Evening star. [volume] (Washington, D.C.) 1854-1972, 1953-01-31
Correcting the Record

Disclosure of letter written by former
Secretary of Interior Chapman to the Depart
ment of Justice on January II provides added
evidence that the Truman administration was
deeply split over the anti trust action initiated
against seven major oil companies. The action,
deadlocked when the five American companies
involved refused to agree to supply records for
civil case in return for dropping of criminal
charges, is now in allegiance pending study by
Attorney General Brownell. The compromise
was offered by the Truman administration after
the National Security Council reviewed the
matter and both the State and Defense Depart
nentS were reported opposed, at least to the
criminal prosecution, on grounds it would jeop-
ardiZe the national interest.
Mr.. Chapman, who was also Petroleum
Administrator for Defense, charged two inaccu-
racies in the Justice Departments presentation.
One was the contention that the alleged cartel
had reduced the incentive for drilling oil wells
In this country and that this had resulted in
reduction of reserve productive capacity to q
level harmful to national security The other
was that the alleged cartel was responsible for
worldwide shortage of aviation gasoline.
The Secretary pointed out, first of all, that
q record number of wells had been drilled in
1851 and another record of 46 200 wells had been
set in 1852. He pointed out further that only
the shortage of pipe had kept the drilling down
to these levels and that the domestic oil indus
try had gone into the foreign markets to pay
premium prices for pipe supplies Other oil
authorities both in and out Of Government,
also point out that the industry met part Of its
needs by the so-called conversion process of
buying steel and supplying it to the pipe fabri-
Gators, likewise a costly procurement method.
Applications for oil-well piping, cleared through
the PAD, are still running ahead of domestic
production and it is estimated that 20 per cent
of the supply today is from foreign or CONVEX
sion sources
Since 1916, there has been an increase in
domestic demand for crude oil of about so per
cent and in world demand of about $50 per
cent. Production has increased by about the
same percentages While Government petro-
leum authorities would like to raise the produc-
tive capacity even faster than at present, they
consider the pipe shortage and normal eco
nomic factors, not traceable to any cartel, as
the principal obstacles.
The same Government authorities also con-
tend that all essential needs for aviation gaso-
line are being met and that any threat lies in
factors other than conspiracy or collision with
in the industry. The closing of the Abadan re-
finery in Iran took $4,000 barrels daily of avia-
ton gasoline off the world markets and the oil
industry strike in this country last May and
June cut our domestic production. Aviation
gasoline is superfuel that is costly to produce
and requires special plant facilities. There is
such great range between the normal peace
time demand and that of wartime that many
of the World War II plants were closed or con-
verted when that war ended Some have been
rebuilt since the Korean war started but the
unpredictability of long-range military demand
and the practice Of contracting to buy on a one
year basis only leave large economic risk in
overbuilding this capacity
As long as the oil industry is private