transaction so we can see in front of us just how the operation works; that is, the initial request that came in; what action was taken on it; what statement was made to the Department of Commerce; what review was undertaken; and how they came up with this reduction of the 95 percent of the quota announced in Japan. That is the thing we want to know.

Colonel VOGEL. Yes, sir; I can get that.

(The information submitted by Colonel Vogel is as follows:).

EXPORT ALLOCATIONS OF PETROLEUM BY THE DEPARTMENT OF COMMERCE In October 1947 the Office of International Trade requested the Civil Affairs Division of the Department of the Army to furnish quantities of all items on the Department of Commerce "positive list" which were scheduled for shipment to any occupied area for the civilian economy during the first quarter of 1948.

Theater commanders were furnished copies of the positive list, which comprises items for which the Department of Commerce requires an export license before shipment from the United States. The theaters then cabled their positive-list items to Civil Affairs Division which forwarded a copy of the cablegram to the Department of Commerce.

The cable from the European theater correctly stated that petroleum products were furnished from military stocks. However, the cable from Japan included all petroleum requirements for Japan and the Ryukyus without regard to source of shipment. The Civil Affairs Division of the Department of the Army did not request allocations from the Department of Commerce although it is now evident that the Office of International Trade made use of the cable to set up a petroleum allocation for Japan and the Ryukyus.

On January 28, 1948, a meeting of the review committee was held to discuss reductions in the foreign petroleum allocations for the first quarter of 1948. In addition to the regular committee membership comprising representatives from the Munitions Board, Departments of Commerce, State, Interior, and Agriculture, Office of Defense Transportation and Federal Housing, representatives were present from the Army-Navy Petroleum Board and the Office of the Under Secretary of the Army. It was explained at this meeting by the representatives of the Office of the Under Secretary of the Army that the petroleum requirements for occupied areas were actually military requirements and as such were not subject to allocation by the Department of Commerce. This view was concurred in by the representative of the Department of the Interior, who stated that an accurate break-down of requirements for the occupied areas could not be made until after withdrawals have been made in the theater.

It was brought out that the first-quarter requirements which were erroneously included in the Department of Commerce allocation schedule included shipments originating outside the United States. Of the 1,600,000 barrels of Diesel oil listed, it was stated that most of this quantity would originate in the Persian Gulf area. For all shipments, both for direct military use and for the occupied areas, approximately 20 percent are for the latter, and by applying this factor to actual anticipated shipments of Diesel oil from the west coast of the United States during the first quarter amounting to 457,000 barrels, it was estimated that approximately 100,000 barrels were the share destined for occupied areas.

However, no actual shipping schedules to Japan have been changed, as the cut in announced quota represents only a correction in tonnage previously reported by the Pacific theater to the Department of Commerce in order to take account of the source of shipment.

Mr. HESELTON. That brings up another question. I want that absolutely clear. You say, do you not, that Commerce has absolutely no control over these allocations to Japan and the Ryukyus. They did approve what the military down there told them to do?

Colonel VOGEL. That is correct.

Mr. HESELTON. Well then Commerce overstepped its authority, let us say, to put it mildly, when they announced a quota without having satisfied themselves that you had a firm commitment on that one particular point.

Colonel VOGEL. I could not say whether they overstepped their authority or not. That procedure is a little bit beyond me.

Mr. HESELTON. As a matter of fact when we look these tables over and see these total amounts of various kinds of oil going out of this country, do we have the absolute limit on the exports to be exported either by authority of the civilian or the military authorities?

Colonel VOGEL. We have budgetary figures that were set up and we have the actual supply that is being furnished, and we have information on how they are controlling that civilian supply on the other end.

Mr. HESELTON. In other words, we can rest assured that these figures now given to us are the limit and there will be no exports authorized by the military to Germany, to Greece, Japan, or any other area over and above the amount that is set forth here during the first quarter?

Colonel VOGEL. That is all they can pay for. That is all that we will furnish them.

Mr. HESELTON. That brings me to my last point, and if this is confidential, let me know: Does the military control the purchase of the items that they are securing for export?

Colonel VOGEL. The military does control the purchase of those items.

Mr. HESELTON. Is there available information as to the source, the seller, and the location from which the various types of oil are drawn? Colonel VOGEL. You are speaking now of United States?

Mr. HESELTON. Let us talk about the continental United States first.

Colonel VOGel. No.

Mr. HESELTON. No information available anywhere on that?

Colonel VOGEL. We cannot give you the specific people who sell, but we do have information on the quantities, the over-all for all military and civilian programs overseas that we are drawing from the United States.

Mr. HESELTON. You require bids, do you not, on that sort of thing? Colonel VOGEL. That is true, but the civil affairs supplies are handled under Army money. In other words, the civil affairs officer in Japan knows the amount of money that he has set up for the barrelage that he requires, and he submits the barrelage requirement once a month, through his area petroleum officer to the Army and Navy Petroleum Board who then transmit that request to the Department of the Army which buys the quantity of fuel to satisfy their program.

Mr. HESELTON. Their fuel program?

Colonel VOGEL. Their program; and the shipment is then set up by the Army-Navy Petroleum Board to meet that slated requirement within the time limit as it is set up.

Mr. HESELTON. I am addressing myself solely to the question of sellers, locations from which the supplies are drawn, and I want to, if I may, bring out the question of price, because that is of real interest

to us.

You say you have no information available as to who sold? Colonel VOGEL. We cannot break that down for the services; no. Mr. HESELTON. You cannot?

Colonel VOGEL. No.

Mr. HESELTON. You cannot break it down for locations?

Colonel VOGEL. We can break it down by general locations and exclusively to the United States. That is all.

Mr. HESELTON. You mean entirely within the borders of the continental United States?

Colonel VOGEL. That is correct.

Mr. HESELTON. Then you could also indicate the Western Hemisphere beyond that?

Colonel VOGEL. How much we were furnishing say to Japan from the Mid East for our total requirements?

Mr. HESELTON. From Venezuela, Colombia, or some other location. Colonel VOGEL. That is correct.

Mr. HESELTON. How much are you furnishing to any of these countries from the Middle East or from any other place or Pacific source, you could show that?

Colonel VOGEL. That is right.

Mr. HESELTON. Is it fair to state that one of the reasons is that the military administration made no effort or gave no consideration to the possibility of supplying this quota for Japan and the Ryukyus from their traditional historical sources in the Pacific, on a shorter haul than we would be obliged to undertake?

Colonel VOGEL. I do not quite get the question.

Mr. HESELTON. Is it fair to state that one of the reasons for this very substantial reduction may have been that it was realized that we could supply the Japanese and Ryukyus requests from sources outside of the United States over in the Pacific somewhere?

Colonel VOGEL. We have been supplying Japan and the Ryukyus, militarywise, including civil, from the Persian Gulf to the maximum limit of the Persian Gulf to supply, the remaining supplies have come from the continental United States.

Mr. HESELTON. When you say the continental United States, you do not include South Amerca or Mexico or the Mediterranean?

Colonel VOGEL. No. We may at times ship a cargo of Arabian oil to the Pacific; not often.

Mr. HESELTON. I am interested more in the distillate fuels and kerosene.

Mr. MILLER. Will the gentleman yield at that point?

Mr. HESELTON. Certainly.

Mr. MILLER. I wonder about this 100,000-barrel figure, where no allocation was set forth for Japan, if that means that 100,000 barrels will be shipped from the United States, or does that mean that that is all that they use? Can they buy elsewhere?

Colonel VOGEL. So far as we have any indication they are getting their fuel program in Japan through the slate that is submitted to the Army and Navy Petroleum Board. They are furnished that from the Middle East and from the west coast of the United States-as much as possible from the Middle East-and the remainder from the west coast.

Mr. HESELTON. Of course, we are handicapped because we cannot get this information at this moment, but I do want to make the further suggestion that some consideration be given to the historical set-up of supplies to Japan and supplies to Europe.

Colonel VOGEL. Historically?

Mr. HESELTON. In the terms of your final determinations of how much we shall draw off from our own continental shores. In that connection, Captain, I think it might be interesting to us and per

haps valuable to the Navy, if we would look into the possibility of drawing some supplies from other areas than the United States, in terms of overseas operations of the Navy. If you have done that, it is commendable. If you have not done it, that might furnish another piece of relief.

Captain WILSON. It has been the Navy Department's policy ever since the war to obtain all the oil from foreign sources we could obtain. Mr. HESELTON. I see.

Captain WILSON. That is just standard accepted policy and we obtain everything from the Persian Gulf we can buy from American

sources.

Now, there are certain products not available in the Near East, such as eviation gasoline.

Mr. HESELTON. I think it is very encouraging to us to have a statement of that kind from the Navy as to what they have done. That removes any doubts about their policy.

What about the price situation? You do bid or offer for bids everything that you buy. That is a standard practice?

Colonel VOGEL. That is correct. There is still negotiation as to the type of bidding, but that is the standard practice.

Mr. HESELTON. Negotiation as to the type?

Colonel VOGEL. Yes.

Mr. HESELTON. Again, anything that I say that you do not want on the record, let me know.

Are you buying above the market price in any instances the current market price?

Colonel VOGEL. No, sir.

Mr. HESELTON. You are staying on the market price?

Colonel VOGEL. Market price or below.

Except as to the escalator clause. There, of course, that is subject to movement with the price of crude and in certain instances that might be questioned as to exactly what the market price is.

Mr. HESELTON. But you do try, I suppose, to stay within the market price as much as you can.

Colonel VOGEL. We certainly are not buying fuel at any premium. Mr. HESELTON. That is the point.

Colonel VOGEL. To take it out of anyone else's hands.

Mr. HESELTON. Or to lift the price also, which would have the inevitable effect of increasing the price.

Colonel VOGEL. That is correct.

Mr. HESELTON. I understood you to say that you had some data as to these military shipments available somewhere.

Colonel VOGEL. Speaking in general terms, we are drawing 99,000 barrels a day of our total requirements from offshore.

Mr. HESELTON. From offshore?

Colonel VOGEL. Yes, sir; 60,000 barrels a day, approximately, from the Persian Gulf and 39,000 barrels a day coming from the Aruba area. Mr. HESELTON. And can you furnish accurate information as to that, for the record of these hearings? Those are approximate figures, I understand.

Colonel VOGEL. Those are effective as of today.

Mr. HESELTON. And historically-as of the past, not as of the future, as you see it. There may be a change in the pattern in terms of the program now.

Colonel VOGEL. That change in program may come with the shutdown of Middle East refineries.

Mr. HESELTON. Exactly; that is just what I had in mind.

One final question-if someone else wants to take over, then yield to me later, I will be glad to have them do so. I have one more question that I want to ask before you leave us.

I am sorry, Mr. Chairman, I do not find the question at the moment. Mr. HARRIS. Mr. Chairman.

The CHAIRMAN. Mr. Harris.

Mr. HARRIS. Colonel Vogel, how long have you been with the Military Establishment?

Colonel VOGEL. Twenty-eight years, plus two years at the Military Academy.

Mr. HARRIS. You are a Regular Army career man?

Colonel VOGEL. Yes, sir.

Mr. HARRIS. Your experience in the oil business has been limited to military service?

Colonel VOGEL. That is correct.

Mr. HARRIS. Have you ever had any experience with the industry in connection with your service?

Colonel VOGEL. From 1930 until 1942 I was very intimately connected with the design and purchase of motor vehicles and motor vehicle requirements for the Army and in that capacity I had quite a bit of information that led me a long time ago not to change my oil too often and to use a lower grade of gasoline during that period. Mr. HARRIS. Then your experience in the oil industry has been limited?

Colonel VOGEL. If you would care to have me, I will review just briefly what my military experience in oil has been.

Mr. HARRIS. I believe, Mr. Chairman, it would be helpful information.

Colonel VOGEL. During the period that I was working with motor transport I was sent to the University of Michigan and completed my master's degree up there, specializing on automotive engineering, and continued in automotive work until I went to England in 1942 as Chief of Motor Transport Section under the Transportation Division at that time. The thinking on fuel in the service was very inadequately organized so far as the volume of supply, and as we had vehicles, motor vehicles, under our particular control in England, it was decided that the Motor Transport Division would become in effect the planner for fuel distribution.

Motor Transport was separated into three elements.

Then later in 1942-and I was made at that time deputy to General Lea, as area petroleum officer in England, and continued in that capacity until December 31, 1942.

In December of 1942 I was sent to Africa and was made area petroleum officer in General Eisenhower's headquarters in Algiers, where I had the full coordinating responsibility, within the Mediterranean, for all military and civilian oil. I remained in this position until VJ-day.

After VJ-day, I returned to the Army-Navy Petroleum Board where I have been deputy executive officer and executive officer since that time.

Mr. HARRIS. Thank you.