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by American nationals, usually with foreign governments. The profits accrue to United States stockholders, and these profits then pay personal income taxes to the United States Government. If oil imports were drastically reduced, many of the United States nationals employed abroad would lose their jobs and be thrown on the United States employment market. Also, many United States independent businessmen who have gone into contracting for oil-well drilling in foreign countries would be forced to return home and compete with the contractors already operating in the United States. It can be seen from this that imports of petroleum do not represent cheap imports of foreign goods which are cheap because of low labor rates abroad. The relatively low prices of foreign oil occur because the United States has already discovered most of its low-cost, high-volume deposits of oil and the cost of discoveries from now on can be expected to increase.
The scarcity of good drilling sites is undoubtedly a major reason for a small decrease in the number of United States oil wells drilled in 1957 as compared to 1956. There are other reasons, including unusual weather in the spring, a rather abrupt increase in interest rates, and the tightening of money supplies. But there is increasing evidence that one of the most important reasons was merely the lack of drilling sites which appeared likely to hold enough oil to make it profitable to drill.
The difficulty and high cost of obtaining more oil in the United States makes it necessary for us to import a larger percentage of our total requirements. In spite of very intensive exploratory efforts, the new reserves discovered since 1946 have not kept pace with the growth in consumption. The ratio of reserves to comsumption in 1946 was 13.4. By 1956 this had been reduced to 11.3. There have been so many oil wells drilled that our total reserves could be produced much faster than is now the case. Therefore, the so-called availability of petroleum is increasing and has been reported by some authorities to be upwards of 2 million barrels a day above the current producing rate. However, it is reserve supply and not the potential produetion rate which is most important to our national security. A farmer might have a well which he could completely empty within 1 day by installing larger pumps, but if he so emptied his well, he would be left without water. The important thing to the farmer would not be his maximum pumping rate for a short period, but how much water he had in his well in total. Likewise the important thing to the United States is the total reserves available for continued production over a long period of time.
A New York Times editorial recently stated: “There are many ways to encourage exploration for oil, whether by private or other interests. But every barrel of our oil used up is an irreplaceable resource gone forever, never again to be available for our future needs.”
4. CONCLCSION The Trade Agreements Act should be extended because it has proven every effective in promoting the prosperity and security of the United States and its allies. The escape clause should be better defined to set up specific criteria for determination of the peril point involving serious injury to domestic industry and a threat to the national security. These criteria are needed to avoid having all increases of imports prevented through abuse of the escape clauses, and thus to eliminate any possible good that could come from increasing imports and increasing world trade. With respect to extension of the Trade Agreements Act, the President stated : "If we fail in this (our trade policy), we may fail in all. Our domestic employment, our standard of living, our security, and the solidarity of the free world-all are involved."
With respect to petroleum, imports have not prevented the domestic producing industry from growing at a healthy rate. Petroleum importers have shown a willingness to cooperate in voluntary restraints on the rate of imports to cope with the recent slowing down in the rate of growth and consumption. Therefore, it could not be said that petroleum importers are threatening the domestic industry, and it would be most unwise to impose rigid restriction on imports through increased tariffs or other impediments to trade, such as rigid quotas.
It would be a calamity to the prosperity and to the defense, and therefore a threat to the very life of the United States, it through ill-advised restrictions on petroleum imports, free access should be denied to United States nationals to the huge deposits which their initiative, capital, and labor have developed in foreign countries. It would likewise be a calamity to the defense of the entire free
world if through any discriminatory restrictions the stability and prosperity of the oil-producing countries from which we import should be threatened, Under present conditions of cold war, it is imperative to keep these countries in the camp of the free world.
This is especially true since it has proven impossible to discover new oil reserves in the United States in sufficient volume to maintain the ratio of reserve to consumption. In addition, for those scarce reserves which are now being dis covered, the cost is high and a reasonable quantity of imports tends to hold the prices charged to civilian consumers and to the Defense Department at reasonable levels.
The United States has less than 15 percent of the free world's reserves of crude oil but has 55 percent of the consumption. In order to support the national economy and maintain the national security, we will inevitably depend more and more on imported petroleum.
United States petroleum imports, domestic demand, and production
(Thousands of barrels per day)
United States Percent imports toUnited States United States production total
domestic crude and petroleum petroleum natural gas United States United States imports demand liquids domestic production
Source: API Statistical Bulletin, vol. 38, No. 21, Apr. 23, 1957, U. 8. Bureau of Mines, 1957 (partly estimated), reported in Platt's Oilgram News Service, Jan. 6, 1958.
United States petroleum reserves related to United States domestic consumption
(1) Reserves are total liquid hydrocarbons, including crude oil and natural gas liquids. (3) Total United States production includes crude oil and natural gas liquids.
Source: (1) AGA-API Proved Reserves of Crudo Oil, Natural Gas Liquids & Natural Gas, Dec. 1956, vol. No. 11.
(2) API Statistical Bulletin, vol. 38, No. 21, Apr. 23, 1957. (3) API Statistical Bulletin, vol. 38, No. 21, Apr. 23, 1957.
United States crude oil and natural gas liquids---Statistics on wells drilled, increase in reserves, etc.
28, 063 30, 474 30, 528
1 Not available. Source: World Oil, Feb. 15, 1957 (reserves: authority, API) (1956, AGA-API proved reserves of crude oil, natural gas liquids, and natural gas, Dec. 31, 1956, vol. 11).
Exports, imports, and gross national product, United States, 1934-57
1 Includes mutual security program military shipments which totaled $1.7 billion in 1956, and $1.4 billion in 1957 (November-December estimated). 2 10 months actual. November and December estimated.
Excludes MSP military shipments from exports. Source: 1934-56, Compendium of Papers on United States Foreign Trade Policy. p. 244. Subcommittee on Foreign Trade Policy of the Committee on Ways and Means, released Oct. 10, 1957; 1956 1 Survey of Ourrent Business, February 1957; 1957 Survey of Current Business, December 1957.
INTERNATIONAL DISTRIBUTORS, Inc.,
Memphis, Tenn., June 18, 1958. Hon. HARRY F. BYRD, Chairman, Committee on Finanoe,
United States Senate, Washington, D. C. DEAR SIR: We are manufacturers of household drugs and importers of needles, pins, small handtools and various notion and sundry items. Approximately 70 percent of our business is in merchandise of our own manufacture for domestic sale. Our firm is closely affiliated with Plough, Inc., of this city who is a manufacturer of nationally advertised drug and cosmetic products and who exports these products to 45 foreign countries.
In the interest of world trade and for the best interest of the greatest number of American people, we urge you to support the extension of the Reciprocal Trade Agreements Act, without crippling amendments, but with additional bargaining power. It does not seem conceivable to us that it is possible to further cut our imports without dangerously cutting our exports. In view of the fact that exportation of United States finished manufactured goods vastly exceeds United States importation of finished manufactured goods (approximately 4 to 1), we cannot believe that the extension of the Reciprocal Trade Agreements Act in materially its present form would be hurtful to our economy as a whole. Failure to do so would be helpful only to a small percentage of American manufacturers who wish to operate under the protection of an artificial trade barrier.
These are challenging facts, which can be easily and quickly verified by government economists:
Foreign trade supports more American people than the combined steel, chemical and automobile industries.
Our economy cannot be supported without an exchange of our exports for indispensable imports. Our imports provide the wherewithal. How can we hold our leadership in world affairs if we act like an isolationist agrarian country trying to protect an infant manufacturing industry? Is it advisable to pour out military and economic aid to our allies with one hand and to
cut their economic throats with the other hand, by failure to extend the Trade Agreements Act in very close to its present form?
We urge you to support the Reciprocal Trade Agreements Act for the best interest of all the American people. Yours very truly,
ROBERT D. MOORE.. GREENMAN, SHEA & ZIMET,
New York, N. Y., June 19, 1958, Hon. HARRY F. BYRD, Chairman, Senate Finance Committee,
Washington, D. C. DEAR SENATOR BYRD: I am writing this letter in support of the reciprocal trade agreements bill recently passed by the House of Representatives. This bill appears to me as the most essential measure proposed by the administration to the present Congress.
The leaders of the Soviet Union have frankly avowed their economic offensive against the free world, and we have learned by experience that such statements by dictatorships cannot be safely ignored. To counter this Soviet threat, I believe that any American administration, Republican or Democratic, must have the freedom of action with regard to tariff matters which the reciprocal trade agreements bill gives.
Even were the Soviet Union to change its Government overnight, however, I believe the provisions of the reciprocal trade agreements bill should be enacted into law because I think they constitute a useful and valuable framework within which the economic policy of this country can be conducted. I am not one who believes that there is any threat to the American standard of living in increased trade with the rest of the world. On the contrary, I believe that an increasingly free interchange of goods will benefit the American consumer as well as American industry.
As a lifelong Republican, I welcome the point made by Adlai Stevenson that we Americans cannot afford to repeat the error of the Hawley-Smoot Tariff Act of 1930. It is precisely when clouds appear on the economic and financial horizons that we in the Western World must keep open the channels of trade rather than close them as we did in 1930 with resulting catastrophic effects, both economic and political
Not every provision of the reciprocal trade agreements bill is unchangeable and I have no doubt that your committee may well make improvements in it. But its basic purpose of continuing the principles of the Reciprocal Trade Acts and of enabling the executive branch of the American Government to plan ahead for as much as 5 years seem to me to be principles which have proved most useful and I wish to add my voice to those of the many who urge the passage of this legislation upon you. Yours very sincerely,
HENRY V. POOR.
LEXINGTON DEMOCRATIC CLUB,
NINTH ASSEMBLY DISTRICT,
New York, N. Y., June 23, 1958. Hon. HARRY F. BYRD,
Senate Office Building, Washington, D.O. DEAR SENATOR BYRD: The enclosed statement was recently adopted by the executive committee of the Lexington Democratic Club in support of H. R. 10368, the President's bill for renewal of the reciprocal trade agreements. It is our hope that the most substantial possible form of this legislation will not only receive your vote, but that it will benefit from the considerable respect and influence which you and your staff command on Capitol Hill.
Enlightened economic thinking, as well as free world security requirements, calls for bipartisan action on this bill. Your efforts on its behalf will crown with further distinction a career of politics and public service which has been motivated by the best interests of the Nation, rather than by party politics alone. Thank you for your consideration. Sincerely,
RICHARD S. LANE, President..