East, the whole calculation of requirements and availabilities for western Europe will have to be reviewed.

I would like to add one more thing, Mr. Chairman. This extraordinary change in the source of petroleum and petroleum products from one part of the world to another indicates, if it does not conclusively demonstrate, on this score alone, the extraordinary significance to the United States of doing what it can reasonably and properly do to aid the western European countries to regain vitality and vigor and to recuperate their commercial and political health, thus contributing to the preservation, at least, of the second largest oil importing area of the world. If anything should happen to western Europe, it is most unlikely that we could rely with any assurance upon the Middle East as a certain source of supply of one of the most critical and important sources of fuel and energy.

The CHAIRMAN. Any questions, gentlemen?

Mr. HESELTON. Mr. Ambassador, how recently have you returned from England?

Ambassador DOUGLAS. I arrived back from England on the 19th of December.

Mr. HESELTON. I assume you have kept in close touch with the situation over there since?

Ambassador DOUGLAS. As well as I could.

Mr. HESELTON. I have a reason for asking that question and it is not to embarrass you in any sense.

We have been much interested in the program announced in early January as to the exports of certain kinds of oil to various countries overseas for the first 3 months of this calender year. I am not sure whether you are familiar with the announced program on January 16, I believe it was?

Ambassador DOUGLAS. No; I was not here in Washington at that

time.

Mr. HESELTON. I think I am accurate on this and I would like to go over these figures with you.

On kerosene it was announced that we proposed to allocate for exportation 130,000 barrels to the United Kingdom. As of February 4 that was reduced to 85,000 barrels, a reduction of 50,000 barrels or 38 percent.

Now, kerosene, it has been indicated this morning, is in short supply in certain areas in this country.

Ambassador DOUGLAS. Yes.

Mr. HESELTON. It is in short supply in Massachusetts and extremely short in the Boston area.

Again, on February 3 there was announced an additional restriction which was placed on exportation of any of these short fuels from the shortage areas.

Ambassador DOUGLAS. Yes.

Mr. HESELTON. Have you any comment as to what result you think that would have on the economy of the United Kingdom during the next two months?

Ambassador DOUGLAS. Well, I think it is fair to say that a reduction of available supplies for any area, whether it be the United Kingdom

Mr. HESELTON. I am sorry, but I did not catch that.

Ambassador DOUGLAS. I think it is fair to say that a reduction of supply below the requirements for any area, whether it be the United Kingdom or whether it be Massachusetts, will have an adverse affect. Mr. HESELTON. Do you have any knowledge as to whether the United Kingdom has been able to build up a stock pile of kerosene which may help them to carry through to the end of their heating

season?

Ambassador DOUGLAS. I am sorry, sir, I cannot answer that question.

Mr. HESELTON. Is there any rationing of kerosene in England? Ambassador DOUGLAS. I think so, sir. I will have to look that up and let you know definitely.

Mr. HESELTON. Turning to another phase of it, do you have any information as to the historical supply of kerosene from this country to England?

Ambassador DOUGLAS. I am sorry, sir, I have not studied that. I have been plunged very suddenly into some of the details of this petroleum picture and I have not had an opportunity to study each one of the petroleum products. I will look it up and give you an answer for insertion in the record if you would like to have it.

Mr. HESELTON. In your opinion, is the 5-year period from 1934 to 1938, inclusive, a fair prewar period to use as a standard? Did you catch that?

Ambassador DOUGLAS. No; I am sorry.

Mr. HESELTON. I have been trying to establish what I thought was a fair prewar period. First I took 1935 to 1940. My attention was called to the fact that the invasion of Poland occurred in 1939 and the dislocation was obvious in all parts of Europe from then on, so I shifted my base from that to 1934-38, inclusive, as a fair historical standard.

In your judgment is that a fair period over which we might average our exports to the end users and other countries and then compare it with our projected program for this year?

Ambassador DOUGLAS. Well, I would be inclined to think that might be establishing a wrong standard, because there has been, as the result of technological and other developments, a change in demand for most of the petroleum products.

Mr. HESELTON. Is not that increase somewhat comparable to our own increases here?

Ambassador DOUGLAS. To some extent, yes.

Mr. HESELTON. So that if one parallels the other it would not be out of line?

Ambassador DOUGLAS. That may or may not be so.

Mr. HESELTON. What I am interested in

It

Ambassador DOUGLAS (interposing). That might be, I think, a fair plan, perhaps, although I do not know the figures well enough. might well be too generous a standard.

Mr. HESELTON. If we use 1934 to 1938?

Ambassador DOUGLAS. 1934 to 1938 and then apply the same percentage increase to western European countries that we apply to our own, because the increase in demand percentage wise in the European countries is not as great as it is in the United States.

Mr. HESELTON. So that if we used that base as one I think of as a fair base period and then applied it to the percentage increase in this country, certainly we are being fair?

Ambassador DOUGLAS. I should think so, sir.

Mr. HESELTON. Now, my second question relates to gas oil and fuel oil.

Ambassador DOUGLAS. I should like to study it a little bit and give you a more considered answer.

Mr. HESELTON. I understand that.

Ambassador DOUGLAS. Than the one I am now giving off the cuff. Mr. HESELTON. I am just asking you, or anyone, who may be able to help us consider these questions, so that we may reach the wisest possible conclusion.

Ambasador DOUGLAS. Yes.

Mr. HESELTON. Then, of gas oil and distillate fuel oils, we proposed in January, to export 1,200,000 barrels. That was reduced by 200,000 barrels or 16 percent with your knowledge of their use of that product in the United Kingdom, as of the time you left and on the historical basis, have you any comments as to how that reduction might affect the economy of the United Kingdom?

Ambassador DOUGLAS. Well, it will have an adverse effect upon the economy of the United Kingdom; but the problem is one of measuring the adverse effects in one area as compared to the adverse effects in another area and of choosing between the two forms of sin. Mr. HESELTON. Or two results of sin?

Ambassador DOUGLAS. That is right.

Mr. HESELTON. Well, Mr. Ambassador, I have in mind this Ambassador DOUGLAS (continuing). I am not trying to avoid an

answer.

Mr. HESELTON. I should put in right here, I think you and everyone else agree, or nearly everyone else agrees, that we ought to do the things you have so eloquently advocated this morning, and I share your point of view as to the objectives, but we must also keep in mind that we must maintain a high production level in this country. Ambassador DOUGLAS. Yes.

Mr. HESELTON. We must not jeopardize the health of the people of this country, certainly, even though we must accept a certain amount of discomfort. I refer to those who must keep industries operating.

Two hundred thousand people are out of work at Detroit, apparently still out; 15,000 are out in and around the steel area in Pittsburgh and unknown numbers are out in other parts of the industrial East and Northeast.

So, is it not to our advantage to address ourselves as far as possible to curing the evils of our sins or the results of the sins in this country, in order that we may do these things which will help the other countries?

Ambassador DOUGLAS. It is certainly very important, Mr. Congressman.

Mr. HESELTON. On residual fuel oils, 300,000 announced on January 16, and that has been entirely wiped out on February 4. No residual fuel oils are now to be exported under the revision. That is a 100-percent reduction.

Now, I do not have any doubt that you have the same general mment as to that?

Ambassador DOUGLAS. That is right.

Mr. HESELTON. I do not want you to answer this question unless you feel it is within your province. Have you had occasion to study the various proposals pending before this committee with reference to fuel embargoes. I am sure that you have not studied the ones that I shall file on Monday. They provide fuel embargoes of 15 days, 30 days, and 60 days. Previously, I filed a bill limiting the embargo in terms of striking the target, with certain exceptions for the military, aimed at reaching the target of 50-percent reduction similar to the voluntary agreement with Canada. A bulletin has been issued which I believe indicates they have carried that voluntary agreement through February, March, and April. Another bill provides for limiting embargo based first on 50 percent, such as with Canada, having in mind only those countries where historically, 1934 to 1938, we did supply them; and a full embargo where there is no way to prove that we historically supplied them?

Now, that is a pretty broad field. Perhaps you are not willing to endorse any of it. Possibly you would be willing to recommend one of them. I would be glad to have your support on one of them, if you felt that one was preferable to the other or if you felt that all of them were poor but one was the least evil.

Can you express an opinion on that this morning?

The CHAIRMAN. I would suggest to the witness, in view of the lenient attitude that you assume this morning, probably this would be a good time for us to accept one of your proposals.

Mr. HESELTON. I would like to have you consider it.

Ambassador DOUGLAS. It is a broad question and I have been plunged into this very suddenly, and I am not therefore as well equipped as I should be to give a categorical answer that would mean anything.

Mr. HESELTON. We have no session today. I imagine that you are fully occupied but if you will consider it and you felt that you could support one, I would be glad to have you say so. If you could select one of those and could support it, even though you qualified your support, I would be very happy to have it.

Ambassador DOUGLAS. Thank you, sir.

The CHAIRMAN. Any further question?
Mr. HALL. Mr. Chairman.

The CHAIRMAN. Mr. Hall.

Mr. HALL. Mr. Ambassador, perhaps it is in this record somewhere during these hearings, but I do not have any recollection of it, by taking the oil reserves at 100 percent, could you give us percentagewise, the areas of those sources for instance?

We had testimony yesterday that about 45 percent was in Saudi Arabia. Now, could you break it down percentagewise and give us the sources of oil supplies in the world?

Ambassador DOUGLAS. Well, I can give you an analysis of the source of oil supplies by general areas. I doubt that I could do it as between Saudi Arabia

Mr. HALL. That is all right; generally.

Ambassador DOUGLAS. And Iraq.

Mr. HARRIS. I think that is shown on page G-16 of this commodity report.

Ambassador DOUGLAS. G-16 shows a table.

Mr. HALL. If it is shown in that table, that is all right.

Ambassador DOUGLAS. That is a table to which I referred in summary before.

The production in 1947 of crude oil in the Western Hemisphere was 332,000,000 tons, of which 253,000,000 tons were produced in the United States, and the balance of 79,000,000 tons principally in the Caribbean.

The Middle East in 1947 produced, as you see, 44,000,000 metric tons. The U. S. S. R. produced 26,000,000 tons; the Far East 3,000,000 tons; Europe 6,000,000 tons; resulting in a world total of 411,000,000 metric tons.

Mr. HALL. So, looking at that roughly, the Soviet Union has a source of production amounting to about 10 percent, is that right, for 1947?

Ambassador DOUGLAS. Well, it is about 5 percent.

Mr. HALL. Five percent. Yes; I was looking at the wrong figure. Ambassador DOUGLAS. But that table is a very interesting table, because it discloses quite clearly the extraordinary increase in production in the Middle East, percentagewise, and the relatively constant production in the Western Hemisphere.

Mr. HALL. Can you enlighten us on the reason for the decrease in production in the Soviet Union?

Ambassador DOUGLAS. For the increased production?
Mr. HALL. Let me see.

Ambassador DOUGLAS. There is a decrease in comparison to 1938 but by 1951 it is calculated that the production will increase. Mr. HALL. From 1938 to 1947 it dropped 4 percent.

Ambassador DOUGLAS. Dropped 4,000,000 metric tons; that is right. I do not know what the cause of that was, sir. The CHAIRMAN. Are there any further questions?

Mr. HARRIS. Mr. Chairman.

The CHAIRMAN. Mr. Harris.

Mr. HARRIS. I notice here, in further reference to the table, you were referring to the proven reserves in Russia as 1,000,000.000 metric tons.

Ambassador DOUGLAS. Yes.

Mr. HARRIS. Is that rather authentic or is that purely a guess? Ambassador DOUGLAS. Mr. Levy tells me that this estimate has been derived from an estimate of a Soviet geologist as of 1937. So I presume that the figure is not now very reliable.

Mr. HARRIS. 1937?

Ambassador DOUGLAS. Yes.

The CHAIRMAN. I would be inclined to think, if you will pardon me, that we maybe could put greater reliability on the statement made in 1937 than we could at the present.

Ambassador DOUGLAS. Yes.

Mr. BULWINKLE. That may be an underestimate.

Mr. HARRIS. Mr. Ambassador, do you have any estimates on the coal reserves in the European countries participating in the recovery program?

Ambassador DOUGLAS. Coal reserves?

Mr. HARRIS. Yes.

Ambassador DOUGLAS. In Great Britain the coal reserves are very large. It is calculated

Mr. HARRIS. They might be what you term an unlimited supply?