Already we are importers of petroleum. We are to be larger importers
year by year if we continue--and we will--to invent and build machines
which will rely upon oil or its derivatives as fuel. Our business
methods have been and doubtless will continue to be developed along
lines that make a continuing oil supply a necessity. Some of that oil
must come from abroad, as nearly 40,000,000 barrels did last year, and
for that we must compete with the world. For while we are the
discoverers of oil and of the methods of securing it and refining it,
piping it, and using it, our pioneering is but a service unto the world.
This situation calls for a policy prompt, determined, and looking many
years ahead. For the American Navy and the American merchant marine and
American trade abroad must depend to some extent upon our being able to
secure, not merely for to-day but for to-morrow as well, an equal
opportunity with other nations to gain a petroleum supply from the
fields of the world. We are now in the world and of it in every possible
sense, otherwise our Navy and our merchant fleet would have no excuse.
No one needs to justify them--they are the expression of an ambition
that carries no danger to any people. For their support we can ask no
preference, but in their maintenance we can insist that they shall not
be discriminated against.
Sometime since I presented to a board of geologists, engineers, and
economists in this department this question:
If in the next five years there should develop a new demand for
petroleum over and above that now existing, which would amount to
100,000,000 barrels a year, where could such a supply be found, and
what policy should be adopted to secure it?
The conclusions of this board may be summarized as follows:
(1) Such an oil need could not be met from domestic sources of
supply.
(2) It could not be assured unless equal opportunities were given
our nationals for commercial development of foreign oils.
(3) Assurance of this oil supply therefore inevitably entails
political as well as commercial competition with other nationals,
as other nationals controlling foreign sources of supply have
adopted policies that discriminate against, hinder, and even
prevent our nationals entering foreign fields.
(4) The encouragement of and effective assistance to our nationals
in developing foreign fields is essential to securing the oil
needed.
(5) Commercial control by our nationals over large foreign sources
of supply will be essential if the estimated requirements are to be
assured.
(6) It is necessary that all countries be induced to abandon or
adequately modify present discriminatory policies and that the
interest of our nationals be protected.
(7) Some form of world-wide oil-producing, purchasing, and
marketing agency fostered by this Government seems essential to
assure the commercial control over sufficient resources to meet the
competition of other nationals. England has apparently adopted such
a policy.
This board proposed the following program of action:
(1) To secure the removal of all discriminations to the end that
our nationals may enjoy in other countries all the privileges now
enjoyed by other nationals in ours:
(_a_) By appropriate diplomatic and trade measures.
(_b_) By securing equal rights to our nationals in countries newly
organized as mandatories.
(2) To encourage our nationals to acquire, develop, and market oil
in foreign countries:
(_a_) By assured adequate protection of our citizens engaged in
securing and developing foreign oil fields.
(_b_) By promotion of syndication of our nationals engaged in
foreign business, in order to effectually conduct oil development
and distribution of petroleum and its products abroad.
(3) Governmental action--through special agency or board:
(_a_) Through the organization of a subsidiary governmental
corporation with power to produce, purchase, refine, transport,
store, and market oil and oil products.
(_b_) Through the formation of a permanent petroleum
administration.
(4) To assure to our nationals the exclusive opportunity to
explore, develop, and market the oil resources of the Philippine
Islands, provided discriminatory policies of other nations against
our nationals are not abandoned or satisfactorily modified.
I have given much thought during the past year to this problem of adding
to our petroleum supply, and it has seemed to me but fair that we
should first make every effort to increase the domestic supply through
the methods that have been indicated--
(1) The saving of that which is now wasted, below ground and above
ground.
(2) The more intensive use, through new machinery and devices, of the
supply which we have.
(3) The development of oil fields on our withdrawn territory and in new
areas such as the Philippines.
In addition, we must look abroad for a supplemental supply, and this may
be secured through American enterprise if we do these things:
(1) Assure American capital that if it goes into a foreign country and
secures the right to drill for oil on a legal and fair basis (all of
which must be shown to the State Department) it will be protected
against confiscation or discrimination. This should be a known,
published policy.
(2) Require every American corporation producing oil in a foreign
country to take out a Federal charter for such enterprise under which
whatever oil it produces should be subject to a preferential right on
the part of this Government to take all of its supply or a percentage
thereof at any time on payment of the market price.
(3) Sell no oil to a vessel carrying a charter from any foreign
government either at an American port or at any American bunker when
that government does not sell oil at a nondiscriminatory price to our
vessels at its bunkers or ports.
The oil industry is more distinctively American than any other of the
great basic industries. It has been the creation of no one class or
group but of many men of many kinds--the hardy, keen-eyed prospector
with a "nose for oil" who spent his months upon the deserts and in the
mountains searching for seepages and tracing them to their source; the
rough and two-fisted driller, a man generally of unusual physical
strength, who handled the great tools of his trade; the venturesome
"wildcatter," part prospector, part promoter, part operator, the
"marine" of the industry, "soldier and sailor too"; the geologist who
through his study of the anatomy of the earth crust could map the pools
and sands almost as if he saw them; the inventor; the chemist with still
and furnace; the genius who found that oil would run in a pipe--these
and many more, in most of the sciences and in nearly all of the crafts,
have created this American industry. If they are permitted they will
reveal the world supply of oil. And upon that supply the industries of
our country will come to be increasingly dependent year by year.