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Army-Navy Petroleum Purchasing Agency coordinated buying by the responsible agencies of the different services.

Priorities for the three using services will be established by the Armed Services Petroleum Board under guidance of the Joint Chiefs of Staff. Broadly, the Board will have, under the terms of its charter, planning and coordinating responsibilities "relating to petroleum, petroleum products, containers, handling equipment and specialized transportation therefor."

It will have six members, three to be designated by the Chief of Staff, Army, the Chief of Naval Operations, and the Chief of Staff, Air Force, respectively, the three others being the Quartermaster General of the Army, the Chief of the Bureau of Supplies and Accounts of the Navy, and the Director of Maintenance, Supplies, and Services of the Air Force. The Board will select one of its members as chairman for a 1-year term, and the chairmanship will be rotated among the three services.

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The Purchasing Agency will have three members-the Quartermaster General, the Chief of the Bureau of Supplies and Accounts, and the Director of Maintenance, Supplies, and Services-each of whom will serve in turn as chairman for a period of 2 years.

Both the Board and the Purchasing Agency are directed to select an executive officer, the jobs to be rotated among the three services, with 2-year terms.

The Board will have a dual responsibility-to the Secretaries of the three departments for interservice planning and coordination, and for such duties as may be required of it by the Munitions Board, the Joint Chiefs of Staff, or the Research and Development Board as these agencies exercise their statutory funcLos for the Secretary of Defense.

The texts of the charters creating the two organizations and fixing their authority and responsibility are attached.

CHARTER FOR THE ARMED SERVICES PETROLEUM BOARD

1. The Army-Navy Petroleum Board is hereby reconstituted as the Armed Services Petroleum Board, with planning and coordinating responsibilities as bereinafter set forth relating to petroleum, petroleum products, containers, Landling equipment, and specialized transportation therefor, hereinafter referred o as petroleum items.

2. The Armed Services Petroleum Board is hereby established as a joint board of the Departments of the Army, the Navy, and the Air Force, the members of which will act as representatives of the Secretaries of these Departments. Necessary authority is delegated to the Board to issue decisions and directives on maters within its jurisdiction.

3. The Armed Services Petroleum Board is charged with a dual responsibility. It shall be responsible to the Secretaries of the Army, the Navy, and the Air Force for interservice planning and coordination of effort in the field of petroleum Jems as defined in paragraph 1 above; and it shall be responsible for making recommendations to and performing such services, duties, and functions in petromatters as may be required of it by the Munitions Board, the Joint Chiefs of Staff, and the Research and Development Board as they exercise their reSective statutory functions for the Secretary of Defense.

4. The Petroleum Board shall consist of six members. Three of the members will respectively represent and be designated by the Chief of Staff, Army, the Chief of Naval Operations, and the Chief of Staff, Air Force. The other three embers shall be the Quartermaster General of the Army, the Chief of the Bureau of Supplies and Accounts of the Navy, and the Director of Maintenance, Supplies, and Services of the Air Force, but these latter three shall have authority to designate alternates, if desired. The Petroleum Board shall select a chairman for a term of 1 year from its members on a rotation basis among the three ervices.

5. The Petroleum Board shall select from the three services in rotation an cutive officer who shall serve for a term of 2 years unless relieved of duty at the discretion of the Board. The executive officer shall act as recorder of the Bard and shall, under the direction of the Board, sign correspondence, reports, terminations, and orders for and in the name of the Petroleum Board, supervise the personnel, records, and facilities of the Board, and, in general, conduct the siness of the Board and perform such other duties as may be assigned by the Board.

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6. The Armed Services Petroleum Board shall be responsible for its own internal regulation and administration, including supervision of its personnel, control of its records, space, and facilities, and determination of its budgeting. staff space, and facilities requirements, which shall be met by the Departments of the Army. Navy. and Air Force on such basis as may be agreed between them.

CHARTER FOR THE ARMED SERVICES PETROLEUM PURCHASING AGENCY

1. An Armed Services Petroleum Purchasing Agency is hereby established as a joint agency of the Departments of the Army, the Navy, and the Air Force and shall be responsible for all purchase functions relating to petroleum, and petroleum products hereinafter referred to as petroleum items, and such other items as may be assigned from time to time.

2. The Petroleum Purchasing Agency shall consist of the Quartermaster General of the Army, the Chief of the Bureau of Supplies and Accounts of the Navy, and the Director of Maintenance Supplies and Services of the United States Air Force, each of whom shall serve successively as chairman for a 2-year term. 3. The Petroleum Purchasing Agency shall select from the three services in rotation an executive officer who shall serve for a term of 2 years unless relieved of duty at the discretion of the Petroleum Purchasing Agency. The executive officer of the Petroleum Purchasing Agency, under the direction of the Agency. shall supervise its personnel, records, and facilities; sign and execute for, and in the name of, the Agency correspondence reports, determinations, contracts and orders, and all other necessary papers; and shall, in general, conduct the business of the Agency and perform such other services as may be assigned by the Agency. The authority of the executive officer may be delegated to personnel of the Agency.

4. The budgetary, staff, space, and facilities requirements of the Agency shall met by the Departments of the Army, Navy, and Air Force on such basis as may be agreed upon between them.

5. The Petroleum Purchasing Agency, within the limits of allotments of appropriations made available for such purpose by each of the Departments of the Army, Navy, and Air Force and in accordance with requirements established by the Departments and priorities established for each Department by the Petroleum Board under the guidance of the Joint Chiefs of Staff, shall have the responsi bility for the purchase of petroleum items for each Department, and for such purpose shall consolidate the established requirements of the three Departments: shall solicit and analyze bids, negotiate, award, execute, and administer con tracts, including claims thereunder; shall make determinations required there for; shall obtain all necessary clearances in connection therewith; shall maintain records thereof; shall supervise the performance of contracts and for this purposé shall arrange for inspections and utilize such laboratory and inspection facilities and services of the Departments as may be made available therefor; shall con solidate transportation requirements and arrange for delivery to storage and use installations through the appropriate office of the Department involved in trans portation, without. however, having any responsibility for operational control of transportation facilities; shall coordinate joint bulk storage by the three Depart ments; and shall certify vouchers for payment by the disbursing officers of the three Departments.

6. The Petroleum Purchasing Agency shall establish its own purchase and contract forms, subject to the approval of the Munitions Board. It shall also establish its own policies, procedures, and regulations, in accordance with applica ble limitations of law and wherever practicable in conformity with established policies, procedures, and regulations.

7. The Petroleum Purchasing Agency shall advise the three Departments with reference to the scheduling of their petroleum item requirements.

8. The Petroleum Purchasing Agency shall render such information, reports and recommendations as may be requested or desirable to cognizant agencies in the National Military Establishment in connection with matters arising in the course of procurement of petroleum items, such as short supply, changes in speci fications and procurement regulations, practices and forms, improvements in stor age, distribution and transportation facilities, and imbalances between purchases transportation, and storage.

9. The responsibility for the administration of pending procurement of petroleum items heretofore initiated by the service or by the Joint Army-Navy Petroleum Purchasing Agency is hereby transferred to the Petroleum Purchasing Agency.

PETROLEUM FOR NATIONAL DEFENSE

TUESDAY, JANUARY 20, 1948

HOUSE OF REPRESENTATIVES,
SPECIAL SUBCOMMITTEE ON PETROLEUM,

COMMITTEE ON ARMED SERVICES,
Washington, D. C.

The subcommittee met, at 10 a. m. Hon. Dewey Short (chairman of Special Subcommittee on Petroleum) presiding.

Mr. SHORT. The committee will be in order.

We have with us today a man who perhaps knows as much about oil and gas, the whole petroleum industry, and the world petroleum situation, from the statistical standpoint, as any individual alive, Mr. Max Ball, who is chief of the Oil and Gas Division of the Department of the Interior.

Mr. Ball, will you take the chair there, and tell us in your own way and words anything that is on your mind. What we would like to have is a comprehensive and clear picture of this whole situation.

You were present yesterday and heard Mr. Forrestal, and also heard the opening statement of the chairman, and you are aware that we are not on any witch hunt. This is not so much an investigation as it is a study and a survey to find out what the facts are, and I know that your presentatiton will be more factual than controversial.

However, members of the committee will want to ask you, no doubt, many questions once you have finished your general statement. But you can feel free to take all the time you care to.

Mr. COLE. Mr. Chairman-not for the record.
(Remarks of Mr. Cole made outside the record.)

Mr. SHORT. And, Mr. Ball, for my own benefit, and for others, too, though we know you by reputation, we would like for you to give us a little about your background. Don't be too modest. Tell us who you are, what your present position is, and something of your background.

Mr. COLE. Mr. Ball, I think we would like to have some indication of the number of times you have testified before Congress on this subject. The number of times you have appeared before congressional Committees would indicate the importance of the subject matter. That is one reason I raise the question.

Mr. BALL. May I check up on that, Mr. Cole?

Mr. COLE. It doesn't have to be exact. Is it five, ten, or fifty times? Mr. BALL. I would say it exceeds a dozen times.

Mr. COLE. In the last year?

Mr. BALL. Within the last year, yes.

Mr. SHORT. Before both Senate and House committees?

Mr. BALL. Before both Senate and House committees, yes.

Mr. SHORT. Tell us a little about yourself, your training, education, and experience.

STATEMENT BY MAX W. BALL, DIRECTOR, OIL AND GAS DIVISION, DEPARTMENT OF THE INTERIOR

Mr. BALL. I graduated from Colorado School of Mines in 1906, with the degree of Engineer of Mines. Later, while I was working in Washington I went to National Law School and received my Bachelor of Laws and Master of Laws degrees from National University, in 1914. After graduating from Colorado School of Mines and serving a short time in Deputy Mineral Surveying in Colorado, I went with the United States Geological Survey as a field assistant, and was with the Geological Survey until April of 1916, starting as a field assistant and becoming successively geologic aid, assistant geologist, geologist, and for the last 5 years that I was with the Survey chairman of the Oil Board. From April 1916, until June 1917, I was engineer and law officer with the United States Bureau of Mines. In June 1917 I went with the Royal Dutch Shell group of oil companies and for 4 years had charge of their Rocky Mountain exploration work. In 1921 I left the Shell-the first of May 1921-and became president of a group of oil companies affiliated with Standard Oil Co. of Indiana. Those were both producing and pipe-line companies. I was with those companies until November 1928 when I left the Standard of Indiana and its affiliates and went into consulting practice. I have been in consulting practice as petroleum geologist and engineer since that time, except for such time as I have been in Government service. That consulting work has taken me pretty well over the United States, in both oil and gas maters. I have devoted a great deal of special study to underground storage of gas, for one thing, and I spent most of about 10 or 12 years in attempting to develop the oil sands-the so-called tar sands of the Athabaska region in Canada. From October 1944 until the middle of December 1945 I was a special assistant to the Deputy Petroleum Administrator in the Petroleum Administration for War. I then went back into consulting practice until I was named to my present position as Director of the Oil and Gas Division, which I have held since December 23, 1946-about 13 months.

The Oil and Gas Division, as you probably know, is a Division of the Office of the Secretary of the Interior, which is charged by a letter from the President with the duty of coordinating on a purely advisory basis the petroleum activities of the various agencies of the United States Government which have to do with oil and gas, and with the further duty of serving as the Government's channel of communication with the petroleum industry and its liaison agency with the appropriate State bodies.

That, I think, brings me down to date.

Now, I have thought that the presentation you would most like to have from me would be a discussion of the short-term situation, the present acute situation with respect to petroleum, and then something of the long-term situation.

I don't need to tell the members of this committee that we are in a very acute situation with respect to supplies of petroleum products. The problem is a problem of increased demand and not of decreased supply. Basically, we are faced with the fact that the instrument of consumption can be manufactured and put into use much more quickly than the instrument of production. It is much quicker to make an oil

burner or an automobile, or even a Diesel locomotive, than to drill oil wells, build pipe lines, build tankers, or expand refining capacity. That increase in consumption is shown most graphically, it seems to me, by the fact that we have increased not only in total consumption but have increased very markedly in consumption per capital. În 1938, the last year before the start of World War II, the average per capita consumption of petroleum products in the United States was 367 gallons. In 1947, it was 608 gallons. That is an increase of 63 percent in consumption per capita from 1938 to 1947. That 608 gallons per capita translated into understandable terms, is 14 of the big 42-gallon steel drums in which petroleum products are shipped, with four 5-gallon cans left over, for every man, woman, and child in the United States.

Consumption is higher than it was at the peak of the war. Consumption in the United States is greater than that of the entire world in

1938.

I should like to introduce into the record a table showing demand for petroleum products in the United States by years from 1934 through 1947. And I may say, Mr. Chairman, that with your permission. I will introduce a number of tables in the record, without going through all the detail of the tables.

(The tables are as follows:)

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TABLE 1.-Total United States demand for petroleum products

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Mr. SHORT. We will be very happy to have them, Mr. Ball.
Are you going to tell us something of the anticipated demands?
Mr. BALL. Before I am through, yes, when we get to the longer look.
Mr. SHORT. All right. Say, 1950 or 1960.

Mr. BALL. Yes, when we get to the longer look I will be discussing

that.

Mr. SHORT. All right.

Mr. BALL. Another significant thing is that in 1946 oil and gas became the principal source of energy in the United States. Always theretofore coal had been the principal source of energy, but in 1946 oil and gas supplied more of the energy of the United States than coal. From 1935 to 1946 the total energy supplied by coal in the United States increased 36 percent, while that supplied by oil and gas increased 96 percent.

Mr. JOHNSON of California. Will you repeat that statement, please?

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