The Lamp, as you doubtless know, is a publication of the Standard Oil Co. of New Jersey, 30 Rockefeller Plaza, New York.

This is the January number and its contents consist of an article. entitled "A Better Day for Venezuela."

Then it says [reading]:

Through the Venezuela Basic Economy Corp., the oil industry is helping the Government to raise the standard of living.

Then we have an article that seems to be an article on adventure about the swamp shooters with several photographs. Then, an article, France: A Land in Need of Oil, in which it says [reading]:

Insufficient imports cause widespread hardships and delay economic recovery. Then, there is an article on Chemistry's Secret Agents, and one on fighting snow.

Then, there is a two-page spread on "Saving Fuel Oil Is a Job for Everyone," which I think is very commendable.

And then there is one entitled "Oil-Hungry Europeans Seek Added Production" and a part of the spread about conserving oil.

There is nothing in the issue which suggests the serious shortage in this country.

On the last page there is a short paragraph in which it is stated [reading]:

1948 UNITED STATES OIL NEEDS FORECAST

Total United States petroleum demands in 1948 will be about 6.2 million barrels a day, or nearly 6 percent higher than in 1947, according to a forecast made by the Interstate Oil Compact Commission.

In 1947 the industry was able to meet demands 10 percent higher than in 1946 by means of unusual efforts. Continuation of such efforts, the commission believes, will enable the industry to meet the expected increase of 6 percent in 1948, though "this does not preclude the possibility of temporary lack of adequate supplies to meet peak seasonal demands for some products in some localities because of transportation shortages, particularly this winter when unusual weather conditions may create supply difficulties."

That seems to me a remarkable understatement of the existing situation in the Northern States indicating a remarkable lack of realization of a true situation.

Mr. FOSTER. I have not seen that magazine, Mr. Hale.

Mr. HALE. Well, I can understand, and please understand that I do not conceive that this statement in the magazine or these statements are binding on the Department of Commerce in any way; but I just comment on the fact that the industry seems less worried about this whole situation than those of us on the committee would expect; and less worried than we like.

Now, I want to ask some questions about the Portland Pipeline Corp., and I have some figures here taken from page 231 of the galley proofs of the hearings of this committee in December. They show a throughput through the pipe-line broken down into three items, crude oil, kerosene, and heating oil.

Do you know whether those are the only forms of oil which go into the pipe line at any time?

Mr. FOSTER. Well, I am not sure of that. We have some information. Mr. Ball of the Department of the Interior is here, Mr. Hale. He has better information on that operation than we have.

Mr. HALE. I would like to ask him something about this pipe line.

Mr. FOSTER. The pipe line, as I understand it, handles no United States oil any way. Is that correct. That is what I am informed. Mr. HALE. What is that?

Mr. FOSTER. I believe that the pipe line handles no United States oils in any event.

Mr. HALE. That is just what I wanted to know.

Mr. FOSTER. Yes.

Mr. HALE. All of the oil that goes through the pipe line originates in South America?

Mr. FOSTER. Do you know the answer to that, Mr. Ball?

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

Mr. BALL. Yes, Mr. Hale, that is the information that I have, that nothing that goes through the Portland-Montreal pipe line originates in the United States.

Mr. HALE. Now, what I want to know is this: I think it is quite important. These figures show that approximately 12% million barrels went through the pipe line in the last 7 months of 1946 and a little over 13,000,000 in the last 7 months of 1947.

Are those figures reflected in figures of exports to Canada?

Mr. BALL. No, sir. Those are "in transit" shipments. They are not counted as exports.

Mr. HALE. So that when we get a tabulation such as I have before me, a tabulation of the Fuel Division's Office of International Trade, January 21, 1948-is that from your department, Mr. Foster?

Mr. FOSTER. Yes, sir.

Mr. HALE. And so when I read their figures of exports from the United States to Canada, the operation of the Portland pipe line would not be reflected in any way in those figures?

Mr. BALL. That is my understanding, sir.

Mr. HALE. Well, that is very helpful information to me. Now you said something this morning about the fact that lubricating oils were not in short supply; is that right?

Mr. FOSTER. Yes, sir.

Mr. HALE. When a barrel of crude oil comes out of the ground, it is up to the industry to decide, is it not, how much gasoline to make; how much high octane gasoline; how much kerosene, and so forth?

Mr. FOSTER. Yes, sir. We have no allocation powers or directive powers of any sort.

Mr. HALE. What is that?

Mr. FOSTER. We have no allocation or directive powers of any sort over that production.

Mr. HALE. I understand that; but if the supply of lubricating oils is ample and ample enough to justify exports, does that not indicate that some error of judgment on the part of the industry has been made in determining what end product to make from the crude oil that comes from the ground?

Mr. FOSTER. I cannot comment on that, Mr. Hale, because I do not know the various end products in the break-down of the production of crude to these various distillate products. It could

Mr. HALE. I do not know either. That is the reason I am asking you.

Mr. FOSTER. I would be very glad to have and I am sure that Mr. Ball can give you that information much better than I, and whether it is an error of judgment or not, I am not prepared to state.

Mr. HALE. Mr. Ball, I would be glad to have your answer.

Mr. FOSTER. Mr. Ball, from the Department of the Interior, is here. He is head of the Oil and Gas Division of the Department of Interior which has the domestic responsibility for petroleum.

Mr. HALE. If he could answer that question now, I would like to have the answer.

Mr. BALL. I am sorry, Mr. Hale, but I was talking with another member of the committee and I did not hear the question. I wonder if the reporter could read it.

Mr. HALE. I am afraid that the question is a little involved. What I am trying to get at is this, whether or not the fact that the supply of lubricating oil is ample would imply some errors of judgment on the part of the industry in their determination of what end products to make from a given amount of crude.

Mr. BALL. No, Mr. Hale, lubricating oils are a specialized business.
Now, it is true that most refineries make some lubricants.
Mr. HALE. Most refineries make some what?

Mr. BALL. Lubricants. But, the large part of high-grade lubricants are made in plants which are constructed largely for that purpose. They are concentrated in the Pennsylvania crude oil-Pennsylvania grade crude oil district and in general in Pennsylvania, parts of Ohio, and West Virginia.

It is a highly specialized business. It is a profitable business. A great part of it is carried on by independent refineries, not so much by the major companies, and it is made from a cut of the crude oil barrel, which, although it could be put into the distillate fuels, it is much more profitable to make it into lubricants.

There is no great excess supply of lubricants, but so far there has been no shortage.

Mr. HALE. I understand that; but what I am trying to get at is if the lubricating oil was less ample would that mean that the supply of heating oil would be more nearly adequate?

Mr. BALL. I suppose it would be possible; yes, it certainly would be possible to make all of the lubricant-crude into heating oils; but, of course, that would dislocate the whole industry to do that, and particularly those plants which are designed and built primarily to make lubricants.

Mr. HALE. The manufacture of lubricants is more profitable than the manufacture of gas oil, and distillate fuel oils?

Mr. BALL. I would not want to give an opinion on that. The lubricants bring much higher price per gallon, of course, but they also cost much more to process.

Mr. HALE. I think that is all of the questions I have at the

moment.

The CHAIRMAN. Any further questions, gentlemen?

Mr. HARRIS. Yes; Mr. Chairman.

The CHAIRMAN. Mr. Harris.

Mr. HARRIS. I have a few questions, Mr. Chairman, that I would like to ask Mr. Foster.

In the first place, will you again give me the figures that you gave me awhile ago as to the total exports of crude from the United States? You mentioned several different sets of figures this morning.

Mr. FOSTER. You mean for that third quarter?

Mr. HARRIS. You mentioned the total number of barrels exported and the total number imported and said that a complete_embargo would probably lose I think, some, 12,000,000 barrels. I am not sure about that.

Mr. FOSTER. Those were the third quarter of exports of crude oil and the third quarter of imports of crude petroleum, and for that period we imported 25,681,000 barrels and we exported 12,110,000.

That is from memory, but I think those figures are right. That would leave a net balance, net favorable import balance, of over 13,500,000 for that quarter.

Mr. HARRIS. That is of crude?

Mr. FOSTER. That is crude oil; yes, sir.

The

Mr. HARRIS. That does not include petroleum products? Mr. FOSTER. No, sir; it does not for that third quarter. exports for all items under control was roughly 17,000,000 barrels, I think, of petroleum products. I think that is right for the third quarter.

Mr. HARRIS. The third quarter of 1947?

Mr. FOSTER. Eighteen million.

Mr. HARRIS. Then that would be 18,000,000 in addition, if you are going to include all petroleum and petroleum products-that would include about 18,000,000 additional barrels of petroleum products; would it not?

Mr. FOSTER. Yes.

Mr. HARRIS. For the third quarter.

Mr. FOSTER. Yes, sir. Crude petroleum, as you know, sir, is not licensed control at the moment.

Mr. HARRIS. Yes, I understand that, but I was trying to get information and a more thorough picture of the entire situation and not just the picture of crude and then one of the break-down. Mr. FOSTER. Yes, sir.

Mr. HARRIS. Then, in a total exchange of imports and exports, we actually exported a little more than we imported in barrels of oil and oil products?

Mr. FOSTER. That was true of that quarter and on the basis of those figures; but it is not true over-all. There is a net import balance, of over-all, for the period of 1947 on which we have records.

Mr. HARRIS. Yes. Now, I notice you have given in your discussion here the number of barrels exported in 1947 as 40.3 million. That is 2.5 percent of the total supply of approximately 1,900,000,000 barrels.

Mr. FOSTER. Yes, sir.

Mr. HARRIS. Does the 1,900,000,000 barrels include also the imports?

I notice you have a situation here indicating that it does?

Mr. FOSTER. Yes, sir; it does.

Mr. HARRIS. Which means that all of the crude oil produced and imported in this country in 1947 amounts to approximately 1,900,000,000 barrels?

Mr. FOSTER. Well, that is also domestic production.

Mr. HARRIS. That is what I say.

Mr. FOSTER. Yes, sir.

Mr. HARRIS. Most of that is domestic production?

Mr. FOSTER. That is right; yes, sir.

Mr. HARRIS. Now, in your analysis later on of the comparison, the first quarter of 1947 and the first quarter of 1948, you said that that was reduced from approximately 17,000,000 barrels for the first quarter of 1947 to 11,850,000 barrels for the first quarter of 1948.

That included petroleum products and not crude petroleum; is that right?

Mr. FOSTER. Yes; that figure refers only to the petroleum products. Mr. HARRIS. To petroleum products?

Mr. FOSTER. Such as aviation gasoline, motor gas, kerosene and gasoline fuel, and residual fuel oils.

Mr. HARRIS. Then the export of crude for the quarters of 1948first quarter and the first quarter of 1947 is not included in that figure?

Mr. FOSTER. That is correct, sir.

Mr. HARRIS. Now, for some clarification of the table referred to this morning by our very distinguished and able colleague, Mr. Heselton. It seems there is some question about this information not being recognized from your Department; but in going over it, I think the same figures as you have given and the totals are approximately the same. For instance in the table referred to, it showed aviation gas in the first quarter of 1947, 811,433; motor gas, 9,561,474; kerosene, 1,507,623; gas oil and distillate fuel oil, 3,616,797, and residual fuel oil, 1,547,235, which I believe was the amount you said this morning was exported, as petroleum products, for the first quarter of 1947.

Mr. FOSTER. That is correct, sir.

Mr. HARRIS. Now, the table here for the first quarter of 1948 gives a total figure of 11,850,000, which was the amount that you explained to the committee this morning in your statement.

So, as I see the statement that my colleague referred to this morning about information as having been obtained by the staff of the committee, that is the same as you gave to the committee in your statement this morning.

I wanted to clarify that for whatever information it might be.
Mr. FOSTER. Thank you, sir.

Mr. HARRIS. What percentage of our petroleum exports are going for military and for occupational purposes?

Mr. FOSTER. The first quarter of 1948 there is a shipment-and I might add that parenthetically there, that those have never been included in the quota licensed for export, but the press release of January 2, 1948 where we mentioned the new quota of 12,000,000 for round figures-11,650,000-we quote the shipments to Japan and the Ryukyus at 2,470,000, in addition to the 12,000,000. That also includes the shipment to Greece.

Now, that percentage is if extended for the year, and I frankly do not know whether that will be. That is the level that it has been running. That would be four-tenths of 1 percent-if my mathematics are correct-of our total production.

Mr. HARRIS. But the number of barrels gives as 17,000,000 for the first quarter of 1947 and approximately 12,000,000 for the first quarter of 1948 does include the proportion that would go for military purposes.

Mr. FOSTER. That is correct.