import trade. Full details on the relative importance of petroleum in U.S. foreign trade since 1936 are shown in a table attached to this statement.

For many years, coffee, which is not produced in the United States, was the principal import item. In 1957, however, petroleum displaced coffee as our principal import item. This is an anomalous situation since about 30 percent of our oil producing capacity, or 3 million barrels per day, is shut-in and idle. This is equivalent to the entire production of Venezuela. It is like exporting coffee to Brazil or oil to Venezuela and the Middle East.

Petroleum's contribution to U.S. foreign trade

The value of petroleum imports has quadrupled since 1947-49 whereas the value of all other commodity imports has doubled. The spectacular growth in the value of U.S. imports of petroleum is shown graphically on the following chart.

The argument is often advanced that oil imports should be increased so that foreign producing countries may purchase increasing exports from the United States. Assuming this contention to be sound, it is submitted that no one industry should be called upon to contribute more than its fair share to this endeavor.

The facts show that the domestic industry has been called upon to make a disproportionate contribution to increasing U.S. foreign trade.

Petroleum and the U.S. balance-of-payments problem

The chronic deficit in our international balance-of-payments is cause for serious concern. Information on overall U.S. balance-of-payments and our trade balance in petroleum is shown in the following table:

During the past 7 years, the adverse balance of trade in petroleum has been a major factor accounting for 38 percent of the overall U.S. balance-of-payments deficit. The excess of U.S. petroleum imports over exports amounted to about $1.2 billion last year or approximately one-half the total Nation's $2.4 billion deficit in international payments.

For more than a year, this association has recommended that petroleum imports be reduced by approximately 250,000 barrels per day. Such action would lower by some $210 million annually the overall U.S. balance-of-payments deficit.

A reduction in present excessive oil import levels, therefore, would do much more than contribute to the petroleum industry's future ability to satisfy national security requirements. Such a reduction would also help offset the heavy flow of gold from the United States and alleviate the Nation's balance-of-payments deficit.

U.S. PETROLEUM IMPORTS AND THEIR RELATIONSHIP TO THE DOMESTIC PRODUCING

INDUSTRY

How have the increasing growth in world oil production, world cost trends, petroleum's contribution to U.S. foreign trade, and U.S. imports adversely affected the domestic petroleum producing industry.

The United States was a net exporter of petroleum prior to World War II. In 1948, the United States became a net importer of petroleum and this adverse balance in our petroleum trade has persisted and grown over the years. In 1961, we were a net importer by 1,715,000 barrels daily. This change from a net exporter, in the prewar years, to an increasing net importer has meant a loss of market for U.S. production amounting to about 2 million barrels daily. The history of U.S. oil imports and exports since 1918 is presented in an attached table.

GROWTH IN VALUE OF U.S. IMPORTS
Petroleum vs. All Other Commodities

1947-49

1950 1951 1952 1953 1954 1955 1956 1957 1958 1959 1960

Source: US Department of Commerce

IPAA CHART

The chart "U.S. Petroleum Imports" pictures the rapid growth in imports since World War II. The increase in imports and their relationship to U.S. crude oil production are summarized in the following tabulation:

Petroleum imports have continued to increase and the ratio to domestic production has also increased. In contrast, U.S. production of crude oil has shown practically no change since 1956 and there has been a marked decline in the vigor and health of the domestic industry.

Crude oil production

The following tabulation shows the trend in U.S. crude oil production since 1956:

The above tabulation speaks for itself. Actual production in 1961 was less than one-half of 1 percent above 1956. The lack of growth in U.S. crude production since 1956 is in contrast to the substantial increase in oil imports. Oil costs and prices

An adequate price relative to the cost of production is essential for any producer of a commodity to continue in business. During the last several years the producer's costs for labor for the various items and services used in drilling wells have continued to mount in the face of declining crude oil prices. Price is a controlling factor in the health and vigor of the industry. The costprice squeeze which has affected the oil-producing industry during recent years remains a serious problem despite cost cutting and more efficient operating practices.