On Mar 1, 12:34 pm, John McAdams <john.mcad...@[EMAIL PROTECTED]
> wrote:
> On 29 Feb 2008 13:10:51 -0500, alo...@[EMAIL PROTECTED]
wrote:
>
> >uh, John - did you read that ENTIRE Bobby Kennedy interview; it's
> >really quite inconclusive, and it includes the following:
>
> Nice you all that was on my web site (which is not the "entire"
> interview, but is pretty much all that was relevant to Vietnam).
>
> If you are arguing that Kennedy might not have sent hundreds of
> thousands of troops into Vietnam, you may be right -- although nobody
> can really know.
>
> But the question is whether he had *already* decided to pull out and
> let the Communists take over.
>
> The answer to that is: "No."
>
>
>
>
>
> >Martin:
> >There was never any consideration given to pulling out?
> >Kennedy:
> >No.
> >Martin:
> >But the same time, no disposition to go in all . . .
> >Kennedy:
> >No . . .
> >Martin:
> >. . . in an all out way as we went into Korea. We were trying to avoid
> >a Korea, is that correct?
> >Kennedy:
> >Yes, because I, everybody including General MacArthur felt that land
> >conflict between our troops, white troops and Asian, would only lead
> >to, end in disaster. So it was. . . . We went in as advisers, but to
> >try to get the Vietnamese to fight themselves, because we couldn't win
> >the war for them. They had to win the war for themselves.
>
> >-Allen Lowe
>
> .John
> --------------http://mcadams.posc.mu.edu/home.htm-
Hide quoted text -
>
> - Show quoted text -
Shalom aleikhem;
"If you want to rule the world, you need to control oil. All the oil.
Anywhere. Oil is the lifeblood of modern civilization "
The United States and the United Kingdom did not wage war on Iraq for
the officially stated reasons. That much is obvious. The world's
superpower and its key ally were not acting because they feared the
Iraqi government's weapons of mass destruction or its ties with the
terrorist group al-Qaeda. Nor were they fighting to bring democracy to
the Middle East, a region where the two governments had long sup****ted
reactionary monarchs and odious dictators, including Iraqi president
Saddam Hussein himself.
It is time, then, to set aside the sterile discussions about
"intelligence failures" and to consider a deeper reason for the
conflict. This paper will argue that the war was primarily a "war for
oil" in which large, multinational oil companies and their host
governments acted in secret concert to gain control of Iraq's fabulous
oil reserves and to gain leverage over other national oil producers.
http://www.globalpolicy.org/security/oil/2003/2003companiesiniraq.htm
The study showed that one of the world's largest oil fields ran along
the coast of the South China Sea right off French Indo-China, now
known as Vietnam. ...
Thank G-d most people don't depend on bumper sticker philosophy to
form their personal opinions. If they did, we would all be in more
international trouble than we are in already
The US is presently in Iraq for oil. Not just Iraqi oil, but control
of the oil in the area. The plan is for long-term dominance of the oil
in the area. The recent handing back of Iraq to the US-approved Iraqi
government did not give Iraq back its sovereignty or control over its
oil Iraq is a warning to the world: "Do not nationalize our oil. If
you do we will invade your country and hang your leader."
1955 - U.S. Oil Monopoly - "By 1955, through proxy American regimes in
Iran and Iraq, American cor****ations ended up controlling over 50
percent of Middle East oil reserves, and provided Europe with over 90
percent of its oil im****ts."
1955 - U.S. Training / South Vietnamese Army - February 12th, 1955:
"U.S. agreed Feb. 12 to help train South Vietnamese army." [Based on:
The World Almanac and Book of Facts, 2005, p. 550]
It's all about oil
Is it no wonder that Americans don't like history while in school.?
The real truth destroys their vision of America and its floundering
fathers
fable.
Every conflict since World War One has been influenced by oil in some
way. Did we go to war in Vietnam over oil? Damn right we did. Over
the course of two decades Vietnam has emerged as an im****tant regional
producer of oil and natural gas in Southeast Asia.
American sailors are now on oil-protection patrol in the Persian Gulf,
the Arabian Sea, the South China Sea, and along other sea routes that
deliver oil to friendly nations around the world including our ally...
Israel
We are All Jews Now
http://www.dissidentvoice.org/Articles4/Jones_Palestine.htm
Most literate Americans understand this and don't care. They know that
America now depends on getting oil from foreign sources and if it takes a
war to obtain it, so be it. Oil And Gas Equipment and Services In Vietnam
as of January 2007 are now of keen interest to American oil companies and
may present a military problem with China.
"The U.S. invasion of Iraq to loot its oil and politically restructure the
Middle East, is part of a policy of military imperialism that the American
and British ruling circles have been engaged in for several centuries."
--- Norman D. Livergood
The New U.S.-British Oil Imperialism
The United States was brought into the second world war when in July 1941,
President Roosevelt signed an embargo to stop all ****pping to Japan. This
was said to be in retaliation for the Japanese invasion of French
Indo-China. Roosevelt's U.S. embargo cut off the Japanese oil supply,
which would have quickly shut down Japan's entire economy. In late
November 1941 the Japanese sent a written "war warning" through diplomatic
channels to Wa****ngton, demanding that the embargo be stopped, or else
American sites in the Pacific would be attacked in retaliation. That
formal diplomatic warning was ignored and the U.S. made no reply. Just two
weeks later the Japanese bombed the American embargo ****ps located in
Pearl Harbor.
Japan had no plans to invade the United States. They simply wanted
America to mind its own business and leave Asia to the Asians
What ever happened to the arrogant Monroe Doctrine, a U.S. doctrine
which, on December 2, 1823, proclaimed that European powers would no
longer colonize or interfere with the affairs of the nations of the
Americas. The United States planned to stay neutral in wars between
European powers and its colonies. However, if these latter types of
wars were to occur in the Americas, the United States would view such
action as hostile
"Greed is a fat demon with a small mouth and whatever you feed it is
never enough."
--- Janwillem van de Wetering:
During World War One the modern armies first discovered their thirst
for oil. The war machine had become mechanised. War ****ps now depended
on oil, as did the tanks. Airplanes were just coming into use. Early
cars and trucks were being used to move troops and supplies.
Strategists recognised not just the military need for oil, but saw
that control of oil would be an im****tant strategic advantage even in
times of peace. John D. Rockefeller had founded Standard Oil and was
the richest person on the planet at that time and civilian use of
petroleum products was growing....
There are many examples. The Human Rights Watch and Amnesty
International websites are full of examples of countries where the
presence of oil has led to upheaval. Every developing nation where
oil
is discovered suffers from the exploitation of that resource.
Governments fall, civil war breaks out, people are forcibly removed
from their land and few see the wealth that the oil brings. The
sudden
discovery of oil in a developing nation is not a chance to better the
lot of that nation's people. It is a path to violence.
US oil exploration played a part in Vietnam. Herbert Hoover had
prepared a re****t on oil in the South China Sea back in the 1920s.
His
research indicated that there was a large amount oil off the coast of
French Indo-China. Offshore drilling technology didn't exist at the
time, so the re****t was largely ignored. The technology did exist by
the time the US was considering getting involved in Vietnam though.
The problem was that US interests had no power in the area and could
not use the modern technology of the time to search for oil as a
result. That technology consisted of taking readings from explosives
set off under the water.
Once the US was involved in the war, largely through the Gulf of
Tonkin incident the explosive soundings could be used under cover of
the clearing of munitions from war planes returning to their aircraft
carriers. The war also gave the US a reason to be there. If there was
no "legitimate" reason to be there the government of Vietnam and the
French would both have been making claims to the oil and protesting
US
exploration.
As conflict increases over control of the oil fields civilians who
live on the land above the oil are violently driven out. New roads
are
put in to access the oil carrying troops who attack the villagers.
The
oil companies are fully aware of the devastation being caused by
their
presence since the beginning. Canada's Talisman Energy and Sweden's
Lundin Oil were forced to pull out of Sudan under pressure from human
rights groups
http://www.peakoil.com/printout688.html
Rockefeller tells FBI to investigate President Bush!!
We fight for Standard Oil!!
Senator Asks FBI to Investigate Fake Iraq Document
( Sen W. Va.) John D.Rockefeller
An American oil company that last month signed a drilling contract
with China said Friday it had begun gathering seismic data in a 9,700-
square-mile area of the South China Sea also claimed by Vietnam. " It
is our oil."
--- American oil company executive
Signs of the Times for Mon, 20 Nov 2006
Signs Editorial:
John F. Kennedy, Oil, and the War on Terror
Laura Knight-Jadczyk
20 November 2006
On November 20th, 1963, between 11:30 - 11:40 a.m., President John F.
Kennedy met with Lena Horne, Carol Lawrence, DNC chairman John M.
Bailey, and others.
Later that day, he issued a statement on the Extraordinary
Administrative Radio Conference to Allocate Frequency Bands for Space
Radio Communication Purposes, held in Geneva, Switzerland from October
7 to November 8, 1963. He invited other nations to participate in
setting up a global communication satellite system. He spoke of "a
peace system worldwide in scope."
Following that, John Kennedy sent to the Congress the 17th annual
re****t on U.S. participation in the United Nations, and then he signed
into law bill (HR2073) to allow the conveyance of submerged and tidal
lands to Guam, the Virgin Islands, and American Samoa if they are
needed for economic development or other compelling reason. The John
F. Kennedy Presidential Library Archives
At the end of the day, he had less than two days left...
Early today, 43 years later, a member of our forum posted a link to an
article carried by the U.K. Guardian:
War on terror 'could last 30 years'
There is "every prospect" of the "War on Terror" lasting for 30 years
or more, a global security think tank has said.
The Oxford Research Group re****t said recent political changes in the
US would make "very little difference" to the conflicts in Iraq and
Afghanistan.
In the US midterm elections, the Democrats seized control of both
house of Congress from the Republicans. The re****t said the United
States was now faced with a dilemma. If it withdraws from Iraq,
jihadist groups could operate "without restraint" in this "im****tant
oil-bearing region".
But if it decided to stay, US soldiers could become an increasing
"magnet" for radical groups, with Iraq turning into a training ground
for new generations of paramilitaries.
Written by Professor Paul Rogers, ORG's global security consultant and
professor of Peace Studies at the University of Bradford, the re****t
analysed the past year of events in Iraq and the Middle East, looking
at how the war on terror had transformed into what has been called the
"Long War" by the Bush Administration.
What was needed was a complete reassessment of current policies, the
re****t said. However, Prof Rogers' said this was unlikely to happen,
because even with the Democrats now controlling both houses, there was
virtually no commitment to full withdrawal from Iraq.
Instead, Prof Rogers' re****t found that while there were various moves
to modify policy, such as withdrawing from the cities and maintaining
a presence in a few bases, nothing amounted to substantial change.
Commenting on the changes needed, Prof Rogers said: "Most people
believe that the recent elections mark the beginning of the end of the
Bush era, but that does not apply to the war on terror. In reality
there will be little change until the United States faces up to the
need for a fundamental rethink of its policies. So far, even with the
election results, there is no real sign of that."
In short, what I wrote several days ago in my article Post Election
Reality Check, seems to be right on target: "Meet the New Boss, same
as the Old Boss."
But it didn't have to be this way. As the reader is probably thinking
by now, having read this present series of articles on John Kennedy
and his plans to steer the ****p of American State into peaceful
waters, "Oh, what a different world we would be living in today if
John F. Kennedy had lived and had finished his work!"
And it's true. Because the same cabal that was responsible for his
death is the cabal that that is running the planet today via the
puppet regime in the United States, and with hooked tentacles in
nearly every other government on the planet. We are, indeed, facing 30
years of War Without End from which few of us will emerge alive. We
are living in a virtual police state planet, with terror around every
corner, a terror that is not due to some mad Muslim hating us because
of our "freedoms" - what a joke - but is due to all of the
machinations and manipulations of evil people in high places whose
greed for money and power knows no bounds.
And that is what the monied elite wanted: War and more war to make
money and more money. And their controllers - those pulling the
strings behind the scenes only wanted power and more power and used
the greed of the Business Titans, the Mob and the Oil Empire to
achieve their ends. But, we will come to that soon enough.
It seems to be a certainty that if John F. Kennedy's life had not been
brutally ended 43 years ago, there would be no so-called terrorists
(of either the Islamic or Monied Elite variety), now would there be a
War on Terror. What a tragedy that we don't see another John F.
Kennedy on the horizon with the brains and savvy to haul our buns out
of the fire now.
Nowadays, just about everyone knows that it is about oil. But what a
lot of people don't know is exactly how it all got started. So,
today's excerpt from Farewell America is going to take us back to the
beginnings of the Oil Issue.
Oilmen
"The American Beauty Rose can only be coaxed to that degree of
splendor and fragrance that enchants us by sacrificing the other buds
growing around it. In the business world, the same operation is the
result not of an unhealthy trend, but simply of a law of nature and of
God." John D. Rockefeller, Jr.
Oil is the lifeblood of modern civilization. It provides the fuel for
our planes, our ****ps, our trucks, and our 180 million automobiles,
and it is the source of some 300,000 petro-chemical products. Oil
accounts for more than half of the maritime freight tonnage, and
furnishes more than 60% of the world's energy. It is the number one
industry in the world today.
The budget of the oil industry is larger than the budget of the United
States government. The annual revenue of the largest oil company in
the world, Standard Oil of New Jersey, is greater than the revenue of
the government of Canada. Directly or indirectly, through American
domestic production (1) as well as overseas holdings, the American oil
industry controls 80% of the world market. (2)
Through their overseas domination and the steady growth of the oil
market in the past fifty years, the big companies have grown
increasingly bigger.(3) Their interests, however, do not always
coincide with those of the continents and the peoples they control.
Europe, which consumes 25% of the oil produced in the world today,
accounts for only 0.7% of world reserves, and for only 1.4% of world
production. In the coming decade and probably until the end of the
century, Western Europe's major problem will be how to obtain enough
oil.(4)
Oil is no longer an exclusive capitalist commodity. The International
(mainly American) Consortium that dominates the world market, after
attempting unsuccessfully following World War I to gain control of
Russian resources, saw them pass under Soviet control. In 1962 the
Soviet Union (with an annual production of 1.3 billion barrels) had
little surplus oil to ex****t, but since then the situation has
changed. Soviet production in 1968 is estimated at more than 2.1
billion barrels. Simultaneously with its ideological and political
transformation, the USSR is converting its coal-burning industry
(including its armaments industry) into an oil-burning consumer
industry. In a few years it will have the same pro****tion of consumer
to heavy industry as the countries of Western Europe. Its desire for
international commercial expansion and its need for foreign currency
have led the Soviet Union to abandon its socialistic oil policy. The
consequences of this change are these:
- an increase in production, in order to ex****t more oil;
- the creation of a distribution network which, because the USSR has
relatively few tankers, is largely dependent on the COMECOM pipeline
which runs to the heart of Western Europe;(5)
- the adjustment, with certain exceptions (barters such as that
practiced with Italy, or agreements based on political considerations,
as with Cuba) of Soviet prices to bring them into line with the prices
of the Consortium.
At the present time, the USSR is feeling its way into the world
petroleum market. This has led to a change in its Middle East policy
following a series of instructive failures in the area. The neo-
Soviets have come to understand the ground rules of the petroleum
industry, and Soviet influence in the Middle East is steadily rising.
By 1980, Soviet oil production is expected to exceed 3.5 billion
barrels. Through the pipeline, it will provide an increasing
percentage of Western European consumption. But before that date the
conflict of interests between the Soviet Union and the International
Consortium will either be resolved or will come to a head. In the
latter event, there will be economic warfare; in the former, the
United States and the Soviet Union will set revolutionary principles
aside to carve up the world oil market among themselves.
If Soviet expansion continues at its present rate, the oil market in
the 1980's will be dominated by a Communist-capitalist cartel that
will swallow up Western Europe while continuing to juggle with the
Middle East. For beneath the golden sands of the Persian Gulf lie the
most im****tant oil reserves on the globe, $300 billion worth (in terms
of current prices), on which the Consortium hopes to earn $75 billion
at its usual rate of commission.
About one-fourth of the price of refined oil goes to the companies of
the Consortium in the form of clear profits. In the Middle East,
another fourth goes to the countries that own the concessions. The
remaining half not only covers the cost of production, trans****tation
and refining, but provides profits comparable to those earned in other
industries.
Oil as an industry is in a class by itself. No other economic activity
offers such high profits, to the detriment of the consumers and the
producing countries. In the Middle East, the people gain nothing from
the riches extracted from their soil. The royalties paid by the
Consortium go to the rulers and their relatives, the ruling classes,
high government officials, and a few local businessmen. By sup****ting
the emirates of the Persian Gulf and protecting their rulers, Great
Britain, now supplanted by the United States, has contributed to the
preservation of archaic social structures and paved the way for
revolution.(6)
In 1968, the overseas investments of American oil companies total more
than $30 billion (nearly 40% of all American investments abroad.(7)
The giants of the oil industry not only control the world market, but
governments and foreign and military policy as well. In the United
States, the Republican and a ****tion of the Democratic Party get much
of their financial backing from the oil industry. The State Department
and the White House and a substantial ****tion of the press give
systematic sup****t to the industry. Even college graduates in quest of
jobs are warned of the danger of opposing it.(8)
Four oil companies were classed in 1966 among the ten largest American
cor****ations: Standard Oil of New Jersey, which ranked third (after
General Motors and Ford), Socony Mobil, fourth, Texaco, seventh, and
Gulf Oil. which ranked tenth. But this list is open to question. It
fails to take account of the most im****tant factor in economics,
profits.
Although the combined personnel of these four oil companies totaled
only 346,846 (388,016 persons are employed by General Motors alone),
their net profits, $2,661,684,000, exceeded those of the entire
automobile industry ($2,603,638,000) -- in other words, the combined
profits of General Motors, Ford, and Chrysler, which together employ
four times as many people. But General Motors, Chrysler, and Ford,
together with deficit-ridden American Motors, comprise almost the
entire American automobile industry . The fourteenth, fifteenth, and
sixteenth places on the list of the top 500 companies are held by
Shell Oil, Standard Oil of Indiana, and Standard Oil of California,
whose combined net profits exceed $1 billion, and further down the
list are 15 other oil companies whose profits add another million to
industry profits. It can be said that the combined profits of the
American oil industry (which in addition to these 22 top companies
include several thousand smaller ones) are greater than the annual
turnover of General Motors.(9)
Standard Oil of New Jersey is symbolic of the oil industry. It is also
its moral leader. At first glance, it looks like just another
cor****ation. In theory, it is what is left of the empire created by
John D. Rockefeller, which was broken up by anti-trust legislation in
1911.(10) But half a century later Jersey Standard, which
theoretically neither produces nor refines nor trans****ts nor sells
any oil, controls one-fifth of the world market. It owns the largest
private tanker fleet in the world (126 ****ps totaling 5,096,000 tons),
ranking 12th in 1967 on the world list of fleets, along with the
national fleets of Panama, Sweden, Denmark and Spain. It has a
security department eight times larger than the security department of
General Electric, employing about 30 special agents who are graduates
of the CIA or the FBI. Its 14 top executives control more than 300
subsidiary companies, one-third of which rank among the largest
cor****ations in the world.(11)
The history of Standard Oil is the history of the oil industry, which
was born a little more than a century ago at Titusville, Pennsylvania
in 1859.(12) Oil, however, has always existed. In ancient times it was
used for eternal flames and torches, but no one ever thought of
commercializing it. Until the 19th Century commerce was based on
grain, and it was there that personal fortunes were made and power
won.
Standard Oil was founded in 1860, and for nearly half a century the
oil industry and the life story of John D. Rockefeller were one.
During 51 years Standard eliminated its competitors by every means at
its disposal, corrupting public officials and violating or getting
around the laws, until it was dissolved in 1911.
Around 1890, its world monopoly began to slip. The Russo-Swedish Nobel
group inaugurated operations in the Caucasus, and between 1891 and
1901 Russian production actually exceeded that of the United States.
The British Rothschilds, realizing the future possibilities of oil, in
particular with regard to modern ****pping, aided the Royal Dutch
Company to escape the control of Standard and conquer some of
Rockefeller's markets in the Far East.(13) In 1907 Royal Dutch merged
with the Shell Trans****t and Trade Company, which until then had
specialized in mother-of-pearl. With the backing of the Foreign Office
and the privileges it enjoyed in the British and Dutch colonies
overseas, the Anglo-Dutch company, headed by Henry Deterding, expanded
rapidly. Contrary to Standard, which had patterned its commercial
policies after the isolationist principles of Theodore Roosevelt and
Taft and sought only markets abroad, Royal Dutch Shell carried out
explorations and extended its operations throughout the world.(14) In
1912 it began operating in the United States and soon controlled half
of American production. It also forced its way into Mexico, where it
bought out the Pearson group that owned the No. 4 well at Potrero del
Llano, with a production of 91 million barrels. By 1921 Mexican
production equaled 40% of United States production, but foreign
companies (British and American) sacrificed everything to the present
and devastated the Mexican reserves. Gas pressure was wasted and the
Golden Way oil field near Tampico was invaded by salt water. By 1930
Mexican production had dropped far behind, and she was soon eclipsed
by her neighbor to the south, Venezuela. In 1963, Mexican production
equaled only 4% of American and 20% of Iranian production.
In the Middle East, where oil reserves are at least 100 times greater
than those of the United States, a British adventurer, William Knox
d'Arcy , obtained a concession from the Shah of Persia in 1901
covering five-sixth of his lands. In 1908 the Anglo-Persian Oil
Company (later the Anglo-Iranian Oil Company, and later still British
Petroleum or BP) was founded. The British Navy had just switched to
oil-burning ****ps, and Winston Churchill, First Lord of the Admiralty,
persuaded His Majesty's government to purchase a majority share in the
new company.(15) At that very moment, America and Europe discovered
the automobile. In 1908 Henry Ford began producing his famous Model T.
The rush was on. In 1911 there were 619,000 automobiles. By 1914 there
were 2 million, and by 1924 there were 18 million cars on the road, 16
million of them in the United States. That year the United States
alone consumed more oil than Europe consumed in 1960.
The war revealed the strategic im****tance of oil. Not only did it
contribute heavily to the allied victory, but it became part of the
stakes of the game. Wilhelm II wished to destroy British oil
domination and give Germany a share in Mesopotamian oil. He built the
Berlin-Bassorah railway (via Constantinople and Baghdad) to compete
with the route of the Indies. Once Germany had been defeated, the
British and the French divided up the oil of the former Turkish Empire.
(16) In 1920, Royal Dutch Shell circled the globe. It had subsidiaries
in the United States, Mexico, Venezuela, Trinidad, the Dutch East
Indies, Ceylon, Romania, Egypt, the Malay Peninsula, North and South
China, Siam, the Philippines, and Burma. In association with other
British companies it acquired concessions in Colombia and Central
America, and it was trying to establish itself along the Panama Canal.
Soon it would extend its activities to Honduras, Nicaragua, and Costa
Rica. It also bought out the Rothschild holdings in Russia for far
less than they were worth. Banker Sir Edward Mackay declared that
"..all of the known, probable or possible oil fields outside the
territory of the United States were either British property, under
British direction or control, or financed by British capital," and
added that "the world was solidly barricaded against an attack from
American interests."(17)
Jersey Standard realized that Woodrow Wilson's policy of isolationism
and pacifism represented a threat to its future. A. C. Bedford,
President of Jersey Standard, declared, "What we need is an aggressive
foreign policy," and the Interstate Commerce Commission recommended
that the United States give diplomatic sup****t to the acquisition and
exploitation by American companies of oil properties overseas. The
State Department dispatched a series of diplomatic notes, the tone of
which grew more and more violent, demanding that the United States be
given a share in the Turkish and German holdings.
In 1922 talks opened between Bedford and Sir Charles Greenway,
President of Anglo-Iranian. They dragged on for six long years, but
Gulf in the meanwhile had obtained a concession on the island of
Bahrain (which it later ceded to Standard of California) which the
British geologists had somehow overlooked. At the same time Socony
Mobil (which when Standard Oil was dissolved in 1911 had inherited
most of its Asian interests) and Shell were engaged in a struggle to
the death in India. Their price war brought prices down all over the
world. In 1928 Sir Henry Deterding (founder and promoter of Royal
Dutch Shell) invited Sir John Cadman of Anglo-Iranian and Walter C.
Teagle, new President of Jersey Standard, to his home in Scotland. At
the conclusion of what has since been known as the Achnacarry
Conference, it was agreed that outright competition had resulted in
excessive overproduction. The Big Three decided:
1. to maintain the status quo of 1928 (in other words their respective
positions) on the world market;
2. to fight overproduction and the waste of new, non-competitive
installations;
3. to fix uniform production prices;
4. to supply markets from their closest source of supply through a
series of reciprocal agreements between companies;
5. to avoid producing in excess of demand.
The companies signing the agreement explained that these measures were
designed to protect the consumers from price hikes resulting from a
multiplicity of separate operations. In actual fact, they laid the
foundations for an arrangement by which the members of the
international cartel would cooperate in the most profitable
exploitation of world oil reserves. They brought the war between Shell
and Socony to an end by making it possible to fix prices in India, and
prevented a new price war in Mexico. A sort of line of demarcation was
drawn between the British and American zones of influence. It was
nothing short of a monopoly.
American anti-trust legislation was no problem. It was expressly
stipulated that the Achnaccary Agreement did not apply within the
United States. But in 1929, 17 companies joined to form the Oil
Ex****ters Association, which set quotas and established prices, which
were aligned with the highest costs in the country, those prevailing
in Texas and the Gulf of Mexico. The British had no objection to this
arrangement, as it enabled them to make high profits on their low-cost
crude from Iran and Iraq. As for the American companies, which were
already making good profits from domestic production, they intensified
their overseas explorations, which would earn them even higher
profits.
The "Red Line" agreement concluded in 1929 consecrated America's entry
into the Middle East. The holdings of Turkish Petroleum were divided
up again, this time between four partners which joined to form the
Iraq Petroleum Company: Anglo-Iranian (still controlled by the British
government), Royal Dutch Shell, the Compagnie Francaise des Petroles,
and Standard Oil of New Jersey (in association with Socony Mobil).
Each was given a 23.75% share in the venture.(18) The Red Line
agreement stipulated that the four associates undertook to maintain
the same percentages in all of the countries that lay within a red
line on the map. The red line ran all the way around the Middle East.
At the time that the Iraq Petroleum Company was founded, Iraq was the
only oil-producing country in the region. But Standard of California
discovered oil at the edge of the sea on the concession it had
acquired from Gulf at Bahrain. As it had no distribution network in
the Orient, it signed an agreement with the Texas Company (becoming
Caltex in 1936). Standard of California also began operating in Saudi
Arabia, on the territory of El Hasa which King Saud had seized from
the bedouin princes. With Texaco it formed the Arabian American Oil
Company (Aramco).
Caltex and Aramco soon proved to Standard and Socony that the reserves
on their concessions far exceeded those of Iraq. The latter two
companies regretted having signed an agreement to share their future
discoveries with the French and the British. But American solidarity
and Jersey's power soon overcame that obstacle. Jersey Standard,
Caltex and Socony joined with Aramco, excluding Royal Dutch Shell,
Anglo-Iranian and the Compagnie Francaise des petroles. Great Britain
already controlled sufficient resources in Iran, Venezuela, the Malay
Peninsula, and Burma. France was traditionally a non-commercial
country, and she had no petroleum policy. Like Gulbenkian, she was
given an indemnity.
The Iraq Petroleum Company faced the difficult problem of income
taxes. In order to benefit to the maximum from American and British
tax provisions that favored the overseas activities of their
companies, it was decided that any profits earned would not go to IPC,
but would appear instead on the balance sheets of the constituent
companies. Obviously, this was contrary to the interests of the
government of Iraq. IPC sold oil to Iraqi consumers at its usual Texas-
based prices, and the company was not eager (or perhaps unable) to
calculate its actual net cost, which would have brought its excessive
profits to the attention of the Iraqi government.(19)
By the time of the Second World War, the world had been divided up
between the Big Seven (Jersey Standard, Royal Dutch Shell, Socony,
Texaco, Gulf Oil, Standard of California, and BP). The war caused a
few minor annoyances, and there was concern as the Germans neared the
Caucasus and Egypt, but the oil business was booming.(20)
The requirements of the war nevertheless led the Allies to impose
quotas on raw commodities throughout the world, and even the
distribution of oil was controlled. The experts on the War Production
Board demanded that the United Nations be given the power to
administer world stocks of raw materials, and in Britain the Labour
Party proposed a similar plan. In 1945 at the Wa****ngton Conference,
Sir Anthony Eden and Secretary of State Cordell Hull legalized and
completed the old Achnacarry Agreement that divided up the world's oil
reserves between Great Britain and the United States. Highly
displeased, the Soviet Union that same year signed the Moscow
Agreement with France.
In 1947 the International Cooperative Alliance proposed that the
petroleum industry in the Middle East be nationalized in order to
eliminate the nascent rivalry between Russia and the West, raise the
living standards of the Arabs, and diminish the price of oil to the
consumer. It proposed that the United Nations create a special agency
to control the petroleum resources of the Middle East and admit all
buyers on an equal footing, in accordance with the Atlantic Charter.
But when the United Nations Economic and Social Council voted on the
measure on August 12, 1949, only Norway and Colombia sup****ted it.
Eight member countries abstained (including the Communist states), and
eight others voted against it, including the United States, Great
Britain and the Netherlands.(21)
The international oil cartel was in greater danger when, in December
1952, the Economic and Financial Commission of the UN approved a joint
Iranian-Bolivian resolution in favor of the right of nationalization.
The United States was the only country to vote against it.
Iran was Britain's private preserve. Sinclair (42nd largest American
cor****ation in 1966, with $1,377 billion in sales) and Standard had
carried out some explorations there, but had withdrawn at London's
insistence. In 1959 Iranian Prime Minister Mossadegh demanded an
increase in royalties, the rate of which had remained unchanged since
before the war, as well as a 50-50 split in profits. Anglo-Iranian
refused, whereupon Mossadegh nationalized the company,(22) and the
crisis was on. The American firms profited from the operation.
Aramco's production rose from 196 to 280 barrels, that of Kuwait from
126 to 266 million. In 1955 Iran began to ex****t oil in small
quantities and at reduced prices to non-producing countries such as
Italy and Japan. But the Consortium regarded Iran as an ominous sign.
To its great relief, the CIA went into action, and Mossadegh was
replaced by Zahedi.(23)
The American intervention aroused a storm of ill-feeling against the
United States that has not yet been dissipated. The Iranians claimed
they had been exploited by Anglo-Iranian for forty years.(24) John
Foster Dulles turned the Iranian problem over to Herbert Hoover, Jr.,
who formed an alliance of five big companies (Jersey Standard, Socony,
Texaco, Gulf, and Standard of California) which formed a common front
in the interminable negotiations with the British and demanded that
the Iranian holdings be divided equally between Anglo-Iranian and
themselves. The new company was called Iranian Oil Participants, Ltd.
The British (who received an indemnity of $510 million) kept their
majority with 54% of the shares (40% went to Anglo-Iranian, now BP,
and 14% to Shell), while the five American concerns got 8% each.(25)
The new agreement was signed on October 21, 1954 and ratified by the
Iranian Parliament, which recognized the validity of the new
Consortium for a period of 40 years.(26)
But the American independent companies were annoyed. They felt the Big
Five were deliberately shutting them out from their overseas treasure
chests, while continuing to benefit from domestic sales prices for
their low-cost crude from the Middle East and Venezuela.(27) The
Consortium, however, was more concerned about the reaction of the
other oil-rich states, which were carefully scrutinizing every clause
of the agreement signed with Iran. The latter country had obtained
nothing more than a 50% share of the profits, the same accorded the
other producing states, plus the promise of a gradual increase in
production. This new agreement raised the American share in the oil
production of the Persian Gulf to 55% in 1955 (as compared to 14% in
1938). The British and the Dutch were declining in power.
In 1956 came the Suez crisis. On July 26, Egypt nationalized the
canal. Since that date, the Middle East has become a battleground of
vested interests(28) where the member countries of the Consortium, the
United States, Britain and France, struggle for predominance under the
interested gaze of the Russians, whose problems are simpler because,
unlike the French, they have enough oil for their own needs, unlike
the British their power does not depend on their position in the
Persian Gulf, and unlike the United States they are not subjected to
private industrial pressures.
The USSR is content to sit back and watch as the cracks grow wider
between the Western powers, between the Western powers and the Arab
states, and between the Arab states themselves. In 1956 half the oil
consumed in Europe was im****ted from the Persian Gulf, and 60% of it
was ****pped through the Suez Canal.(29) Britain and France risked a
war to ensure control of their oil supplies, and only the intervention
of the United States stopped them. During the winter of 1956- 1957,
American companies took advantage of the European shortage to raise
the price of fuel oil $1.50 a ton, and the price of crude $2 a ton.
The price hikes affected American consumers as well. They cost the
Americans $1.25 billion and the Europeans $500 million. Suez brought
Jersey standard $100 million in additional profits. The Big Five beat
all records for profits during the first quarter of 1957. Jersey
Standard's profits rose 16% (compared to the last quarter of 1956),
Texaco's 24% and Gulf Oil's 30%.(30)
The Persian Gulf brought the Consortium more than $1 billion a year.
Continuing the policy followed by the Department of State since 1920,
John Foster Dulles lent his sup****t to the big American oil companies,
and when necessary the intelligence services and the military backed
him up. The Middle East was almost completely encircled, and Britain
was losing her foothold. In 1957 the King of Jordan, hitherto
subsidized by the British, switched his allegiance to the Americans.
Saudi Arabia's King Saud renewed his country's agreement with the US
Air Force and the Strategic Air Command in exchange for $10 million in
weapons. The London Times wrote, somewhat maliciously, that "The
bizarre combination of a large American company (Aramco) and an
ancient feudal kingdom constitutes a real threat to Anglo-American
cooperation in the Middle East."
The growing demands of the Saudi Arabian King were not the only
problem the Consortium had to face. It had managed to gain a foothold
in the Sahara,(31) but it was deeply concerned when the Italian firm
ENI (Ente Nazionale Idrocarburi) proposed an agreement giving the
government of Iran a 75% share of profits (at a time when a 50-50
split was still the rule in the Middle East).(32) ENI's President,
Enrico Mattei, had the courage to defy the Consortium. He declared:
"The oil companies have built their power by concentrating control of
production and distribution in a few hands, by maintaining a
relation****p of supplier to client with the consumers in a closed and
rigid market, by refusing to grant compensation other than tax
revenues to the countries owning the reserves, by excluding all
agreements and arrangements between states for a more rational
organization of the market, but they have also created the conditions
for a breaking up of the system or its transformation under the
pressure of new forces and new problems . . . The price of crude oil
is based not on production costs in the Middle East, but on the much
higher costs in the United States . . . As a result of the rivalry
between the various nations and the Western oil companies, oil has
become an element of disorder and instability that gives rise to
nationalist demands in the oil-rich countries and arouses the jealousy
of those states that have none.
"Italy, France, Belgium, Germany and Japan are anxious to free
themselves from their subservience and that of the consumers to the
traditional organization of the oil industry . . . For the first time
in a century we have the possibility of substituting a buyers' market
for a sellers' market. An orderly market is necessary if we are to
change the order established by the big international companies. The
supremacy of what is known as the international cartel is not 'taboo,'
and Italy is not obliged to respect it when this supremacy is breached
on all sides by public and private initiatives.
"Oil is a political resource par excellence. What must be done now is
to see that it is made to serve a good policy which is free, in so far
as possible, from all imperialist and colonialist reminiscences,
devoted to the preservation of peace, to the welfare of those whom
nature has provided with this resource, and of those who make use of
it in their industry." A short time later, in 1962, Enrico Mattei was
killed in the crash of his private plane.(33)
At the beginning of the Sixties, the Consortium's problems multiplied.
The evolution of the market revealed growing competition,(34) but what
was even more serious was the wave of popular revolts. Fortunately,
for every Mexico(35) there were two or three Venezuelas,(36) but
nations all over the world were suddenly becoming conscious of the
im****tance of the minerals in their soil. Those that had been bypassed
by nature realized that the balance of their economy depended on the
security of their supplies. The Consortium knew that the Italian ENI,
the French ERAP, the Mexican Pemex, and the Argentinean YFP could
easily be copied elsewhere. It began to pay special attention to its
sources of supply in the Middle East and to its principal clients in
Western Europe.(37) Their hatred of the foreigners who depleted their
soil, however, was not strong enough to forge the peoples of the
Middle East into a powerful and united community.
In January, 1968, the principal oil-ex****ting countries of the Middle
East -- Saudi Arabia, Kuwait, Iran, Iraq, Qatar, Syria and Libya --
joined with Indonesia and Venezuela to form an organization to
commercialize the oil of its member states, to defend their economic
and commercial interests, and to examine ways to develop the oil
industry and its derivatives. The principal object of this agreement
was to raise prices and create a fleet of tankers and a petrochemical
industry under the control of the producing countries themselves.
The Consortium is fighting every foot of the way, but it is beginning
to realize that its days in the Middle East are numbered. On the other
hand, it has sufficient political power to maintain its position for
the moment in Venezuela. Caution, however, has led it to concentrate
its exploration efforts in South America and Africa, where the oil
fields of Libya, the Sahara, Nigeria, and Gabon produce more than 700
million barrels. For Jersey Standard, the future lies in Africa.
The Consortium also had problems in Europe. In 1966 Western Europe
consumed 2.9 billion barrels of oil, only 126 million of which came
from her own soil. Britain is a member of the Consortium. Her oil
policy is patterned after that of the United States, and despite the
promise of im****tant oil discoveries in the North Sea, she remains
dependent on her concessions in the Persian Gulf and has not yet
resolved her coal problem.(38) The Common Market is a bigger headache
for the Consortium. Germany produces only 56 million barrels of oil a
year, plus an additional 14 million barrels in Libya, but the
distribution networks in Germany are almost entirely controlled by
American concerns. (Texaco was able to buyout DEA, an im****tant
Germany company, with only one-fourth of its annual profits.)
Italy is less aggressive but just as realistic as France. Her oil
policy is that defined by Enrico Mattei, and she is linked to the
Soviet COMECOM pipeline at Trieste. The Italians have undertaken
explorations in the Adriatic, Somalia, the Sinai, the Gulf of Suez,
Tunisia, and the Persian Gulf. In December, 1967 they obtained a
12,000 square kilometer concession at Rub El Khali in Saudi Arabia,
together with permission to construct a petrochemical complex.
In France the present Minister of Agriculture and former Prime
Minister, Edgar Faure, wrote in 1939 that "If the government has an
oil policy, the leaders of the oil industry will have a policy in the
government." Until 1939 France too was dominated by the Consortium.
Since De Gaulle's accession to power in 1958, and in particular since
1963, France has stood in direct opposition to the interests of the
American oil industry. The French government already controlled a
****tion of the third-largest non-American company in the world, the
Compagnie Francaise des Petroles, and it spent several billion dollars
drilling for oil in the Sahara. When political considerations forced
De Gaulle to give the Sahara back to the Algerians, the government,
desirous of obtaining oil independence, began looking in other
directions. A state oil company, ERAP, was created which today ranks
17th in the world, and whose activities and policies in the Middle
East (notably in Iraq and Iran) run contrary to the methods and
interests of the International Consortium.(39) Today, France is the
most active sup****ter of the idea of a Common Market oil organization.
Such a body is indispensable to Europe, but it is contrary to the
interests of the Consortium in other words, to the interests of the
big American companies.(40)
In November 1966, Walter J. Levy, an American expert, submitted a 52-
page confidential re****t to the European Economic Community (Common
Market). Levy noted that "eighteen percent of the oil im****tations of
the Common Market are controlled by the companies of the Common Market.
(41) As things stand now, this figure is destined to drop." Levy
recommended the adoption throughout the Common Market of fiscal
measures of the type already existing in France, which are aimed at
stimulating oil explorations. These measures are specifically directed
at the oil industry and are nearly as favorable as the tax privileges
granted oil companies in the United States, with the difference that
in France any amount deductible from taxes must be reinvested within
five years in explorations or related activities. Levy suggested that
this provision be included in any fiscal measures adopted by the
Common Market countries.
This re****t, which was submitted to Dr. Walter Hallstein, was an
indication of the Common Market's preoccupation with the development
of the oil industry of its member states in order to be able to
compete with the Consortium.(42)
This orientation of the oil policy of the Common Market was hardly
welcomed by the Consortium. The battle was on.(43) The measures
proposed by France and Walter J. Levy to enable the Common Market to
regain its oil independence were identical to those that had enabled
the United States to gain control of the market.
The oil industry has dominated the American economy formerly 40 years.
(44) The 1930 crisis enabled it to eliminate the independent
prospectors and made possible the establishment of federal and
especially state controls the likes of which existed in no other
industry, and which had the effect of maintaining artificially high
prices for petroleum products. You will find no mention of price
fluctuations for crude oil and gas in any financial publication.
Almost all of the world's raw commodities are quoted on the stock
exchange, with the exception of oil.(45)
The oil market is no freer in the United States than it is in the rest
of the world.(46) The rules that govern the activities of the Oil
Empire within the United States are particularly advantageous for
prospectors and land owners,(47) which explains why there are more
than a million oil wells on US territory, and why 400,000 of them
produce, or are permitted to produce, only 10 barrels a day (while one
well in Mexico has an annual production of 7 million barrels, and
several wells in Iraq produce more than 500,000 barrels a year).
Mackay, the British oilman, once remarked, "The Americans are
plundering their natural resources." Under the rules that have
governed the American oil industry for nearly 40 years, two-thirds of
the United States reserves have been wasted. Henry M. Bates, Dean of
the University of Michigan Law School, remarked in 1935 that "the
losses resulting from the rule that any oil discovered belongs to the
property owner can be evaluated at several billion dollars and
constitute the most ruthless and the most unjustifiable destruction of
our natural resources ever perpetrated by the American people."
Nevertheless, the oil industry justifies its privileged position by
pointing to the need to conserve American oil reserves, a major part
of the wealth of the nation and a strategic necessity in time of war.
But, as Harvey O'Connor remarks, the word "conservation" must be taken
with a grain of salt. When oilmen talk about conservation, they are
speaking of the conservation of their profits.
The problem emerged for the first time in 1930, when the immense
reserves of the East Texas oil fields upset the balance of the market.
It was decided that production quotas would be established each month
in accordance with the demand. A national quota was set, and in each
oil-producing state a special body was established to see that it was
respected.(48) In Texas, this task was assigned to the Texas Railroad
commission, which had been created in 1891 to regulate the railroads.
In 1919 its authority was extended to the oil industry. Given the
dominant position of the state of Texas in the Oil Empire, the Texas
Railroad Commission serves as a model for the other state regulatory
bodies. The annual variations in the quota bear no relation to
scientific conservation techniques.(49) Nor are the consumers
represented on these commissions. The system is, in effect, a
monopoly, and it enables the oil industry to top all other American
industries in sales per employee(50) and to maintain a steady rate of
profits regardless of the national economic situation and
international events.(51)
The system of "posted prices" is one of the pillars of the industry.
These prices do not represent the net cost increased by a normal
margin of profit. Instead, they are fixed by the Consortium. While it
is difficult to determine the actual net cost of crude oil, it can be
estimated at one-tenth the wholesale sales price. The companies of the
Consortium and the company-backed local rulers (in Venezuela as in the
Middle East) pocket most of the difference.(52) The Consortium's
profits were and are excessive when calculated on production costs in
Texas, but the latter, which already include profits for the local
operators, are four or five times higher than net costs in the Middle
East, and three times higher than net costs in Venezuela.
The American independent producers are constantly urging higher
production quotas for themselves. In 1954 twenty-nine companies were
forced to lower production as a result of competition from foreign
oil. Even Standard of Indiana complained that im****ts had increased by
35% between 1951 and 1954, while at the same time its Texas production
had been ordered cut by 35%. (It was as a result of these complaints
that the members of the Consortium agreed to sell the independents 5%
of the shares in their Iranian operations}. But the independents'
protests had little effect. The big cor****ations had friends in
Wa****ngton. In 1952 a commercial treaty concluded with Venezuela set
the im****t duty for Venezuela oil at 2% of its value, rather than the
20% requested by the American producers. The National Security
Resources Board, backed by the Mutual Security Agency, recommended
that im****t duties be abolished altogether "if necessary."
In 1955 the government considered limiting oil im****ts to 10% of
national production, but the big cor****ations promised not to exceed
their im****tation level of the preceding year, and this apparently
satisfied Eisenhower. Actually, Jersey Standard and the other members
of the Consortium had little to fear from any restrictions imposed by
Congress. Their foreign market was growing steadily, and they had
diversified interests within the United States. Their im****tations of
foreign oil brought them super-profits, but they made money from their
integrated operations in Texas, Oklahoma, and Louisiana as well.
Conflicting interests can rarely be reconciled. Texas and Venezuela
seemed destined to clash, but the men from Jersey Standard were well
versed in the art of the most profitable compromise. The big
integrated cor****ations make profits on all four sectors of their
activities: extraction, trans****tation, refining, and retail sales.
Distribution is sometimes run at a loss and pipeline profits are
largely fictitious. Refining is an indispensable intermediate
operation of which the independents are purposely deprived. Extraction
is the main source of revenue, but it is the interlocking operations
as a whole that provide the profits.(53)
The profit margins of small, strictly producing companies are
extremely precarious, particularly in the case of the independent
refineries, which are at the mercy of a slight increase in the cost of
crude or a slight drop in the price of gasoline.(54)
The independent, integrated producers and the small producers of crude
are in a somewhat better position. They benefit not only from the
posted prices, but also from the special tax privileges accorded the
oil industry as a whole. These fiscal privileges enable the Big Five
to earn colossal profits while guaranteeing super-profits to the big
independent and integrated companies. They also provide large profits
for the medium-sized concerns, particularly the producers, and it is
to them that the small producers, which in any other sector of the
American economy would have been swallowed up long ago, owe their
survival.(55)
A booklet entitled "An Appraisal of the Petroleum Industry of the
United States," published in 1965 by the Office of Oil and Gas (headed
by Rear Admiral Onnie P. Lattu) devotes only one line in 96 pages to
the depletion allowance.(56) But Milton Friedman, who can hardly be
accused of being a socialist, wrote a whole article on the subject in
the June 26, 1967 issue of Newsweek:
"Few US industries sing the praises of free enterprise more loudly
than the oil industry. Yet few industries rely so heavily on special
governmental favors. These favors are defended in the name of national
security. A strong domestic oil industry, it is said, is needed
because international disturbances can so readily interfere with the
supply of foreign oil. The Israeli-Arab war has produced just such a
disturbance, and the oil industry is certain to point to it as
confirmation of the need for special favors. Are they right? I believe
not.
"The main special favors are:
"1. Percentage depletion. This is a special provision of the Federal
income tax under which oil producers can treat up to 27.5% of their
income as exempt from income tax -- supposedly to compensate for the
depletion of oil reserves. This name is a misnomer. In effect, this
provision simply gives the oil industry (and a few others to which
similar treatment has been extended) a lower tax rate than other
industries.
"2. Limitation of oil production. Texas, Oklahoma, and some other oil-
producing states limit the number of days a month that oil wells may
operate or the amount that they may produce. The purpose of these
limitations is said to be 'conservation.' In practice, they have led
to the wasteful drilling of multiple wells draining the same field.
And the amount of production permitted has been determined primarily
by estimates of market demand, not by the needs of conservation. The
state regulatory authorities have simply been running a producers'
cartel to keep up the price of oil.
"3. Oil im****t quotas. The high domestic prices enforced by
restriction of production were threatened by im****ts from abroad. So,
in 1959, President Eisenhower imposed a quota on im****ts by sea. This
quota is still in effect. Currently it is slightly more than 1 million
barrels a day (under one-fifth of our total consumption).
"Foreign oil can be landed at East Coast refineries for about $1 to
$1.50 a barrel less than the cost of domestic oil. The companies
fortunate enough to be granted im****t permits are therefore in effect
getting a Federal subsidy of this amount per barrel -- or a total of
about $400 million a year .
"These special favors cost US consumers of oil products something over
$3.5 billion a year. (Gibert Burck, Fortune, April, 1965). This
staggering cost cannot be justified by its contribution to national
security.
"The following points indicate the basis for this judgment:
"1. Restricting im****ts may promote the domestic industry, but why pay
a $400 million subsidy to oil im****ters? A tariff of $1.25 a barrel
would restrict im****ts just as much -- and the US Government rather
than the oil im****ters would get the revenue. (I do not favor such a
tariff but it would be less bad than a quota).
"2. Oil from Venezuela -- after the U.S., the largest oil producer in
the world -- is most unlikely to be cut off by international
disturbances threatening our national security. Yet it too is covered
by the im****t quota.
"3. Restrictions on domestic oil production at least have the virtue
that domestic production could be expanded rapidly in case of need.
But such restrictions are an incredibly expensive way to achieve
flexibility.
"4. The world oil industry is highly competitive and far-flung and
getting more so. The Mideast crisis has let large oil-producing areas
undisturbed. Moreover, the Arabian countries themselves cannot afford
to refuse to sell for long. Only World War III is likely to produce
severe disruptions of supply -- and then the emergency is likely to be
brief.
"5. If all the special favors to the oil industry were abandoned,
prices to the consumer would decline sharply. Domestic production also
might decline -- but then again, if the industry were freed of all the
artificial props that raise costs and stifle initiative, production
might rise rather than decline. In either event, a vigorous and
extensive domestic industry would remain, protected by the natural
barrier of trans****tation costs.
"If domestic production did decline, we might want to insure against
an emergency by stockpiling oil, paying for holding reserve wells in
readiness, making plans for sharp reductions in nonessential
consumption, or in other ways. Measures such as these could provide
insurance at a small fraction of the $3.5 billion a year the US
consumer is now paying.
"The political power of the oil industry, not national security, is
the reason for the present subsidies to the industry. International
disturbances simply offer a convenient excuse.(57) Indeed, the
American oil industry enjoys extraordinary political power.
When Kennedy entered the White House, the American fiscal system, and
in particular the system of the depletion allowance, had enabled a few
operators in the oil industry like H. L. Hunt to amass in only a few
years the kind of fortune it had taken Rockefeller a half-century and
a great deal of patience to accumulate.
If a person had enough capital, speculation in oil operations carried
virtually no risk. He could take capital which normally would have
been taxed at the rate of 90% and invest it in new oil wells. A
speculator with $900,000 in this tax bracket could drill nine wells
(at an average cost of $10,000). The odds were that one well out of
nine would be productive. The eight dry wells would have cost him
$10,000 each, all tax-free, and the ninth would earn him a fortune.
With a little perseverance, any speculator could make a million.
Pools or joint ventures enabled citizens with more modest revenues,
but whose income was still partly taxed in the 90% bracket, to do the
same thing. These persons would purchase fractional interests in an
oil well. Some of them never even got to see "their" well, but every
tax dollar they invested represented a gain of approximately 25% on
their capital. In the war and immediate post-war period, investment in
the petroleum industry was one of the most obvious and attractive ways
of reducing personal income tax liability. For the non-professionals
this system was still, to a certain extent, a speculation, but the
same was not true of the big companies, which employed experienced
geologists and commanded unlimited capital.(58)
These special privileges constituted an international anomaly, and
they cost the nation several billion dollars every year.(59) It has
been estimated that the abolition of these favors would have enabled
the government to avoid the 1951 tax increase that applied to
taxpayers earning as little as $4,000 a year. The oilmen, conscious of
the im****tance of these privileges, have always claimed that their
abolition would hinder new explorations. But the fantastic number of
wells drilled in the United States represents a waste of natural
resources.
In 1963, the oilmen advanced other arguments.(60) They noted that the
market for American crude had grown from 1 billion barrels in 1930 to
nearly 2 billion in 1950 and almost 3 billion in 1963, and they made
known their "concern" about a future shortage. Their cautious and
seemingly pessimistic prognostics, however, were not confirmed by more
independent-minded experts. Professor A. I. Levorsen of Stanford
University had declared in 1949 that world oil reserves were
sufficient to cover the world's needs for the next five centuries, and
other scientists estimated that only l/1,000th of the surface of the
earth and sea had been explored thus far.(61)
The oilmen also complained that it was becoming harder and harder to
find oil in sufficient quantity to make it as easily extractable and
as profitable as in the past. Between 1956 and 1967, it took twice the
number of new field wildcats to make one profitable discovery compared
with 10 years earlier.
These arguments became the theme song of the National Petroleum
Council, the only lobby representing private interests that enjoys
official standing. The NPC was founded in 1946 and is composed of
representatives of the front offices of the big companies. It elects
its own President. In reality, it is the NPC that defines the oil
policy of the federal government, in the spirit of John Jay's maxim:
"The country should be governed by those who own it."(62) The
President of the United States has no business interfering.
A half-century ago, the oilmen lacked the influence in the White House
that they had over Congress. They regarded the President with
suspicion. For them, the country had been going to the dogs since
McKinley. The power of the oil lobby was a concern to every President
who entered the White House after the accession to power of Jersey
Standard and its little brothers and sisters. In 1920 President
Harding was elected with the massive backing of the oil industry. Two
members of his Cabinet were oilmen (Hughes of Standard and Fall, an
associate of Sinclair). Coolidge, and after him Hoover, did nothing to
displease the oil magnates. On the day of Franklin D. Roosevelt's
death, a San Antonio oilman threw a huge party to celebrate.
Roosevelt, nevertheless, had not been particularly aggressive towards
the oil industry. The pre-war climate was hardly favorable, and the
war, which was still going on at the time of his death, had brought a
boom in the oil business.
In 1950 President Truman examined the depletion allowance system, and
the oilmen learned that the President felt that an exoneration that
withheld such amounts from the Treasury was not equitable. That same
year Hubert H. Humphrey, then a political neophyte and regarded as a
liberal, introduced an amendment to the tax bill that would reduce the
depletion allowance. The amendment was rejected. It was re-introduced
in 1951 but rejected again by a margin of 71 to 9. In 1952 President
Truman turned again to the problem, but any decision he might make was
at the mercy of Congress, and Harry Truman liked the quiet life.
Nevertheless, during his last days in office he adopted one of
Roosevelt's ideas and declared that the continental shelf (an
extension of the American coastline) was part of the national reserves
and should be placed under the control of the Department of Defense.
The value of the oil beneath the sea had been estimated at $250
billion, and Truman felt it would be madness to let this oil, which
was vital for national defense, fall into private hands, obliging the
government to buy it back at high prices.
In 1952 Eisenhower received heavy financial backing from the oil
industry in his campaign against Adlai Stevenson. Ike knew how say
thanks. When Truman's bill came up before Congress, the House rejected
it in favor of a measure recognizing the property rights of the states
over any oil discovered within ten and a half miles (twelve for Texas
and Florida) of their coastline. The federal government was left with
only a right of preemption over the resources of its former territory.
The bill was later voted into law by the Senate.(63)
In 1954 Senator Humphrey's timid offensive was taken up by Senators
Douglas (Illinois) and Williams (Delaware), both of whom introduced
amendments concerning the depletion allowance. Senator Douglas noted
that in 1953 one company with a net income of $4 million had paid only
$404 in taxes, that another had paid nothing on a revenue of $5
million, and that a third company with profits of $12 million had
received a $500,000 subsidy. The amendments were rejected.
On March 27, 1957, Senator Williams again introduced an amendment that
would reduce the depletion allowance from 27.5% to 20%. He explained
to Congress that this privilege had been instated during the First
World War, when it amounted to only 5%. Later it had been increased to
12.5%, then to 25%, and finally to 27.5%. Originally it had been a
discovery depletion, permitting the recovery of the investment, "but
the present 27.5% oil depletion rate obviously gives a special tax
advantage to the oil industry above that enjoyed by other taxpayers."
He added that when the present rate of 27.5% had been adopted in 1926,
the cor****ate tax rate had been approximately 14% .The depletion
allowance therefore did not represent a huge sum of money. But in
1957, "with our present cor****ation rate, this 27.5% gross sales
deduction, or depletion allowance, represents a tremendous tax-free
bonanza.(64)
"The im****tance of percentage depletion is more glaringly emphasized
in connection with the operations of foreign companies," he continued.
"The Treasury Department has submitted three examples as to how this
works. Cor****ation A with total earnings of approximately $200 million
re****ted a United States tax liability of $103,887,000. They paid
foreign taxes which are deductible from United States taxes in the
amount of $103,323,000, leaving a United States tax liability of
$564,000. This company has a total allowable depletion allowance of
$91,879,000.
"Cor****ation B re****ted an income of approximately $150 million. Their
total allowable depletion was $123,977,000, and they re****ted a United
States tax liability of $78,961,000. The taxes re****ted as paid to
foreign countries by Company B amounted to $98,319,000, and the credit
allowed for foreign taxes paid was $77,087,000, leaving a United
States tax liability after foreign tax credit of $1,874,000.
Cor****ation C re****ted an income of approximately $33 million. The
total allowable depletion of Cor****ation C was $44,895,000. The United
States tax liability of this company was $17,325,000, and foreign
taxes paid were of the same amount, with credit being given for the
full total, leaving Company C with no United States tax liability."
Senator Williams cited and inserted in the Congressional Record the
testimony of Mr. Paul E. Hadlick, general counsel of the National Oil
Marketers Association, to the Senate Finance Committee. Mr. Hadlick
had prepared a list of the incomes and taxes paid by the 23 largest
oil companies. His figures indicated that Humble Oil had paid $30
million in federal income taxes on a net income of $145 million, that
Socony Vaccuum Oil had paid $51 million on a net income of $171
million, that Standard Oil of California had paid $40 million on an
income of $174 million, and that the Texas Company had paid $47
million in taxes on an income of $181 million.
Senator Barrett (Wyoming) retorted that "the depletion allowance is
based upon the great risk involved in drilling and discovering oil,"
and he drew Senator Williams' attention to the fact that "our first
line of defense will rest in air power, but the planes will not be
able to deliver the bombs without high octane gasoline and plenty of
it, I might say."(65) Senator Carlson (Kansas) declared: "Those of us
who are familiar with the reserves in the stripper well are in a
position to know that the producers must have the 27.5% depletion
allowance and any other encouragement they can get, or the United
States will lose millions of barrels of oil, which will never come out
of the ground." Senators Monroney (Oklahoma) and Martin (Pennsylvania)
joined in the chorus. Senator Williams quoted a statement by the
Secretary of the Treasury in 1937: "This is the most glaring loophole
in our present revenue law." Nevertheless, he noted, depletion had not
been discussed during the 1937 hearings, and the committee had made no
recommendation in its re****t on the subject "because of lack of
time."
"Mr. President," Senator Williams continued, "today we hear the same
argument: lack of time." Senator Williams spoke for another 15 minutes
and then called for a vote. Senator Johnson (Texas) suggested the
absence of a quorum. But there was a quorum, the vote was held, and
the amendment was rejected.
Senator Douglas of Illinois then introduced his amendment, which
maintained the percentage of 27.5% on revenues not exceeding $1
million, but lowered it to 21% for revenues of between $1 and $5
million, and to 15% for revenues exceeding $5 million. Senator Aiken
(Vermont) sup****ted the Douglas amendment. "I believe that when these
enormous depletion allowances are given to one segment of our economy,
it means that other people must dig into their pockets to make up for
them," he said, adding that in 1955, "the total depletion deductions
were approximately $2,800,000,000. Since the cor****ate tax would have
been 52%, this resulted in a tax saving of $1,500,000,000 to the oil
companies. "My amendment," he continued, "would save approximately
$700 million for the Treasury. I wish to emphasize again that it would
not hit the small driller. The weight would fall almost entirely upon
the big companies." He went on to cite examples of oil companies that
didn't pay a cent of taxes (on $7 million in income), or 1% of taxes
(on $1,800,000 in income), or 6% (on $95 million in income), while in
other industries companies were taxed at the rate of 52%.
The parade of lobbyists for the oil industry began. Senator Long
(Louisiana) declared: "I must oppose this amendment. I submit that in
many respects it works out to be the absolute epitome of unfairness
and injustice. This is an amendment which proposes to say: Oilman Rich
can earn and receive $1 million a year and still retain the 27.5%
depletion allowance. On the other hand, Grandma Jones who does not
have the im****tance or prominence of an independent oil and gas man
owns $200 worth of stock in an oil company, and she receives an income
of $20 a year from that owner****p . . . I would like to protect
Grandma Jones' little $20 dividend."
Senator Johnson (Texas) again suggested the absence of a quorum. The
legislative clerk called the roll. Eighty-seven Senators were present.
There was a quorum. Senator Douglas then asked for the yeas and nays,
but his request was not sufficiently seconded. The yeas and the nays
were not ordered, and the amendment was rejected. The Senate turned to
the examination of an amendment concerning trans****tation taxes, which
were considered too high for the Western states.
The following year, on August 11, 1958, Senator Williams introduced
his amendment once again. He was obliged to wait for four hours until
there were enough Senators present. He reminded them of what Senator
La Follette had said in 1942: "In my opinion this percentage depletion
is one of the worst features of the bill, and now it is being
extended. We are vesting interests which will come back to plague us.
If we are to include all these things, why do we not put in sand and
gravel; why do we not provide for the depletion the farmer suffers
through erosion of the soil of his farm?"
Senator Taft had followed up Senator La Follette's remark with one of
his own: "I think with the Senator from Wisconsin that the percentage
depletion is to a large extent a gift . . . a special privilege beyond
what anyone else can get." Senator Dirksen (Illinois) made a long
speech declaring that the problem of national defense needs and the
precarity of oil supplies in the Middle East "is worth infinitely more
than a question of whether the oil companies get a few million dollars
more or a few million dollars less . . . the oil companies," he added,
"which have given their best to the country."
Senator Williams acknowledged that "it is always popular to defend the
little fellow, but what is small about a man with a million dollar
income?" He noted that in 1955 depletion deductions for all
cor****ations had totaled $2,805,500,000, and that 67% of these
deductions had benefited companies with net assets of more than $100
million. He asked why the deduction for oil depletion wasn't the same
as that for metal (15%) or coal (5%). He concluded: "One of the really
major loopholes in the tax code is the method by which capital gains
may be applied to oil and gas properties," and he produced a document
which explained exactly why the leaders of the oil and natural gas
industry were opposed to a reduction in the tax rate for the highest
income brackets.(66) Such a reduction, which was sup****ted by the
majority of the nation's cor****ations and taxpayers, would mean a
decrease in the incomes of the oilmen.
Senator Williams' amendment was put to a vote and defeated by a margin
of 63 to 26. A similar but less liberal amendment introduced by
Senator Proxmire (Wisconsin) was also defeated, this time by a
majority of 58 to 43. Senator John Kennedy (Massachusetts) voted
against the Williams amendment and in favor of Senator Proxmire's
amendment. When the vote on the second amendment was announced,
Senator Johnson (Texas) remarked, "Mr. President, I do not think we
should ask the Senate to stay any later this evening."
The oilmen and their representatives in the Senate were all the more
concerned about these amendments because 1957 had been a record year
for oil production in the Middle East, and everything indicated that
the expansion would continue. (In fact, Middle East production rose
from 6 billion barrels in 1958 to 9.7 billion barrels in 1963.) In
1959 President Eisenhower imposed im****t quotas on foreign oil. The
sales price of domestic American oil, which had been steadily rising
since the end of the Depression and had dropped in 1959, held steady
in 1960.(67)
On June 18, 1960 Senator Douglas re-introduced his amendment. He noted
that the total depletion allowances taken could amount to $4 billion
that year. He presented his Congressional colleagues with 20 pages of
documents, remarking that if the other Senators were unable to hear
him (for there were only three other people on the floor), they could
perhaps read them. The following day, June 20, his audience was
larger. Senator Douglas described his amendment as "a very moderate
attempt to reduce the greatest tax racket in the entire American
revenue system. It is probably safe to say," he continued, "that the
depletion allowances given to the gas and oil industry now amount to
well over $2.5 billion a year. I have put into the Record time and
time again the records of 28 oil companies -- which I do not name, and
which I identify only by letter, but which I could name -- that show
that there was one company which in 5 years had net profits of $65
million and not only paid no taxes, but received $145,000 back from
the Government. There are many other cor****ations which have a similar
favored record.
"My proposal is a modest one. I do not propose to abolish the
depletion allowance. I do not propose to reduce it across the board. I
merely propose to introduce a moderate, graduated reduction. On the
first $1 million of gross revenue there would be no reduction
whatsoever. That would remain at 27.5%. On gross income from $1
million to $5 million, the depletion allowance would be 21 percent. On
gross income in excess of $5 million, the depletion allowance would be
15 percent. This is a very moderate proposal.
"Mr. President, this issue has faced the Senate and the Nation for at
least a decade. It is now before us again. We must make our decision
as to what we shall do. It is time that we put our fiscal system in
order. In our fiscal system some people pay too much because others
pay too little. The time has come when we should deal with this issue.
The depletion allowance can continue without any time limit. It occurs
after depreciation has been allowed and fully taken account of. As
long as the oil and the gas run, the depletion allowance can continue
to be taken. There are cases in which the amount of the depletion is
many, many times the total original cost, which bear in mind has
already been deducted under the depreciation practice. I think the
Senators are aware of the issues at stake. I wish to say to the gas
and oil industry, which has been fighting this amendment for years,
that if they are once again successful in beating this amendment, as
they may well be, there is likely to arise in the country a storm of
indignation."
But indignation is not a common emotion in the Senate. Senator
Douglas' amendment would have resulted in a $350,000,000 loss to the
oil industry. A vote was held, and the amendment was defeated by 56 to
30.(68) Senator John Kennedy (Massachusetts) voted in favor of it.
(69)
At the 1960 Democratic Convention, the representatives of the oil
states, headed by Sam Rayburn, sup****ted the candidacy of Lyndon
Johnson, but Kennedy won the nomination. In the spring of 1961, Mr.
Morgan Davis(70) remarked during a private luncheon, "It's impossible
to get along with that man."
As a Senator, John Kennedy had not been popular with the oilmen, but
they weren't afraid of him. They knew that his father Joseph had
invested a large part of his fortune in the oil business, and they
couldn't conceive that his son, even if he were to become President,
would dare take a position that would go against his own and his
family's financial interests.(71) H. L. Hunt expressed the same
opinion when he confided to Playboy in 1966, "Catholics are known for
being anti-Communist, and I had never seen any evidence of fiscal
irresponsibility in the Kennedy family."
The oilmen were wrong. The new President decided to broach the issue.
Although he didn't go as far as John Ise,(72) he felt, like Roosevelt,
that the control of the national economy should not be allowed to
continue in the hands of the few, but should be enlarged to include
millions of citizens or be taken over by the government, which in a
democracy is responsible to the people. But he knew also that any re-
examination of the principles of profit-making and free enterprise
from the moral, social or even national point of view would be
rejected not only by the oilmen, but also by a good many other
citizens as an attack on the American way of life. In the past, such
attacks by the administration and the Justice Department had been
defeated.(73)
The only chance for a modification of the structures of the Oil Empire
lay in a major crisis, internal or external -- an economic crisis or a
war. But President Kennedy was working for peace and economic
expansion, and he knew that his objectives could not be attained
unless the principles of the American autarchy were re-examined and
their destructive action brought progressively to a halt.
A year after he entered the White House, in 1962, the new President
studied the re****ts of his advisers and decided to act. He had reacted
with violence to the dictates of the steel industry; in the case of
oil, he laid his plans more cautiously. On October 16, 1962, a law
known as the Kennedy Act removed the distinction between repatriated
profits and profits re-invested abroad in the case of American
companies with overseas operations. Both were henceforth subject to
American taxation. The law also sought to distinguish between "good"
earnings resulting from normal commercial operations, and "suspicious"
revenues siphoned off at some point in the commercial circuit by
subsidiary companies located in tax havens abroad.
This measure was aimed at American industry as a whole, but it
particularly affected the oil companies, which had the largest and
most diversified overseas activities.(74) At the end of 1962, the
oilmen were estimating that their earnings on foreign invested
capital, which in 1955 had equaled 30%, would fall to 15% as result of
these measures.
But Kennedy's second measure was far more im****tant and infinitely
more dangerous. It affected not only the companies with overseas
investments, but all companies which, in one way or another, benefited
from the privileged status of the oil industry. It called into
question both the principle and the rates of the fiscal privileges,
the improper use of tax dollars, and the depletion allowance. If
adopted, it would undermine the entire system upon which the Oil
Empire was based.
On January 24, 1963, in presenting his bill to Congress, President
Kennedy declared, "Now is the time to act. We cannot afford to be
timid or slow." For him, the fact that it was going to be difficult
made it all the more necessary to act. But the Oil Empire wasn't the
steel industry. Its leaders were of a different mettle. Ludwell Denny
had said, "We fight for oil." By tangling with the oilmen, Kennedy was
commencing the last year of his life. He considered his fiscal
measures as the first step in a vast national reform.
As George Wa****ngton said to Henry Lee on October 31, 1786,
"Precedents are dangerous things." The oilmen thought so too. "Think"
is the motto of the businessman. Once they had determined what had to
be done, they set about choosing their battleground and meticulously
laying their plans.
NOTES
1. The evolution of world oil production between 1860 and 1966 was as
follows:
1860 1930 1966
USA 476,000 b 861 million b 2.9 billion b
USSR 135 million b 1.9 billion b
Venezuela 140 million b 1.2 billion b
Middle East 42 million b 3.3 billion b
Rest of the world 21,000 b 2.2 billion b
2. Of the 20 largest oil companies in the world with an annual
turnover in the neighborhood of $57 billion, 14 are American ($42
billion), one is Anglo-Dutch and another British ($1 billion), and one
is Belgian ($700 million). But American influence extends even to
these foreign companies.
Company Country Turnover
(in millions of dollars)
Standard Oil (NJ) USA $12, 191
Royal Dutch Shell GB-Holland 7,711
Mobil Oil USA 5,253
Texaco USA 4,427
Gulf Oil USA 3,781
Shell Oil USA 2,789
Standard Oil (Ind.) USA 2,708
Standard Oil (Calif.) USA 2,698
BP GB 2,543
Continental Oil USA 1,749
Phillips Petroleum USA 1,686
Sinclair Oil USA 1,377
Union Oil California USA 1,364
CFP France 1,140
ENI Italy 1,093
Signal Oil and Gas USA 847
ERAP France 806
Petrofina Belgium 704
Ashled Oil and Refining USA 699
Industry Oil USA 695
3. In the period between 1930 and 1966, energy consumption doubled
every 15 years, and oil consumption rose from 19 to 60%.
In 1938, the world consumed only 2.1 billion barrels of petroleum
products. By 1971 it will be consuming 14 billion barrels per year,
and by 1980 28 billion barrels.
4. In Europe, despite the increasing use of natural gas (which in 1965
provided 4% of all the energy consumed, as compared with 0% in 1950)
and the advent of atomic energy (0.4% in 1966), oil consumption has
risen steadily (from 10% in 1945 to 45% in 1965), while coal
consumption has steadily dropped (38% in 1965, as compared with 75% in
1945).
5. The tem****ary outlets of the COMECOM pipeline are located at
Neutspils and Klaipeda in the Baltic states, East Berlin, Most
(Czechoslovakia), Vienna, Budapest, and Trieste (Italy).
6. 95% of the population of Saudi Arabia is still illiterate. The
country has 750,000 slaves. Trade unions are prohibited by law, and
the death penalty is inflicted with the bastinado.
If the royalties paid to the Sultan of Kuwait were divided equally
among his people, each Kuwaiti citizen would have an annual income of
more than $1,500, giving Kuwait one of the highest standards of living
of any underdeveloped country. Instead, the average annual income in
Kuwait is $100. 98% of the population is illiterate, and 85% suffers
from tuberculosis.
An exception to this rule is the Sultan of Bahrain, who contributes a
large ****tion of his royalties to the state treasury. In his
territory, most dwellings have running water, sanitary conditions are
satisfactory, and public education is developing rapidly.
Nevertheless, the Sultan of Bahrain is the poorest of the Middle East
rulers. In 1955 he received only $8.5 million in royalties, as
compared to $36 million paid to Qatar, $84 million to Iran, $223 to
Iraq, and $280 each to Saudi Arabia and Kuwait. Iran is relatively
prosperous, but Iraq is continually shaken by corruption, political
intrigue and assassinations.
7. American investments abroad rose from $1.4 billion in 1943 to $10
billion in 1958 ($5.1 billion of which was re****ted) and to $28
billion in 1967 ($15 billion of which was re****ted). In 1967, American
investments in Europe totaled $10 million in the mining industry, $290
million in miscellaneous industries, $640 million in the chemical
industry, $795 million in the machinery industry, and $1,200 million
in the oil industry.
8. Frank W. Abrams, past President of Jersey Standard, jointed with
General Motors, US Steel and several other cor****ations to form a
committee for economic aid to education in an effort to stave off what
he considered a future threat to industrial investments.
In 1955 Senator Fulbright cited a brochure edited by Socony Mobil for
job-hunting students which warned them that their "personal opinions"
could cause them difficulties in their career. His criticism, together
with a protest from the Princeton Alumni magazine, caused the brochure
to be withdrawn, but the paternalistic and totalitarian attitude of
the oil companies continued unchanged.
9. Figures released by the Chase Manhattan Bank show that between 1934
and 1950, the 30 largest oil companies moved more than $121 billion,
with net profits of $12 billion and taxes of $4 billion. These
companies had taken out so few loans that only $700 was paid out in
interest. $12 billion appeared on the balance sheets in the form of
stock depreciations, amortizations, and reserves. Of the $12 billion
in profits, $7 billion was reinvested and $5 distributed to
stockholders.
10. The Rockefeller family's holdings are now limited to 15%, but the
100 most im****tant stockholders (out of a total of 300,000), most of
whom are descendants of John D. Rockefeller and his partners, own more
than 40% of the shares.
11. One of its "little sisters," Socony Mobil (actually Standard Oil
of New York) has assets of nearly $5 billion, and Standard Oil of
Indiana has nearly $4 billion in assets. In 1966 Jersey Standard
earned $1,090,944,000 in profits, two-thirds of which came from its
overseas subsidiaries. Of the latter, Creole of Venezuela, for
example, generally earns profits of around 30% . Creole and Lago,
Standard's second Venezuelan subsidiary, together with Imperial of
Canada, Imperial Petroleum in Latin America, Esso Standard, and its
other foreign subsidiaries, earned more than $800 million in profits
in 1966.
12. The first oil well was drilled by Edwin Laurentine Drake. better
known as Colonel Drake, who discovered oil at 69 feet at Titusville on
September 8, 1859. Nevertheless, he was fired in 1864 by his employer,
Seneca Oil, and given the paltry sum of $731 in compensation. The
state of Pennsylvania showed its gratitude by granting him an annual
pension of $1,500.
13. Today, Royal Dutch Shell is the most im****tant private industrial
concern in Western Europe, and perhaps in the world (with the
exception of the United States).
14. Shell has a policy of forming a national company in every country
where it operates.
15. The British government invested approximately two and a half
million pounds, and got back several billion pounds on its investment.
It was represented on the Board by two administrators and exercised
its veto only on political and naval questions, never interfering with
commercial policies.
16. The Turkish Petroleum Company (which wasn't Turkish at all) owned
oil fields in Mesopotamia. Before World War I it was divided up
between Anglo-Iranian (50%), Royal Dutch (20%), and the Deutsche Bank,
whose share of 25% was seized by the British at the start of the war.
For having allied itself with Germany, Turkey was dismembered in 1918,
and Britain appointed the rulers of the former Ottoman colonies. But
the war booty was divided up under the cover of the League of Nations
mandates. Germany's share of 25% was handed over to the Compagnie
Francaise des Petroles in exchange for an indemnity and French
permission to install a pipeline across its Syrian and Lebanese
mandates.
17. It is difficult for us today to imagine a time when United States
foreign policy was based on the rivalry between Shell and Standard,
when Shell was refused the right to participate in bids for federally-
owned concessions, and when writers prophesied war between Great
Britain and the Union.
18. The remaining 5% went to the broker, Gulbenkian.
19. Moreover, the companies mixed the Iraqi oil with oil from Iran and
Saudi Arabia, making it difficult to determine the actual cost.
In 1939 Jersey Standard felt that it had gotten back all of its
original Iraqi investment. Nevertheless, Iraqi production was held
back in favor of production in Saudi Arabia and Iran, where the
royalties paid were very low (4 ****llings per ton of crude in Iran,
plus 20% of the profits).
20. At the beginning of the war, the difficult position of the Allies
in the Middle East led Roosevelt to consider government participation
in Aramco, in the same way that the British government had held a
majority in Anglo-Iranian since 1914. But Standard of California and
Texaco kept delaying the talks, and once Rommel was defeated, the two
companies even refused to consider admitting the government as a
minority stockholder. They felt, and there was little evidence to
contradict them, that they already enjoyed government protection.
The companies of the Aramco-Caltex group managed to avoid American
taxes on their wartime profits by founding new companies in the
Bahamas and Canada.
21. Dutch Shell is richer and more influential than the l of the
Netherlands. Two other Dutch companies, Phillips and Unilever, have
international standing. These three it difficult for the government of
the Netherlands to independent economic policy.
22. Iranian assets of Anglo-Iranian have been estimated at $1
billion.
23. The CIA's action is accounted for not only by the singular nature
of the American intelligence agency (see Chapter 15, Spies), but also
by the fact that the Pentagon and the ion in Wa****ngton feared that
with the Abadan refinery closed down, the Air Force might run short of
fuel in the event of World War III. Such a shortage had already
occurred during the Korean War.
24. They estimated Anglo-Iranian's gross profits since 1914 at $5
billion, $500 million of which had gone to the Admiralty in the form
of low-cost fuel oil, $350 million to the stockholders, $1.5 million
to the British treasury, and $2.7 million to the cor****ation for
depreciations and new investments.
To these sums they compared the royalties paid to Iran: before 1920,
none; from 1921 to 1930, $60 million; between 1931 and 1941, $125
million, mainly in the form of military equipment which was later used
against them by the British and the Russians.
In 1951, Iran received 18 cents on every barrel of oil (a barrel
equals 42 gallons and weighs an average of 306.6 pounds). In
comparison, Bahrain received 35 cents, Saudi Arabia 36 cents, and Iraq
60 cents.
The Iranians also complained that nearly all the gas from their wells
was burned by Anglo-Iranian, when it could have been put to the
benefit of the population.
25. The Compagnie Francaise des Petroles, which by the terms of the
Red Line agreement had a right to its share, was granted 6%.
26. In 1966 the Consortium was forced to yield to new demands from the
government of Iran and surrender one-fourth of its concessions (the
1954 agreement provided for the surrender of one-fifth in 1979). It
was also obliged to increase production by 13% in 1967 and 1968. The
Arab blockade in June, 1967 enabled it to go well over this figure.
27. The Big Five managed to pacify the most voracious of the
independents by each sacrificing 1% of their shares. The 5%
distributed was sold in April 1955 to the following companies:
Atlantic Richfield, Tidewater Oil, Aminoil, Atlantic Refining, Getty
Oil, Continental Oil, Signal Oil and Gas, Standard Oil (Ohio), and
American Independent Oil. Harvey O'Connor states that each company
paid $1 million for its shares, which few years later were earning
them $850,000 a year. Such a good investment was also a kind of
indemnity, but the independents continued to demand a share for
themselves in the Middle East.
In 1947 Aminoil (American Independent Oil Company), an association of
independents made up of Phillips Petroleum, Hancock, Signal, Ashland,
Deep Rock, Sunray, Globe, J. S. Abercrombie and the promoter, Ralph K.
Davies, had been given a bone to gnaw in the form of a neutral zone
between Arabia and Kuwait theoretically reserved for the nomads. But
the Sultan demanded high royalties, and 10 years later the reserves
were estimated at only 50 million tons. It looked like the
independents were stuck with the leftovers, but in 1966 the neutral
zone was producing 133 million barrels.
28. Biafra is the latest battleground of the oil companies --
American, British and French.
29. Twelve years later, giant tankers of up to 1 million tons designed
to detour around the Cape have apparently condemned the Suez Canal to
a position of minor im****tance.
30. Gulf and Jersey Standard increased their Venezuelan production,
while Texaco expanded its operations in Indonesia and Canada. In this
way, they were able to sell their oil at higher prices while
maintaining stable production costs.
31. Jersey Standard was admitted to the Sahara, then French territory,
following a request from French Premier Guy Mollet for a $100 million
loan from Wa****ngton which was eventually granted by the Chase
Manhattan Bank. (Jersey Standard is a member of the Chase group.)
32. On the surface, ENI continued to respect the 50-50 rule, but by
associating with an Iranian company, INOC, it actually granted 75% of
the profits to Iran. In the midst of the negotiations concerning ENI's
concession in the rich Koum basin, the Iranian Prime Minister was
overthrown.
33. In 1932 Andre Maginot, a French Minister who had founded the Union
Petroliere Latine, was poisoned. His death was also the death of the
UPL.
34. Between 1950 and 1962, the American share in world production
dropped from 69.8% to 57.9%, and its share in refining from 65% to
52.1%. Jersey Standard, which in 1958 accounted for 10.8% of all
production, had dropped to 10.3% in 1961.
35. In 1938 Mexico expropriated Royal Dutch Shell, Standard Oil, and
several other foreign companies which refused to grant wage increases
demanded by the oil workers union (which amounted to $1.7 million per
year). Mexican President Cardenas founded Pemex, a state company which
was boycotted at first by its powerful neighbors. The British
government even broke diplomatic relations with Mexico. It was not
until the Second World War that the Consortium forgave the Mexicans.
Today Pemex pays the Mexican government nearly a billion pesos a year
in taxes, while before the nationalization the amount paid by private
companies operating in Mexico never exceeded 44 million.
In 1963 Mexico, once considered incapable of exploiting her own
resources, was producing 115 million barrels (16 million tons), and
oil was her most im****tant source of revenue. These expropriations
ensured her prosperity if not her economic independence for the
Mexican economy is still closely bound to that of the United States.
36. Shell was the first oil company to operate in Venezuela. In 1922
it was joined by Standard of Indiana, followed by Gulf. In 1932
Standard of New Jersey took over Standard of Indiana's operations at
Maracaibo and began offshore drilling. In 1937 Venezuela accounted for
40% of world production. Gulf was obliged to make concessions to
Jersey, whose local subsidiary Creole became the giant of Venezuela.
In 1938 Jersey, Gulf and Shell formed a pool to exploit their reserves
and naturally applied Texas prices. In 1943 the companies were obliged
to split their profits 50-50 with the Venezuelan government. In 1948
the "Democratic Action" government that had come to power in 1945
demanded a revision of this agreement, but was overthrown by a
military junta backed by the United States. Between 1949 and 1954,
Creole reduced its personnel from 20,500 to 14,400 persons while
increasing its production by 35%. In 1949 the company earned net
profits of $336 million.
The revenue paid by the oil companies covered three-quarters of the
Venezuelan national budget (the government's revenues from other
sources were lower in 1956 than Creole's profits). But Venezuela
produces only half the grain, milk and meat, and only one-third of the
vegetables, that she consumes. The wide plains of Orinico sup****t
fewer cattle today than during the revolution of 1812. From their
mountain conucos or their huts on the latifundia, nine-tenths of the
Venezuelan population can watch the distant lights of fabulous
Caracas.
37. In January, 1957, Anthony Nutting, a member of the British
Cabinet, suggested a form of internationalization -- a kind of
"Schuman plan" for Middle East oil.
In March, 1957, Walter J. Levy wrote in Foreign Affairs:
". . . The demands and responsibilities which have devolved on our
international oil companies go far beyond the normal concerns of
commercial operations. Public and private responsibilities become
increasingly intertwined. Our existing arrangements for government-
industry relation****ps in this new uncharted area appear to be
inadequate to cope with the broad range of new problems."
On April 10, 1957, Lord Henderson suggested before the House of Lords
that her Majesty's Government "take the initiative, through the United
Nations, to get an International Oil Convention for the Middle East
which would ensure a just distribution of oil to consumer countries,
as well as a fair deal for the oil-producing countries. 'Oil politics'
have been a disturbing factor in the Middle East situation over many
years," the British peer added.
And Walter Lippman wrote in November of the same year:
"We should, it seems to me, have it clearly in mind that we are on the
threshold of a new situation in regard to the oil in the Middle East.
This is often taken to mean that the Arab countries, infiltrated by
the Soviet Union, may attempt to ruin Western Europe by depriving it
of access to the oil.
"Theoretically, that could happen if we take the simple view that
Russia may conquer and occupy the oil countries. But in fact, this is
not likely to happen, since it would precipitate a world war. What is
likely to happen is that the Arab countries, using Soviet influence as
a lever, will attempt to force the Western oil companies to a radical
revision of the existing contracts. The Middle Eastern countries have
no interest in cutting off the ex****t of oil to Europe. On the
contrary, it is their vital interest that the trade should continue.
What they will seek, both the oil-bearing countries around the Persian
Gulf and the transit countries like Syria and Egypt, is a bigger share
of the profits of the oil business.
38. The British continue to work the unprofitable coal mines of Wales,
the Midlands, York****re, Nottingham****re, and Lanca****re, immobilizing
some 700,000 workers, and British explorations in the North Sea area
are carried out in collaboration with the big American firms.
British fiscal legislation is far less favorable to the oil industry
than American legislation. Britain's energy policy consist of
penalizing the use of oil in order to protect her coal industry.
British tax legislation does not appear to have contributed
significantly to the overseas expansion of British oil companies, and
it offers no special privileges designed to stimulate new explorations
by British firms.
39. On February 4, 1968, ERAP signed an agreement with the Iraq
National Oil Company (INOC) giving the French company onshore and
offshore exploration rights on a 10,000 square kilometer concession
along the Persian Gulf. Mr. Jean Blancard, Vice-President of ERAP,
declared that the agreement "follows in the footsteps of history. The
era of traditional concessions, when the oil power established their
hegemony over huge areas, is a thing of the past."
At the same time. another French company. the Societe Nationaledes
petroles d'Aquitaine, was competing with the Free****t Co. for the
right to work an Iraqi sulfur deposit which would make it the second
largest producer of sulfur in the world.
Also in Iraq, the Compagnie Francaise des Petroles was negotiating for
the North Rumeila concession which the Iraqi government had seized
from the Iraq Petroleum Company.
The economic and political differences between France and the United
States are partly the result of French oil policy.
40. The only company producing any significant quantity of oil in
France thus far has been an American firm, Esso Rep, which is 90%
controlled by Jersey Standard (Esso Standard 89%; Finarep 1%). Esso
Rep has an annual production of 21 million barrels.
The most im****tant French oil company, the Compagnie Francaise des
Petroles, founded by Raymond Poincare, is not a state concern. Mr.
Jeanneney, French Minister of Industry, declared in 1960 that "state
control of the CFP is extremely theoretical" and that "the interests
of the 'oil franc' are not always given priority." In actual fact,
according to well-informed sources, control is held by a number of
different companies acting for Royal Dutch Shell.
ERAP, the state-owned company, has not quite caught up with the CFP,
but it already holds first place among the state-owned companies in
continental Europe, and it is evident that the French government is
anxious to see it expand.
41. The European companies concerned by this re****t were: Ente
Nazionale Idrocarburi (ENI, Rome), Entreprise de Recherches et
d'Activite Petrolieres (ERAP, Paris), and several German companies
belonging to the Deutsche Mineraloel-Explorations-gesellschaft MBH
(DEMINEX).
42. Ten European companies (ERAP, ENI, C. Deilman Bergbau GmbH,
Preussag AG, Deutsche Schachtbau und Tiefbohr GmbH, Saarbergwerke AG,
Schlolven Chemie AG, Union Rheinische Braunkohlen Kraftstoff AG,
Wintershall AG and Gelsen- kirchener Bergwerks AG) followed up this
re****t with one of their own that was nothing less than a declaration
of war on the Consortium. It concluded:
"If the Common Market is to have an energy policy, the oil and natural
gas sector, which constitutes the most im****tant element in this
policy, must not escape the action of the Common Market. To prevent
this from happening, the Common Market must create conditions which
enable this policy to exist through legislation and regulations
adapted to the circumstances, and it must safeguard the instruments of
this policy, in other words the companies of the Common Market."
43. A German, firm, Saarwerke, and an Italian company, ENI, have
received permission from the French government to install a
distribution network in France. Other measures and agreements are
currently under discussion.
This new European energy policy explains a great deal, and in
particular De Gaulle's position with regard to the Israeli-Arab
conflict of 1967. De Gaulle is neither pro-Arab nor pro-Zionist; he is
merely a realist.
44. Twenty-two companies account for 65% of all the oil produced and
87% of all the oil refined in the United States. Nine thousand other
companies account for the rest.
In 1963, oil and natural gas provided 75% of all the power consumed in
the United States (as compared with 60% in 1950). Their combined value
was eight times that of all the ferrous and non-ferrous metals (iron,
copper, lead, zinc, gold, silver, bauxite, manganese, tungsten,
titanium, and uranium) mined in the United States.
45. An Oil Exchange did exist in the 19th Century, but in 1895
Standard Oil of New Jersey announced that henceforth it would set its
prices itself. At that time, Jersey Standard was buying 80% of all the
oil produced in Pennsylvania and controlled all of the pipelines
(which enabled the companies to enforce their production quotas and
the quotas set by the states).
46. There are 200,000 sales outlets for petroleum products in the
United States, mainly service stations. To all appearances there is
open competition, but actually the big oil cor****ations control 85% of
the market. Service station managers are bound by contract to the big
companies, which supply their gasoline and cover their operating and
advertising expenses.
47. Contrary to what is true in Europe, in the United States any oil
discovered belongs to the owner of the land on which it is found.
Generally, the owners lease their rights to the companies. In 1963 the
oil companies paid nearly $2 billion in leasing rights to property
owners spread over one-tenth of the area of the United States,
principally in Texas. Since 1859 these leases have cost the companies
an estimated $40 billion.
48. Ninety percent of the American Oil Empire is concentrated in only
seven states: Texas, Louisiana, California, Oklahoma, Wyoming, New
Mexico, and Kansas. The combined production of Texas and Louisiana
alone accounted for 55% of American domestic production in 1963. Most
of the oil companies based in Texas have im****tant investments in
Louisiana, which is closer to the Eastern market: Louisiana, where the
most im****tant oil fields since Spraberry Fields in the 1930s were
discovered in 1956, is also favored by a larger "acreage-to-well"
ratio than Texas. The average well in Louisiana is currently allowed
79% more oil daily than the average well in Texas.
Most of these oil wells produce only two or three weeks per month. In
Texas, the number of production days was reduced from 171 in 1957 to
104 in 1960. During the second quarter of 1960, the oil wells in Texas
were worked an average of only 9 days per month, and during these 9
days they were limited to two-thirds of their maximum output. The
producers estimated their losses at $6 million per year, but prices
remained stable. On the other hand, the number of people employed was
reduced by 25% (from 164,904 in 1958 to 124,922 in 1963) and the
corresponding expenses dropped from $967 million to $880 million
Nevertheless, despite this reduction in output, nearly 200 new wells
are drilled every day (43,300 in 1950, 58,200 in 1956, and 43,600 in
1963).
49. Petroleum engineers have their own techniques of conservation,
which can be resumed as follows:
1) the elimination of gushers and uncontrolled flows that waste gas
pressure
2) the limitation of the number of wells to the minimum required by
the geological structure of the oil field. Too many wells reduce the
gas and water pressure, while too few result in the loss of a certain
amount of oil
3) the regulation of the output of each well so as to maintain a
uniform pressure throughout the oil field
4) the maintenance in each well of a sufficient pro****tion of gas to
oil to ensure a continuous flow (Harvey O'Connor, The Empire of Oil)
50. The figures given by Fortune for the year 1967 are:
Oil: $64,943
Mining: $54,023
Automobiles: $25,016
Aviation: $19,179
Textiles: $18,404
51. Standard Oil of New Jersey earned $758 million in 1961 and $840
million in 1962; Gulf Oil earned $338 million in 1961 and $340 million
in 1962; Socony Mobil earned $210 million in 1961 and $242 million in
1962; Standard Oil of Indiana earned $153 million in 1961 and $162
million in 1962.
52. The net cost of oil as it comes out of the well in the Middle East
is around 20 to 30 cents per barrel. The same oil is sold by the
Consortium at between $2 and $3 a barrel.
Oil in Kuwait costs approximately 5 cents a barrel (0.12 cents a
gallon); oil in Saudi Arabia costs 10 cents a barrel (0.24 cents a
gallon); and oil in Libya costs 40 cents a barrel (1 cent a gallon).
In March, 1965, Consortium prices for oil leaving these countries was
as follows:
Kuwait: $1.59 a barrel
Iran: $1.78 a barrel
Saudi Arabia: $1.80 a barrel
Iraq: $1.95 a barrel
Sidon: $2.17 a barrel
Libya: $2.21 a barrel
Sahara: $2.30 a barrel
The companies charge 60 to 70 cents a barrel for trans****tation. The
considerable increase in the tonnage of today's oil tankers (100,000
and 200,000 tons, and soon even more) ensure even greater profits than
those earned by the oilmen in the Fifties and Sixties (a 100,000 ton
tanker earns approximately $500,000 gross per cargo).
Excluding these trans****tation charges (the companies generally use
their own fleets of tankers), the profits per barrel of oil are 3 to 4
times higher for overseas than for domestic production.
The net cost to the companies of the Consortium has remained
relatively stable since 1954. The retail sales price for gasoline in
American service stations in November, 1967 was $9.51 a barrel (plus
tax). This gasoline was sold at an average price of 33.33 cents a
gallon (which included 10.68 cents in taxes). The break-down of this
final price was as follows:
Retails profits: approximately 20%
Taxes: approximately 30%
Trans****tation, refining, refinery labor, miscellaneous costs and
refining costs, trans****tation from the Gulf to the refinery, delivery
to the retailer, storage, and wholesale profits: 20%
Price of the crude: 20%
(But the latter price already included the company's profits on
production and trans****tation.)
The United States is the only im****tant industrial nation in the world
where the oil industry makes more on a gallon of gasoline than the
government (70% as opposed to 30%). In Europe in particular , these
pro****tions are generally the reverse, to the benefit of the countries
concerned.
53. Beneath the Big Five and the twenty-odd large companies are a
multitude of independent producers. Concentration has been the rule in
the oil industry for the past ten years. Between 1959 and 1963, the
big cor****ations of the Chase Manhattan Group increased their
production by 526,000 barrels per day, while the production of other
companies dropped by 37,000 barrels.
In 1956 the ten largest companies in Texas produced 41% of all the oil
in the state; by 1963 they were producing 51%. The decline of the
small producers was due in part to the quota system (proration)
imposed by the States (actually by the big companies). In addition, a
number of independent producers were bought out by larger companies.
The independents still accounted for half of national production, but
pipeline fees considerably reduced their independence.
54. Oil cooperatives are virtually unknown in the United States. The
first was the Consumers Cooperative Association of Kansas City,
Missouri, founded in 1929 with a capital of $3,000. In 1962, however,
the total production of the cooperatives equaled only 200,000 barrels,
while a single unit at Baytown, Texas belonging to Humble Oil produced
300,000. The cooperatives own less than 1% of the wells in the United
States, and their refiners can handle only a fifth of the oil they
produce. Nor do they have a pipeline or other organized means of
trans****tation.
Cooperatives do not aspire to control the market, but in countries
where they are sufficiently powerful (such as Sweden, where they
account for 12% of the market), they serve as a restraint on the
conduct of the other companies.
55. As Walter J. Levy notes: "The companies which are integrated from
the well to the service station have obvious competitive advantages
over the strictly producing companies, for they can tem****arily do
without their profits from one sector of their operations."
Standard Oil of New Jersey, for example, is apparently content with a
profit rate of approximately 17% which, taking into account its super-
profits from its foreign operations, necessarily reduces its profits
from its domestic operations and, given its nearly complete control of
the market, the profit margins of the independent producers as well.
But the big oil companies conceal some of their profits in companies
incor****ated in privileged territories. Jersey Standard, for example,
uses the International Cor****ation registered in Liechtenstein. (In
the United States, the tax haven for H. L. Hunt and many other oilmen
is the state of Delaware.)
56. The depletion allowance is based on the notion that the more oil
has been extracted from a well, the less there is left. This, of
course, is nothing more than a special version of what is known in
industry as depreciation.
If a $100,000 factory operates for ten years, its owner is entitled to
deduct $10,000 a year from his gross profits for plant depreciation.
In the oil industry, on the contrary, the rate of depreciation applied
has nothing to do with the cost of running a well. A well which costs
$100,000 and produces $500,000 worth of oil each year for ten years
until it runs dry would normally justify a depreciation of $10,000 a
year.
An oil company, however, is entitled to deduct 27.5% per year from its
gross income, which amounts, in the case cited above, to $137,500 per
year, or to $1,375,000 in ten years, on an investment of only
$100,000.
The Common Market has considered applying this system to its own
industry, but with certain basic differences. Europe, contrary to the
United States, needs first to find oil in her own soil. As a result,
the Common Market measures would grant a tax reduction to companies
carrying out explorations, on the condition that the amount of this
deduction be re-invested within five years in new explorations (French
PRG system).
57. Not only did the activities of the Consortium hurt the American
consumer and the American taxpayer; they also had serious
repercussions in underdeveloped countries and affected the
international monetary situation.
The Consortium sold its oil from Venezuela, Colombia, Kuwait, Saudi
Arabia, Iraq, Iran, etc. exclusively in dollars and pounds sterling.
(Even the internal operations of the members of the Consortium were
carried out in dollars or in pounds.) As a result, the sales made in
"oil dollars" and "oil sterling" swelled the treasuries of the United
States and Great Britain, to the detriment of the currencies of the
producing and consumer countries, in particular, and to the world
financial situation in general.
This system contributed to the disequilibrium in the British balance
of payments which led to the November, 1967 devaluation, and has
forced the United States to take measures to protect the dollar. The
financial difficulties besetting both countries today are symptoms of
20 years of abusive business practices, particularly. in the marketing
of raw commodities.
58. The Humble Oil and Refining Co. declared that in 40 years it had
sunk $500 million (a figure which represents less than half of its
present capital) in deep, dry wells. But although these dry wells cost
it $62 million in 1957, the same wells cost the federal government
more than half a million in lost revenues, and Humble Oil that year
earned $175 million in profits.
59. In Britain, oil companies are not permitted to deduct their losses
from unsuccessful explorations from their income from sources other
than oil production. If the explorations are successful, the entire
cost of the original installation can be written off, but may not be
deducted as expenses, and there is no provision for a percentage
depletion allowance deductible from revenue from current production.
60. In 1965 the oil industry claimed that American reserves were no
more than 31 billion barrels. The Office of Oil and Gas of the
Department of the Interior commented, however, that "Reserves so
defined are probably on the conservative side" and added:
>"A study compiled in late 1964 by the US Geological Survey puts the
amount of crude oil originally in place in known deposits as of January 1,
1964, at over 400 billion barrels. The study goes further to conclude that
an additional 2 billion feet of exploratory drilling in favorable but as
yet unexplored areas would yield an additional 600 billion barrels of
crude oil in place. Of this, 73 billion had actually been withdrawn as of
the end of 1963. On the basis of these cold figures, it would appear that
the US is in no danger of running out of oil for many years."
Additionally, it is now possible to extract oil from deposits of
bituminous shale (a ton of bituminous shale yields 30 gallons of oil).
The bituminous shale reserves of the United States have been estimated
by the UN at 320 bill |
