DEPARTMENT OF STATE Memorandum of Conversation
DATE: August 31, 1949
SUBJECT: Oil Imports
PARTICIPANTS: Messrs. W. R. Poage, Eugene Worley, Ed Gossett, G. H. Mahon, Albert Thomas, O. C. Fisher, W.H. Lucas - Congressmen from Texas S - The Secretary E - Mr. Thorp arrived just before conclusion of meeting PED - Mr. Eakens
COPIES TO: S E H ITP CP
As the Secretary had only a limited amount of time for the meeting, the discussion consisted of Congressman Gossett, who acted as the principal spokesman, and other members informing the Secretary of their concern about oil imports. According to Mr. Gossett, in the second quarter of 1949 oil imports were the highest in history, and they are causing hardship to the independent oil producers of Texas, where production has been reduced over 700,000 barrels per day. They have also reduced tax revenue of the State of Texas from severance taxes on oil by about $30 million, and a special session of the Texas Legislature is going to have to be called before the end of the year to find new sources of revenue to make up for this loss.
He said that oil imports are increasing and that there is nothing to keep the large oil companies from even doubling the present level. He mentioned that he did not believe any agency of the Government could control such imports through persuasion, or even coercion if that were necessary, unless it is the State Department. The group does not wish to support the Thomas Amendment (introduced by Senator Thomas of Oklahoma) to the Reciprocal Trade Agreements legislation, but if action is not taken by the State Department they will not have any other alternative. The Thomas Amendment provides for limiting oil imports to 5 per cent of domestic demand. At the present time the application of the Amendment would reduce imports to about half the present level of 600,000 barrels daily.
Congressman Thomas indicated that while some independent oil producers are millionaires, there are a lot of small producers in Texas who cannot meet their obligations at the present level of production, and these are the producers about which the Texas Congressmen are concerned. The position of some of the group was that independent oil producers cannot exist without protection from the large oil importers. Mr. Poage took exception to this, stating that he favors the removal rather than the increasing of restrictions, but that the problem is that the industry cannot exist half controlled and half free. He did not elaborate upon this last point.
Mr. Gossett mentioned the analysis which the Petroleum Division has made of the oil import question and which has been sent as an enclosure to letters to several congressmen. This analysis points out that the Texas Railroad Commission in setting the quantities of oil that were permitted to be produced in Texas had set such quantities below market demand as estimated by the U.S. Bureau of Mines. Mr. Gossett said that he had a letter which he would submit to the Department from Col. Ernest O. Thompson, member of the Texas Railroad Commission, indicating that the Department's analysis is not correct. In support of this he mentioned that crude oil stocks in the United States have been increasing during the period that Texas production has been shut back. The group expressed the hope that the Department would reexamine the problem and give them a further report. The Secretary said that the Department would do this.
* * *Following the meeting Mr. Gossett issued a statement to the press, a copy of which is attached.
Attachment.
ITP:PED:RHSEakens:mb
Statement Issued by Congressman Gossett August 31, 1949
Texas Congressmen O. C. Fisher, W.R. Poage, Albert Thomas, Eugene Worley, Wingate Lucas, George Mahon, and Ed Gossett today called on Secretary of State Dean Acheson concerning foreign oil imports.
The Texas Congressmen told the Secretary that the domestic petroleum industry, especially the independent segments of the industry, was suffering greatly because of excessive importations of foreign oil. We urged upon him the necessity of administrative relief and protection, pointing out the necessity of keeping the domestic petroleum industry in a healthy condition. We took exception to the State Department's release of some weeks ago in which they minimized the dangers of foreign imports and reflected upon the Texas Railroad Commission's administration of conservation laws. We handed him a copy of the Texas Railroad Commission's letter of August 23 replying to the release and urged upon him a careful study. The Secretary promised to have his petroleum section reexamine the problem and give us a further report in the premises.
I hope that some definite commitments may be obtained from the State Department as to its future policy. In the absence of administrative assurances we will endeavor to secure some administrative relief when Congress reconvenes.