum Corp., Tulsa, Okla., American Independent Oil Co., New York, N.Y., Arabian American Oil Co., New York, N.Y.; Atlantic Richfield, Philadelphia, Pa.; California Texas Oil Corp., New York, N.Y.; Cities Service Co., New York, N.Y.; Continental Oil Co., New York, N.Y.; Frontier Refining Co., Denver, Colo.

Gulf Oil Corp., Pittsburgh, Pa.; Hunt Oil Co., Dallas, Tex.; Getty Oil Co., Los Angeles, Calif.; Marathon Oil Co., Findlay, Ohio; Mobil Oil Corp., New York, N.Y.; Murphy Oil Corp., El Dorado, Ark.; Phillips Petroleum Co., Bartlesville, Okla.; Signal Oil & Gas Co., Los Angeles, Calif.; Sinclair Oil Corp., New York, N.Y.

Standard Oil Co. of California, San Francisco, Calif.; Standard Oil Co. (Indiana), Chicago, Ill.; Standard Oil Co. (New Jersey), New York, N.Y.; Standard Oil Co. (Ohio), Cleveland, Ohio; Sun Oil Co., Philadelphia, Pa.; Sunray DX Oil Co., Tulsa, Okla.; Texaco Inc., New York, N.Y.; and Union Oil Co. of California, Los Angeles, Calif.

[News release from Department of the Interior, October 10, 1967]



When I met with you last, you reported that there appeared to be adequate supplies of crude oil and refined products to meet the third quarter 1967 free world requirements, that even some stock buildup in Europe and Japan appeared to be in the cards, and that it would not be necessary to recommend schedules for that quarter.

At that time, there still were restrictions on the shipments of oil to some destinations; the Suez Canal remained inoperative and TAP line was closed. In addition, there were problems in Nigeria, some doubts remained as to the ability of the tanker fleet to meet the increased seasonal load, and there was concern over the lack of usual inventory buildup to meet the peak demand of the winter months. These things combined to make you apprehensive as to the situation in the fourth quarter of this year and the first quarter of next year. Therefore, your Chairman recommended in his report to me, and I approved, that your Committee study and report on the expected petroleum supply-demand for this critical period which begins this week.

I note that you will review and probably adopt a similar report today. I am pleased with the speed with which this has been accomplished. I am told that the two subcommittees beat their initial tight schedule by at least a week as the result of hard work and long hours. I look forward with interest to the discussion, conclusions, and recommendations of the future course of action by the Committee.

I note that part of the proposed resolution calls for a report on our preparedness for such contingencies and the work of the Committee. We have learned a lot since June 5, and these lessons should be incorporated in our various contingency plans and procedures. You have done a good job-and, while I hope it may never become necessary, any future action should reflect the efficiency of the current effort.

Finally, I would like to make another observation with respect to the current situation in contrast to the Suez crisis of 1956–57. At the outset, I was advised by a number of close observers of that situation that many of the problems of the Middle East Emergency Committee resulted directly from a policy of excessive secrecy and a lack of concern of accountability to Congress and the public. Thus, I informed all members of the Department of the Interior that these current operations would be conducted in a goldfish bowl and that special efforts would be made to keep the Congress and the public fully informed and as promptly as possible. I think that all of us now see the wisdom of this course. We have not been criticized by the Congress; to my knowledge there have been no adverse editorials in the public press in the United States or Europe; and the various reporters who act as our link to the public have voiced no criticism, publicly or privately, that they have not been properly served.

As a result, we can go confidently and proudly to any congressional review of our activities, and such an opportunity would permit us to show how effective Government and industry can be when the needs of the Nation require it.

Gentlemen, thank you for coming, and thank you and companies for your willing cooperation and your unselfish contributions in our mutual endeavors.



Washington, D.C., October 6, 1967.
Administrator, Voluntary Agreement Relating to Foreign

Petroleum Suppy of May 1, 1963, as amended, U.S.

Department of the Interior, Washington, D.C. DEAR MR. MOORE: Pursuant to the Administrator's letter of August 17, 1967, accepting the recommendation of the Emergency Petroleum Supply Committee, the Committee has continued to gather, analyze, and appraise supply and transportation data for the fourth quarter of 1967 and the first quarter of 1968, and has made a detailed analysis of the fourth quarter 1967 and a general assessment of the first quarter 1968. The substance of the Committee's findings is summarized below: Supply and distribution balance

Member companies and observers were requested to submit industry demand estimates for the free world areas with which they were most familiar. The Office of Oil and Gas of the Department of the Interior also submitted demand estimates for all areas. Free world demand was derived from these data.

Each member company and the observers submitted their individual supply plans void of company identification. Total estimated U.S. imports and exports, and Soviet bloc exports to the free world, were provided by the Office of Oil and Gas. Military requirements and tonnage availability were furnished by the Department of Defense through the Office of Oil and Gas. Free world supply is based on the above data plus Committee-developed estimates of movements by companies not members or observers of the Emergency Petroleum Supply Committee.

Supply data was developed and reported based on known facts such as closure of the Suez Canal, closure of TransArabian Pipe Line (Tapline), limited availability of Nigerian crude, destination restrictions, et cetera, as they existed on August 23, 1967.

It will be noted that two of the conditions have changed. The Tapline has been in operation since mid-September. Shortly before Tapline_opened most major destination restrictions were lifted. These two changes occurred after the supply data for the fourth quarter, and most of the supply data for the first quarter, had been submitted by participating companies. However, the Committee felt that the probable impact of these changes was determinable, and the range of such impact is incorporated in the findings of this report.

A comparison of the Committee estimates of free world petroleum supply and demand for the third and fourth quarters shows:

[blocks in formation]

Excluding the United States and Canada. 2 3d quarter data should not be taken as actual fact; they merely reflect the estimates contained in the committee's 3d quarter report.

Tanker tonnage position

On the basis of the before-mentioned supply data, comparison of fourth quarter 1967 tanker requirements and availability indicates an essentially balanced position. Specifically, the study indicated a calculated shortage of 55 T-2's. It should be noted that the tonnage position is expressed as a quarterly average. The December availability is 132 T-2's higher than the quarterly average which will coincide with higher demand later in the quarter.

The following table summarizes fourth quarter average requirements and availability:

Equivalent Requirements: Free world.

5, 310 Free world product

770 Soviet bloc to free world (crude and product).



Total requirements. Availability short position..

6, 305 6, 250


(55) Requirements and availability cover non-U.S.-flag, commercial free world petroleum trades, including Soviet bloc to free world trades. Movement data was not provided for coastal trades, and so, vessels known to be engaged in these trades are not included in the availability. U.S.-flag requirements and availability are excluded also.

Attached is a tabulation of fourth quarter 1967 and first quarter 1968 tanker availability. The table reflects only minor changes from the forecasted fourth quarter availability contained in the third quarter report. First quarter average availability will be 233 T-2's higher than fourth quarter, with most of the additional availability coming from new deliveries. Findings as to fourth quarter

1. Demand in the free world for the fourth quarter 1967 is estimated to be 19,150 MB/D, which will require 6,305 T-2's.

2. European demand for the fourth quarter 1967, based on normal weather, is estimated to be 10,800 MB/D. If weather were 10 percent colder than normal, the demand increase would be 3 to 5 percent, or 300 to 500 MB/D, which could then be met by a combination of stock drawdowns and additional movements. Any additional movements can only be achieved by a rearrangement of flows increasing shorthaul movements.

3. Crude production in the free world is estimated at 20,230 MB/D, which is an increase of 9.7 percent over the third quarter estimate.

4. Free world emergency imports of crude oil from the United States in the fourth quarter are estimated to be 270 MB/D, which is 40 MB/D above the third quarter estimate. Product imports are estimated at 170 MB/D in the fourth quarter, which is in line with the historical level.

5. Free world imports of crude and products from the Soviet bloc are estimated to be 1,070 MB/D, which is 172 MB/D above the third quarter estimate.

6. Refinery runs in the free world are estimated at 19,837 MB/D, or 93 percent of refining capacity which is estimated to be 21,252 MB/D. However, on the assumption of zero stock drawdowns (which the committee utilized in its analysis), refining capacity in Europe and the Caribbean will be tight but adequate in the fourth quarter.

7. Tanker requirements were calculated on round voyages. While the projected fourth quarter movements contain a potential saving of approximately 300 T-2's if all crude and product crosshauls were eliminated, there are known to be substantial backhaul opportunities which will reduce the indicated crosshauling. Findings as to first quarter

1. Demand in the free world for the first quarter is estimated to be 19,500 MB/D, which is an increase of 1.3 percent (350 MB/D) above the fourth quarter estimate.

2. In the light of the small increase in first quarter demand, and in view of the potential for increased crude availability, anticipated additional refining capacity (700 MB/D), and tanker availability (233 T-2's), the general first quarter situation should be essentially the same as that found for the fourth quarter. Findings as to impact of changed conditions

The opening of the Tapline and the lifting of destination restrictions could result in possible savings in tanker requirements ranging from zero to 200 T-2's (up to approximately 3 percent of tanker availability), depending on the alternative sources of crude which may be displaced. Conclusions

1. The committee's analysis indicates that there will be no shortage of crude supplies or refining capacity.

2. Tanker tonnage will be tight, but should be adequate to meet demands.

3. Some cushion against adverse developments is provided by inventories.

4. The opening of Tapline and the lifting of destination restrictions will provide additional supply flexibility.

5. Based on the committee's general assessment of the first quarter, it is concluded that no further analysis of the first quarter is required unless some significant change in the present situation occurs.

6. There is no need for schedules at this time. Recommendations

1. In view of the committee's findings that petroleum supplies and transportation facilities during the fourth quarter of 1967 and first quarter of 1968 are adequate to meet normal free world demand under presently existing conditions;

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