New-York tribune., 1920-10-01
u. S. Considers
Plan to Enter
Oil Business
Expert, Now in Mexico, Ex.
pected to Place Details
OF His Survey Before the
Shipping Board Shortly
Fuel Sought for Vessels
Control of Output of Many
Mexican Wells and Build
ing ofPipeLinesS Suggested

N''N OH'tNN toIdltS government to
ter the oil business on its own account
Tor the purpose of insuring an ade-
quate supply of fuel oil for American
vessels will soon be placed before the
united States Shipping Board for con-
sideraton.
A survey of the oil situation in Mex
ico is now being made by the Shipping
Board, and an agent of the board is
no" IN Mexico investigating. among
other plans, project under which the
board would take over control of the
output of numerous Mexican-owned
wells; and enter the oil refining busi-
ness by constructing q system of pipe
IInes and a refinery of its own and opc-
rating them in Mexico.
consent of the Mexican government
8. would have to be obtained before such
a plan could be carried out, it was said
in diplomatE circles to-day. Admiral
llIlam 5. Benson, chairman of the
Sh1ppng Board, asserted that if the
board should decide to adopt such
method for insurng the future fuel oil
supply OF the American merchant fleet
the plan would be submitted to the
State Department and the Secretary of
state would be asked to conduct the
necessary diplomatic negotiations with
Clt McAlcdn government.
Ihere Is no intention on the part Of
the Shipping Board to enter the oil
production field, Admiral Benson said
such plan was rejected as unfeasble
when the question of the future of the
fuef oil supply for American vessels
first was taken up by the board.
Oil Expert Makes Survey
j. A. Phelan, oil expert for the
board, has been in Mexico for several
weeks making thorough investiga-
ton of the entire oil supply situation
IN that country. lie VIII return in
four or five weeks and make his report
and recommendations to the board. Ad-
miral Benson said
Nv. Phclan was not authorized by
the board to conduct any negotiations
with the Mexican government, Admiral
Benson declared, but was instructed to
make an Investigation and return to
Wa ahington and discuss the situation
and uggest plans to the board
THE Shipping Board positively has
no intention Of engaging in the oil pro-
due On business,' Admiral Benson said.
"The question of obtaining an adequate
supply OF fuel oil for the 1900 Ameri-
can vessels that burn Oil, however, is
becoming serious. and the board sent
Mr. Phelan, who is an expert on such
matters, to Mexico to make a thorough
Investigation.
THE board had been having some
difficulty with clearing tankers from
Mexican ports, and | requested Mr.
Phelan to look into that matter. also
instructed him to inquire into the abl-
ity Of the producers to give US the Oil
they contracted for and to make prompt
deliveries.
among other things Mr.. Pholan was
asked to investigate the cost of con
structing pipe lines, and possibly our
own refinery in Mexico, in the event
that the board should decide that we
should purchase our Gil in crude form
at the wells and refine it ourselves.
"Such a plan, Of course, could not be
carried out until the Mexican govern
ment becomes stable, and then only if
the proper arrangements could be made
with the Mexican government.
"Mr Phelan will return in four or
five weeks and make his report to me.
If the board should decide that it was
best to build our own pipe lines and re
tinery, the whole matter would, of
course, be referred to the State Depart
ment The board would not attempt to
carry out any such plan without thc
approval of the State Department., and
if it was found that the plan could not
be worked out we would drop it,
Question of Leases Considered
The whole plan is still nebulous, Ad-
miral Benson insisted. He said that re
ports have reached him from Mexico
that Mr.. phcan already has discussed
the possibility Of carrying out such d
plan with the Mexican government, and
that his discussions have gone so far
as to touch upon the possibility of the
Mexican government leasing oil lands
to the Shipping Board.
Admiral RpnEOn pmDNatlCallV UonleQ
that any plan for leasing oil properties
in Mexico is under consideration.
ave have been having so much trou-
Bile in obtaining a supply of oil that
Mr. Phelan was sent down there to
make an investigation,' the Shipping
Board chairman said. THAT is all
there is TO it. He will make his re
port when he returns, and then the
board viii consider what plan to
adopt"
one of the propositions being inves-
tigated hv Mr. Phelan, it has become
known. Is the construction OF pipe
line across the Isthmus of Tehuante-
pee, Mexico, by the American govern
ment. in order 10 supply oil to Amer-
can warships and merchant vessels in
the Pacific Ocean. Mr.. PhelAn is now
inquring into the cost of such an un-
dertaking.
The plan for the pipe line across the
isthmus is meeting with opposition
from military men here, who point out
that part of such pipe line would run
through Jungle. and it would be al
most impossible to protect it in case
of war
Any plan to establish United States
government oil properties in Mexico,
whether they be wells or pipe lines
and retineries, viii present new prob
lens to the State Department and add
greatly to the tangled Mexican situa-
tion, in the opinion Of diplomats who
are informed as to the Mexican sltua-
ton.
Such properties. it was pointed out
would be at the mercy OF the Mexican
government, and in case of any dispute
with that government the only way the
United States could protect its prop
erty and keep a supply of fuel OIL flow
ing would be to send the American
army into Mexico and seize control of
the fields where the governments re-
hneries and pipe lines might be To-
Gated.
Military Opposition Expected
The whole plan. which has been ru-
mored for several weeks, undoubtedly
Will be strongly opposed by the mill
: tary leaders, if it ever Is adopted by
the Shipping Board. Army heads are
criticizing it on the grounds that it