Evening star., 1944-04-02
Arabian Oil Issue
Nears Decision
By ". III. Harrison

Inc QeDate over tne proposed Saudl
Arabian pipeline has already run into
many thousands of words, but that is
just the beginning. For in the weeks
Immediately ahead, with advocates and
critics scheduled to appear before
special Senate committee investigating
the subject the volume of arguments
pro and con is almost certain to mount
to truly monumental proportions.
The points at issue revolve around the
understanding reached recently by Sec
retary Ickes' Petroleum Reserves Corp.
and the Gulf, Texas and Standard Oil
of California companies. These three
hold immensely rich concessions in the
Kingdom of Saudi Arabia and the
Sheikdom of Kuwait, and under the
understanding, the Governmental an
estimated cost of upwards of $120, 100000
would build, own and operate 1900
mile pipeline to transport their produc-
ton from the Persian Gulf area to
tanker-loading outlet on the Eastern
Mediterranean shore.
In return for this. in addition to pay
ing back the full Federal outlay, with
interest, over a period of Is years, the
companies would bind themselves to do
the following: Cd To maintain reserve
of about 1,000,000,00 barrels of crude
oil petroleum for purchase by our armed
forces at any time at rs per cent below
the regular market price; (2) not to
sell any of their output to any foreign
government without first consulting the
State Department and the Petroleum
Reserves Corp, and go to make no sales
to any government or it's nationals
when 'in the opinion of the Department
of State, such sales would be unwise in
the light of United States foreign policy
and the requirements of collective Sc
curity"
AS expressed by Mr.. Ickes, the Gov
ernment's view is that an agreement of
this kind Is absolutely essential as a
measure of prudence and ordinary, COM
nonsense foresight AS such, its pur-
pose would be to implement our foreign
policy, to prepare against the day when
our own domestic oil resources may be-
gin to run dangerously low and to
make long-term provision for the petro-
leum needs Of our armed forces in the
event Of future emergencies and in view
of the obligations this country may have
to assume for the maintenance of COL
lective peace system in the postwar
world. From the standpoint of the
three companies, of course, the arrange
ment speaks pretty much for itself, since
besides taking care of an important
financing problem, 1t would lend a spe-
cial degree of security to their opera
tions-the security implicit in having
the United States for partner, how
ever limited that partnership might be.
The proposals opponents, however,
have launched full-scale offensive
against it. Led by the Petroleum In
dustry War Council representing some
81 American companies, they have cut
loose with massed barrage of objec-
tions, the chief of them being that such
an agreement would be an entering
wedge toward Federal control of private
SAAeSA ~ AoSt eAAoU AZ ID PACOlIdOCo Olt q
grossly exaggerated idea of our dwin-
ding domestic resources and that it
would be an imperialistic step full of
ominous possibilities. Thus, for ex-
ample, in resolution adopted early last
month, the council declared that ''the
direct participation by the Government
of the United States in pipeline sys-
tenn traversing the territory of three
foreign nations can easily lead to inter-
national misunderstanding and pave
the way to future war through the
involvement of our national honor"
Other objections include these: Cd 1t
Is not necessary for the United States
Government to build this pipeline. If
it is justifiable from a commercial
standpoint, the companies should build
1t. CD The marketing of large ad-
dltional supply of oil from the Persian
Gulf fields, thus helped by the Gov
eminent, will adversely affect Western
Hemisphere exports to Europe and may
create ill-feeling among our South
American neighbors. And 90 any ad-
vantages accruing to us from the build
ing of such a pipeline by the Govern
ment could just as readily be obtained
If the State Department offered Wig
orous diplomatic support to private en-
terprise on the basis of the rights of our
nationals operating abroad.
These are but a few of the argu-
ments raised against the proposed Saudi
Arabian project. A sketchy summary
of them does not do justice to their
cogency but, by the same token, neither
does a summary do justice to the argu-
ments on the other side. For instance,
both Mr.. Ickes and the three COM
panies involved have forceful points to
make in contending that it is far
fetched to say that private enterprise
Is endangered or imperialism embraced
when the Government, on a loan basis,
merely finances pipeline. AS for COM
mercial feasibility and the reason why
the companies would not foot the bill at
the outset, representatives of Gulf,
Texas and Standard of California can
point out Cd that pipeline transporta-
ton, besides meaning swifter delivery,
would be about 20 cents per barrel less
in cost than shipping by tanker from
the Persian Gulf, and (2) that the COM
panies already have huge sums of ven-
ture capital invested in developing their
concessions and need partial Federal
support to carry on. In this case, it is
argued, regular diplomatic assistance,
however vigorous, simply would not be