the new licensing policy which was announced December 31, effective with the beginning of the first quarter, represents an objective of the Department in a new plan or a different plan for the distribution of export licenses among applicants.

This plan is based upon the conviction of the Department that the historical pattern of distribution of licenses now no longer is appropriate. We felt it was the only method that we could use immediately following the war, but the time has come for a modification.

It is a very difficult task to change over from one basic licensing system to another with such an enormous volume of license applications, two or three thousand a day which come into the office. Consequently, the assimilation of this new policy is a gradual matter, and petroleum was not put under the new policy immediately.

It is intended to review that question with respect to the second quarter before the first calendar quarter of 1948, the licensing of petroleum products would continue on the old basis, where the substantial bulk of the shipments was assigned to the same firms who had made the shipments in whatever was the appropriate base period. There would be an additional allowance for new exporters, but the bulk under that procedure would be assigned to established shippers in proportion to the pro rata to their base-period shipment.

Mr. BUSBEY. Up to this time I could visualize that you probably have applications for 3,000,000 barrels of oil for the 200,000 barrels allotment to this country X we are speaking of.

Now, just what was the basis for determining who would receive this oil and what percentage they would receive?

Mr. MCINTYRE. The base period would be taken, the quantity supplied by each of the firms in that period determined.

Mr. BUSBEY. What was the base period?

Mr. MCINTYRE. I will have to ask the chief of our fuels division. The last 18 months before control was established on June 30, which would be the 18 months from January 1, 1946, to the middle of 1947. Mr. BUSBEY. In other words, new oil companies and new sources of supply and people who ordered oil in this country could come in this program, in the beginning of 1946 even though they had never shipped oil to this country before?

Mr. MCINTYRE. In most of that period of 18 months there were no controls on the export of petroleum. Petroleum export controls were reimposed only June 30 last, and prior to that time anyone who could get the business could make the shipment.

As a matter of fact, in petroleum almost more than any other products, the exportations were made and have continued to be made by the established suppliers, and not necessarily the billing producers, but the producers who have traditionally been making the shipments.

Mr. BUSBEY. Did you have controls on during the war?
Mr. MCINTYRE. That is right.

Mr. BUSBEY. And as soon as the war was over, it was thrown wide open?

Mr. MCINTYRE. There was a period when military requirements were first removed when the petroleum industry was very eager for any markets it could find.

Mr. BUSBEY. One of the members raised a question about the price of oil domestically and the price of oil that was exported.

71869-48-pt. 1-7

In the application form, do you not have a place in that application where they have to state the amount, or the amount of barrels they desire to export, and the price they are going to receive for it?

Mr. MCINTYRE. That is correct.

Mr. BUSBEY. Could you not ascertain the price per barrel very easily from that?

Mr. MCINTYRE. We have made an analysis of those export prices and they show almost without exception that these suppliers quote the same price for f. o. b. refinery, whether the shipment is a domestic sale or an export sale.

Mr. BUSBEY. Now, if I may, Mr. Chairman, I have one more thought, and we can get back to Mr. Foster for a minute. Mr. Foster, in your statement to the committee at the opening of the session this morning, and I quote from your statement, starting on the bottom of page 1 [reading]:

Toward the middle of 1947, there was a sudden marked increase in domestic consumption of gasoline, fuel oil and other petroleum products. Mainly, it resulted from increases in off-highway use of motor fuel for farm purposes and large increases in the number of Diesel locomotives and industrial and domestic oil burners.

Before I ask you to comment on my question, I would like to state that I have in mind at the present time if legislation is recommended to the Congress from this committee to attempt at least to inlude in that recommended a provision to stop the installations of domestic oil burners, and other uses temporarily, until this chaotic condition that we are in at the present time has been removed.

Back in July 1, 1946, in the State of Illinois we prohibited the installation of new gas heating units and other units that used gas, due to the fact that we could not get additional pipe lines into Chicago to pipe gas in for this additional use.

Naturally, that has thrown an extra burden on oil burners, and a great many people have converted from coal to oil, and I was wondering what your opinion would be if some legislation were introduced in Congress to prohibit the installation of these oil burners temporarily to help alleviate this condition that confronts us today.

Mr. FOSTER. Well, I think that the question that you raised is a very serious question. Had we not had the tremendous increases in the consuming mechanisms of oil products, this unforeseen demand I would not have occurred.

Now, just how you should stop that I do not know. I think that if the emergency is to continue for any time, it would be the part of wisdom to limit in some way the new users of petroleum products of which there is obviously not enough to go around at the present time. Had that been done as you did in Illinois with the gas consumers, we might not have faced that problem, but those are things that we do not like to do in this country, of course.

I presume the reason many people shifted to oil burners was because of the possible shortage of coal. Well, it develops now that we have plenty of coal, but we have no oil.

If we attempt to limit the manufacture of such devices, and the installation of such devices as oil burners, we do upset the manufacturing industry in those fields, but this economy at the moment does need some direction of the short items into the critical areas, and the postponement of the building of certain items which can be postponed,

and I think it might well be one of the things on which a postponement would be desirable in that interest.

Mr. BUSBEY. You will agree with me, Mr. Foster, that we are in a critical and desperate condition on this fuel-oil business from all reports at the present time?

Mr. FOSTER. Yes.

Mr. BUSBEY. In view of that fact, would it not be possible for this review committee you speak of, to review the first quarter allotments for the rest of the world and not only ascertaining, but making a sincere effort to even reduce these quotas further than what you already have reduced them?

Mr. FOSTER. I think that we should do that, and I can assure you that that will be done. In fact, a conversation to that effect has already been started.

Mr. BusBEY. That is all.

Mr. HESELTON. I am sure that you have tried to prepare the material and cover the questions that I asked this morning, but the hour is too late for me to question in detail on it.

If you would be willing, I would like to have you furnish that to the clerk of the committee, and supplement it with anything that you have not been able to prepare this noon, and let us go over it and then if I think, or the committee thinks, that it is advisable to ask you further questions at a later date, that procedure will be communicated to you. In the interest of saving time, I want to just refer to two or three things that I think have been left at loose ends here a bit.

Can you give us any assurance as to how soon the committee will have the statement on the procedure as to how the licenses are issued? Mr. FOSTER. How they are issued, you say?

Mr. HESELTON. The procedures.

Mr. FOSTER. We will have that directly.

Mr. HESELTON. Could we have that tonight, or do you mean that you would have to give it orally?

Mr. FOSTER. You will have it tomorrow, sir.

Mr. HESELTON. That is fine. Now, I just want to briefly touch on this kerosene situation because of certain information I have had which may or may not be accurate.

I understand that the Department stated in substance the Canadian stock position was so much better than ours on the east coast, that the cut was possible.

Is that accurate?

Mr. FOSTER. I do not think that that is a complete statement, sir. Mr. HESELTON. I think it is part of a press release, and I do not think it is a complete statement, either. What I am asking is, is it accurate?

Mr. FOSTER. You say their stocks were reasonably good. They were reasonably good, but they were not good enough to take the cut of the degree which they engaged in without serious effects on those stocks.

Mr. HESELTON. I do not think that that was my question, but perhaps I do not put it well.

I said that their stock pile position was so much better than ours on the east coast that you were able to arrange for this reduction. Now, is that an accurate statement or not?

Mr. FOSTER. No. I do not think it is an accurate statement.

Mr. HESELTON. Will you check it and report to the committee the relative stock pile position in Canada and on the east coast? Mr. FOSTER. I will be glad to.

(The information requested is contained in the table below.)

EXHIBIT 6

Canadian refinery inventories of refined petroleum products, June 1 to Nov. 1, 1946 and 1947

1 An imperial gallon contains 5 quarts, making 175 quarts per barrel. The United States gallon contains 4quarts, making 168 quarts per barrel.

Canadian marketing inventories of refined petroleum products, June 1 to Nov. 1, 1946

and 1947

Source: Monthly reports on refined petroleum products in Canada, compiled by Dominion Bureau of Statistics, Ottawa.

79, 640 3,451, 050

169,905

79,388 3, 421, 931 173, 256

72,975 3,599, 944

517,621

2,037,587

301,774

143.412 467,038

1, 107, 211

2,294, 467

1,018, 220

1,111, 414

1,027, 360

Mr. HESELTON. Next, I quoted from the conversation of Mr. Blaisdell this morning, and I would like to ask formally now what will be the position with reference to Canadian exports during the balance of the year. Will it be kept at the rate now in operation, or will it be increased?

Mr. FOSTER. My best judgment is that it will be kept at the rate of operation, through the present rate of operation, through April 30, depending entirely on conditions as they develop during the first third of the year.

There might be some adjustments during the summer. I would believe, however, that the chances are that the level will be maintained pretty close to the present level.

Mr. HESELTON. That is, we can safely take the 50-percent figure of the 1947 exports, and conclude that that is the minimum for the calendar year 1948?

Mr. FOSTER. You say the minimum or the maximum?

Mr. HESELTON. I said minimum.

Mr. FOSTER. In other words, we will probably not cut below those levels, you mean?

Mr. HESELTON. Yes.

Mr. FOSTER. I would think that is a fair assumption.

Mr. HESELTON. Now, as a matter of fact, there was no agreement as to kerosene with Canada, was there?

Mr. FOSTER. Yes; there was.

Mr. HESELTON. Was there?

Mr. FOSTER. There was.

I might say some confusion as to what was covered by our technical designation of the products existed. That confusion has been resolved and kerosene is covered by the agreement.

Mr. HESELTON. Well, I realize that your press statement referred to refined kerosene, but it is my understanding that apart from that there are still some residuals and it is impossible to obtain an agreement on kerosene.

Mr. FOSTER. That is incorrect, sir. The same figures that we used, or the same designation we used for kerosene here, our number, 5027, is covered in the Canadian agreement.

Mr. HESELTON. I have another set of figures that I would like someone to make a note of, and give me some advice as to their accuracy.

I give you the first quarter of 1947, and the second quarter of 1948 with Canada.

Aviation gasoline, 47,656 barrels. 1948, 60,000. Motor gas, 262,196 barrels. First quarter of 1948, 370,000.

Kerosene, 835,505; and for 1948, 500,000. Distillate, 1,099,506; and 535,000. Residual, 571,323; and 600,000.

Will you check that?

Mr. FOSTER. All right.

Mr. HESELTON. And bear in mind also that I would like you to include the best estimate that you can give, or in your answer to Mr. Hale this morning that these figures do not include the Portland-toMontreal pipe line, and give us the information on what that will be in view of the increase last year and give us the information on the military requirements, if any, used in Canada.