FUEL INVESTIGATION WEDNESDAY, JANUARY 28, 1948 HOUSE OF REPRESENTATIVES, COMMITTEE ON INTERSTATE AND FOREIGN COMMERCE, Washington, D. C. The committee met at 10 a. m., pursuant to adjournment, in room 1334, New House Office Building, Hon. Charles A. Wolverton (chairman) presiding. The CHAIRMAN. The committee will please come to order. We will resume our study of the fuel situation and our first witness will be Mr. Mark Edwin Andrews, Assistant Secretary of the Navy. We will be pleased to have Mr. Andrews take the stand at this time and give the committee such information as he has with respect to the temporary use of naval vessels which the committee suggested in its resolution of December 19, should be authorized to transport fuel oil to those sections of the United States where such shortages existed. We will also be pleased to have any additional information that Mr. Andrews may have to give. STATEMENT OF MARK EDWIN ANDREWS, ASSISTANT SECRETARY Mr. ANDREWS. I might also say this, gentlemen, I can make a statement this morning that I can never make in my life again, that is, that I have never appeared before a congressional committee. I am a rank amateur and I hope you gentlemen will respect my amateur standing. This is the only time I can make that statement. The CHAIRMAN. Well, I will endeavor to see that the committee does have proper respect for the shorn lambs, and we will not tread too harshly. I think when you have finished you will realize that whatever spirited questioning that the committee may do is based on the same sincere desire to be helpful in this emergency as yourself and associates. Mr. ANDREWs. I am sure that will be the case. Gentlemen, I welcome this opportunity to appear before your committee in response to a request for information which the Navy Department can furnish. I have been asked to inform the committee as to what we can do on a temporary basis, toward making naval vessels available for transporting petroleum products for civilian use. I was also asked to inform this committee regarding fuel conservation or other action by which the Navy, and other Government departments can make more oil available for civilian use. Gentlemen, those questions boil down to this, what is the Navy doing and what can it do; what has the Navy done to conserve fuel further in it and what is the Navy doing, and what can the Navy do to make the fuel available for the civilian economy. May I first say that the Navy has no vessels other than tankers which are either available or suitable for the bulk transportation of oil. Except for 50 tankers acquired from the laid-up fleet of the Maritime Commission which I shall discuss later, the Navy's tanker fleet comprises 36 ships. The greatest possible use of these vessels is required to meet in part the world-wide requirements of our fleets and bases both continental and overseas. In continuation of an agreement reached during the war, the Navy has the responsibility for providing overseas transportation for all bulk petroleum products required by all of the military services. Because of the inadequacy of its own tanker fleet for that purpose it has been necessary for the Navy to charter an average of 40 to 50 tankers monthly from the Maritime Commission. These tankers are used on runs to Europe and the Far East. In the fall of 1947 it became apparent that the Navy could meet this responsibility only by the outright acquisition of 50 additional tankers. To afford the greatest possible relief for civilian requirements, the Navy agreed that the 50 tankers should come from some 96 vessels of that type then in the laid-up fleet of the Maritime Commission. The reconditioning and readying for service of the 50 tankers above mentioned was undertaken expeditiously. These ships were not put up in "moth balls" by the Navy and were not a part of the "zipper" fleet. Some delays have been encountered in getting these ships into active service. It is now expected that about 18 tankers of the 50-ship program will be ready by the end of January. During February, 31 more should be completed, leaving only one ship for final delivery in March. I wish to emphasize that the record will show that the Navy has done everything it could to reduce the demands on the Maritime Commission for chartered tankers. In December, for example, requests were reduced from 43 charters to 37, thus releasing 6 for civilian use. During the current month there were actually only 13 tankers on charter. During February it is expected that only 9 chartered ships will have to be furnished by the Maritime Commission. Thus we have cut our use of chartered tankers from 43 in December to 9 in February-a reduction of 34 tankers which were thereby made available for normal commercial use. We have already released for commercial use one ship for every laid-up tanker scheduled to be available by February 29. From the foregoing analysis, the Navy, in acquiring 50 laid-up ships from the Maritime Commission, has insured the rleease of an equivalent number of active tankers to meet the needs of the civilian economy It is a misconception, however, to believe that the Navy can utilize these same ships recently acquired to assist further in alleviating civilian fuel shortages. All of these tankers plus the 36 of the Navy's original tanker fleet will be required for the world-wide needs of al. of the milita. y services. Now, gentlemen, I recognize this problem. We have tried to do everything we could to pull these tankers out of the laid-up fleet, thereby making tankers available that we were chartering. Now, the tankers that we make available from the Maritime Commission are chartered by industrial companies and they are used on runs to transport oil for the use of the civilian economy. My second point covers what the Navy has done and is doing to save fuel and to make available to distressed civilian consumers some of its own limited stocks. Before I list the steps we have taken, I should like to stress two important points: First, large as the Navy's consumption and stock of oil must necessarily be, they are but little more than drops in the bucket when compared with over-all national needs. This is most important in determining what the Navy can do. Second, almost all of our oil is not suited for home consumption and only a part is suited for institutional use. The problem is like trying to run your car on lubricating oil instead of gasoline. It just won't work. The other day, for example, in discussing the problem with one State fuel coordinator, it became apparent that the oil we have would be of little use in relieving distress in his State, and we have practically none of the oil his people need. This, too, is important in understanding what contribution the Navy can make. Now, specifically, the Navy has taken these five steps to comply with the wish of the President, the recommendations of your committee and Members of Congress and the various State Governors. First, on November 6, 1947, we issued a directive to all shore establishments to conserve fuel to the utmost, and gave them detailed instructions for doing so. Second, on December 6, 1947, we reemphasized that directive and further directed that the installation of new or conversion oilburning equipment be suspended immediately except in extreme cases. Third, on January 12, 1948, we resubmitted Navy oil requirements for the second half of this fiscal year to the Department of the Interior so that the oil industry could be notified. These requirements. have been cut to the bone. Now, we come to the specific thing that the Navy has done outside of the Navy to relieve the crisis so far as the civilian economy is concerned, bearing in mind these two points (1) the amount of oil that the Navy has to make available is very limited, when you consider the total civilian requirements; (2) the oil that we have, generally speaking, is the type of oil that can be used by institutions, hospitals, schools, power plants, and so forth, not for home consumption. Well, these are the specific steps that we have taken. Fourth, on January 12, 1948, after many calls from New England, and after consultation with the Interior Department, an agreement was reached with representatives of the Governors of the six New England States. By this agreement the Navy will release up to 940,000 barrels of oil from Navy storage points in the New England area. This oil is to be used for emergency relief of distressed hospitals, power plants, and comparable institutions. This oil was not surplus. to the Navy and was made available only after thorough consideration of the suffering and hardship in the New England States. Fifth, we evolved a simple plan for making oil available to dis tressed regions, so that actual deliveries of fuel have been made immediately upon demand. We require only those conditions essential for the protection of the Government. In brief, we require (a) a showing of real emergency; (b) proper safeguards for distribution and conservation of the oil under supervision of the State or municipality; and (c) guarantee of return of the oil, barrel for barrel, before June 30, 1948. Where genuine need exists, and we have suitable oil, we are set up to do our part just as fast as the States can do theirs. These are the ground rules that we have laid down in making this oil available to the States. (a) The oil being made available by the Navy is not surplus and the Navy stocks must be replenished as soon as possible (before June 30, 1948). (b) If more than one State is involved, as in the case of New England, the States must determine among themselves the percentage of the available oil that each is to receive. In other words, we have not put ourselves in a position to tell Connecticut or Rhode Island, or Massachusetts or New Hampshire, "You get this much; you get this much; and you get that much." We had the representatives of those States, by themselves, with no Navy people present, divide up the amount of naval oil we had. They did that in a meeting, I think, with harmony and they did it very quickly. (c) Each State must select the companies through which the oil is to be distributed. That is very important, gentlemen. The Navy did not want to be in a position of telling the X company, or the Y company, or the Z company, "We want you in this program." We have told the States, "You select the companies through which you want the oil distributed and then we will deliver the oil to the companies." (d) Each State must have the selected companies contract with the Navy to replace the oil delivered barrel for barrel, grade for grade, or or before June 30, 1948. This is a simple one-page contract that was worked out. The State must approve the contracts to indicate that it will do all within its power to see that the contracts are carried out. First of all, the States decide which State is going to get how much of the oil and, secondly, they select the companies that do the distribution of the oil and then we make a loan to the State of that oil and the State selects a reputable, responsible company to stand in its stead and contract with the Navy to redeliver that oil prior to June 30. Besides that, the State, through its governor, approves that contract. It is a very simple approval. It says the State hereby agrees to do all in its power to see that this contract is carried out. (e) Each State must determine the criteria for the distribution of the oil and make the allocation itself. The Navy does not enter into that. Now, we did in the case of the New England governors and in the case of other States lay down the general broad policies, or general criteria. The oil should be used for power plants, for hospitals, for schools, for institutions, where the public welfare or health is concerned. Now, it is true that we have in some instances authorized or agreed with the States that they could make oil available to civilian homes. In those cases we laid down these ground rules which the States in general have agreed to follow. There must be one of three conditions: The State coordinator is requested to set up controls before the oil can go to individual homes. 1. The home must be out of fuel and there must be no facilities for converting that home to some other kind of fuel-such as wood or coal. That is the first criteria. 2. There must be living in that home children of tender years, not 16 or 18 years old, but the children must be 3 or 4 or 5 years of age. Or there must be people of extreme age, not people of 45 or 50 or 60, but people of 70 or 80 years of age; or there must be people critically ill in the home, not just the mumps or a cold or something like that, but someone who is really ill. The States have agreed that those were reasonable requirements. (f) In cases where the State has not entered into such a program with the Navy, we have refused specific requests from individual companies though we have been perfectly willing to deal with the municipalities who in turn have selected companies. We have had instances where a State has not yet come into the program and an individual oil company has said, "We are out of oil. We would like to have the Navy deliver us X barrels of oil." We have told them that we are not in a position to do that; if their State, through the governor, will set up means for handling the situation, we will try to do our best. We have been perfectly willing to deal with municipalities where a State has not come in and there have been certain municipalities that we have dealt with. In those instances we have told the municipality that, "If your State comes in, then this agreement that we have with you is merged or absorbed by the over-all agreement with your State." In other words, we are not going to be in a position of dealing with communities or municipalities at the same time we are trying to deal with a governor of the State. (g) Every effort has been made not to disturb the oil-conservation program We thought that was important. We have stressed in the public press releases this angle of this situation and we have impressed upon each governor of the States involved that we must do everything we can to conserve oil and to continue the conservation program. In summary I have tried to point out: (a) The Navy has released all possible tankers for civilian use. (b) The Navy initiated a strict oil-conservation program to cut our own consumption. (c) The Navy resources are limited but we do have some oil that is suitable to meet emergencies for hospitals, power plants, and so forth. The Navy has a very limited supply of oil that will help home consumers. (d) The Navy has worked out a simple, businesslike system for making oil available for a specific emergency and at the same time the Navy's interest has been protected. (e) The Navy has cooperated fully with distressed regions. I assure you that the Navy will continue to do everything in this emergency that it can so long as the national security is not endangered. That, Mr. Chairman, completes my prepared statement. The CHAIRMAN. Mr. Secretary, your statement is very gratifying indeed, in many particulars. It indicates a very sincere desire upon |