disagree with some of the President's decisions in the past, I think that President Eisenhower should be permitted to exercise some jurisdiction.

Mr. CURTIS of Missouri. You think possibly the administration of it might be a little different, as far as some of our industries are concerned that have been hurt?

Senator KENNEDY. I disagreed with some of the other decisions, and I have hopes that the President will consider these problems.

Mr. CURTIS of Missouri. One final question. Of course, in these import quotas on residual fuel oil and others, there is an escape clause in there for suspension of quotas.

Senator KENNEDY. Yes.

Mr. CURTIS of Missouri. Do you not feel that that escape clause, which says in the event the President finds that these domestic supplies are inadequate to meet the needs, would solve your problem? Why would that formula not apply there, if you have agreed with the formula in the overall picture?

Senator KENNEDY. The formula that I agree with is to let the Tariff Commission, with the President's acquiescence, make a decision in this case. As you know, Congressman, what you are going to do is to limit tremendously, cut very, very substantially, the importation of residual fuel oil. At some future date they can make an appeal that our domestic supplies of residual fuel oil are not adequate, and then the burden of proof

Mr. CURTIS of Missouri. But your whole plea is that you want to be sure that there is an adequate supply of oil for your domestic use. Senator KENNEDY. At this price. My basic plea is for the present supply of residual fuel oil at this price.

In addition, I am conscious of the effect this action will have on our whole reciprocal-trade program. If you are going to do it in residual oil, I do not see why you should not do it on most of these other commodities. I think then the effect will snowball.

Mr. CURTIS of Missouri. That is all.

Mr. SIMPSON. Any further questions?

Senator, we thank you.

Senator KENNEDY. Congressman, I want to express my appreciation, because I know that you have a lot of other witnesses to hear. Mr. SIMPSON. We appreciate your courtesy.

The next witness is Hon. Thomas J. Lane, of Massachusetts.

STATEMENT OF HON. THOMAS J. LANE, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF MASSACHUSETTS

Mr. LANE. Mr. Chairman, not once, not twice, but almost on an annual basis, New England homes and industries have been put in fear and jeopardy by interruptions in the supply of oil and coal, from domestic sources.

We have been obliged to seek a steady and low-cost supply elsewhere, and we have found it by importing crude oil from Venezuela, which in return, is a good customer, spending over half a billion dollars yearly for American manufactured goods, including electrical equipment and textiles.

Starting at the consumer level let me cite some figures compiled by the United States census of housing in 1950. Of fuels used for heating

occupied dwelling units in Massachusetts, coal serviced 446,000 units, and oil was used in 657,000 homes. Percentagewise, the figures were 35.9 coal, and 52.5 oil.

Most of our homes and factories are equipped for oil.

I assume that the same situation applies to all the States on or near our long coastline.

We cannot go back, by changing to inefficient equipment and unstable supply, just to please those segments of the fuel industry, or those regions that hijacked us when they held the upper hand.

The Simpson bill would artificially restrict the supply of oil, and exert an upward pressure on the price of all fuels.

Maybe the Congress is not interested in the battle that New England is making to solve its economic problems, but we from the six Northeastern States are. This is no time to place another burden on our shoulders by restrictive legislation that is reminiscent of the 19th century. The proposed bill is doubly dangerous. It attempts to force a subsidy on millions of American consumers and is a step that could undermine our reciprocal-trade program, leading to divisions within the Western World that would play right into the hands of Moscow.

I can appreciate the problems of certain communities in Pennsylvania and West Virginia and the attitude of the independent oil producers, but the solution is not to be found in repressive legislation. Doing harm to others will benefit no one.

In desperation they instinctively cry, "Stop," "Restrain trade," "Cut imports," but this is no answer to the need for adjustments within certain communities and certain industries.

By way of example, I mention the automotive industry of the United States.

The workers are paid far higher wages than their opposite numbers in other countries. Yet this industry does not try to block the import of foreign cars because American technological know-how, always improving, is able to pay the highest wages and yet undersell foreign cars in open competition.

will

We from the labor-surplus areas where textiles have suffered much more than the coal-mining industry are trying to get emergency Government help. In the long run, however, we know that we have to make the improvements that will put us in the running again. In the meantime, there is no suggestion that southern textiles be barred from northern markets or that all textile imports be choked off. There are plenty of men's suits being sold in retail stores of the United States that are made from English textiles.

The same reasoning should apply to the coal industry and the independent oil producers.

To turn our economy upside down by forced reconversion to coal. or to domestic fuel oil at higher prices, would confront us with 2 problems instead of 1. Multiplying hardships is no way to solve any problem.

Residual fuel oil is used as fuel in industrial plants and in the gener ation of electric power. More and more of it is being used in the generation of electricity for public utilities.

Within the space of 4 years, from 1948 to 1951, inclusive, the percentage of coal used for such purposes declined from 87 to 39 percent. At the same time the use of oil climbed from 4.1 to 50 percent.

Furthermore, foreign refineries produce a higher proportion of · residual fuel oil than the United States refineries.

Would you have us penalized just to bail out the coal groups and the independent producers in the United States?

The Standard Oil Co. of New Jersey is authority for the following

statement:

The feeling of eastern coal producers that curtailing heavy fuel-oil imports would result in an equivalent increase in the use of coal is not supported by a realistic view of the eastern energy market. Although some large plants and utilities are equipped to use heavy fuel oil or coal alternately, most present users of heavy fuel oil are not so equipped, for consumers to change from one fuel to the other usually requires new or altered equipment and basic changes in operating procedures.

In 1952, for example, Esso Standard Oil Co. and its wholesalers sold heavy fuel oil to apartments, hotels, stores, office buildings, bus terminals, churches, schools, Government buildings, factories, and utilities; and a recent survey showed that less than 3 percent of Esso's direct customers are equipped to burn some other fuel besides oil.

For most present users of heavy fuel oil, the conversion of equipment to burn coal, or even getting the physical space to store solid fuel, could be accomplished only at great expense, if at all. If their supplies of heavy fuel oil were cut off, the vast majority of consumers of this product would turn to natural gas as soon as possible. Costs of heavy fuel to those able to obtain its would almost certainly be higher because of lessened supply. The result would be an increase in the level of fuel prices to consumers generally.

Serious restrictions on heavy fuel oil imports would work harm to thousands of businesses, large and small, and to other establishments that now use this fuel directly and indirectly for heat and power. Such an action would not serve the best interests of our national economy and would do disservice to consumers of many types of goods.

Imports of crude oil and heavy fuel oil are nothing new. The United States Navy and our merchant fleets use oil fuel. American railroads have abandoned the steam locomotive in favor of diesel-powered engines. Even those railroads whose principal freight haul is coal are changing to diesel power.

Most of the new houses, millions of them, that have been built since the end of World War II, use oil or natural gas. This is in response to consumer demand.

Natural gas itself has become a competitor of coal and oil, not only for heating homes, but as fuel for industry, and for electric power generation.

Shall we reverse the whole economy of the Nation and throw away technological advances to save a declining coal industry? Shall we "take it out on oil imports" when it is domestically produced oil and especially natural gas that have had the greatest effect on coal consumption?

It seems to me that the Simpson bill has picked the wrong target. Instead of bringing other industries down to its depressed level, the coal industry would be better occupied in getting up to date. Technological improvements, both in the production and the use of coal, would be a constructive solution.

The President's Materials Policy Commission is for oil imports. In its report of June 1952 it said:

The energy economy of the United States has prospered on the basis of using the cheapest available fuels and can prosper most in the future if our import policy continues to permit oil consumers to have access to the lowest cost sources consistent with security. Geological and economic conditions throughout the World favor an increasing reliance on imports to meet a considerable part of the

future growth of United States consumption, even though United States produe tion of oil can also be expected to continue to grow. Consumption is expected to increase more rapidly than production, so as to leave room both for increasing imports and a healthy domestic petroleum industry.

In World War II, Venezuela was a main factor in supplying the oil requirements of industry and of the armed forces of the Allies. Toward the end of the conflict, oil from the Middle East was also used in large quantities. At the peak of the war, more than one-third of the total oil needs was supplied from sources outside the United States.

Security demands access to oil sources abroad. To develop such sources, we must make markets available to them here. If they cannot sell to the American market, they may be forced to seek an outlet else where, and add their resources to the growing power of the Soviet Union.

Crude oil production in Texas has been cut back from 3 million barrels per day as of December 1952, to 1,700,000 barrels for April 1953. There have been proportionate cuts in Oklahoma and Louisiana.

These figures are cited by those supporting the Simpson bill as evidence that we must do something impetuous and drastic to halt the decline.

However they conveniently ignore the fact that these reductions are from the recordbreaking level in the whole 94-year history of the petroleum industry in this country.

The current anxiety about the effect of oil imports is without foun dation. It is based largely on short-term comparisons concerning an industry that has had a remarkably steady growth. Other indus tries know that some interim fluctuations are inevitable but they do not rush to Congress for help every time this happens. If they did we would have an Iron Curtain of our own with tariff walls so high that we would not be able to get the raw materials that we need from other nations. Remember, gentlemen, that the United States is not self-sufficient. Trade is never a one-way street.

You can't baby any part of the fuel industry by protecting it from competition and normal economic evolution and still preach free enterprise.

You can't saddle the American consumer with subsidies just to please a few high cost oil producers and coal mine operators who have not kept in step with progress.

Help them to modernize and to find new markets through research and development leading to new derivatives and new applications. But don't blame successful competitors and drag them down, too. Quota restrictions on oil imports would wreck our whole reciprocal trade program, make a farce of the trade-not-aid approach to economic diplomacy, and burden American consumers with an unfair

cost.

At the same time, this would not be a real solution to the problems of the independent oil producers and the coal groups. Blaming the other fellow for your own mistakes or shortcomings will not correct them.

This bill, if passed, will harm us nationally and internationally, As a Congressman from Massachusetts, I must also emphasize the particular injury it would inflict upon the consumers and industry of my home State.

President Eisenhower has recognized the economic problems of New England caused by technological and other changes in the oncedominant textile industry of this area. The seriousness of our situation is confirmed by the cold and factual statistics of the United States Department of Labor.

The Simpson bill would compound our troubles by restricting the basic fuel supply of our industries and by pushing prices higher, thereby leading to further deterioration in our competitive position which is already critical.

Seventy million dollars would be added to the bill of New England

consumers.

Any hope of attracting new industries to take the place of our closed mills or to keep the ones we have from giving up the ghost would be given the 1, 2, Marciano punch, by my respected colleague, Mr. Simpson.

I am willing and anxious to cooperate with him in any constructive program to help the coal miners, or those who work for the indepenent oil operators, but I submit that his present bill is not the answer. It is a measure that is born of panic and one that would have the devastating effect of a chain reaction.

Have the American people no right to choose the fuel they prefer or can afford?

Mr. SIMPSON. Thank you, Mr. Lane.

Is Mr. Donal M. Sullivan present, executive secretary of the Oil Men's Association of New England, Inc., Boston?

Mr. Sullivan, will you kindly take the chair, and give your name to the reporter, and proceed as you see fit?

STATEMENT OF DONAL M. SULLIVAN, EXECUTIVE SECRETARY, INDEPENDENT OIL MEN'S ASSOCIATION OF NEW ENGLAND, INC., BOSTON, MASS.

Mr. SULLIVAN. My name is Donal M. Sullivan. I am executive secretary of the Independent Oil Men's Association of New England, Inc.

First, I wish to thank the committee and its distinguished chairman for permission granted to the Independent Oil Men's Association to present four witnesses, of whom I am one, on the matter of the Simpson bill. The others will be John P. Birmingham, of White Fuel Corp., South Boston, Mass.; John J. Gill, of Petroleum Heat & Power Co., Providence, R. I., who will also, I understand, represent the Providence Chamber of Commerce; and Martin J. Ryan, of Buckley Bros., Bridgeport, Conn., who is also, I believe, representing the Connecticut Petroleum Association.

Independent oil men in general, and members of the Independent Oil Men's Association of New England in particular, have a most important role in the marketing of the fuel oils which are consumed in the six New England States. Anything which affects the supply of crude petroleum or its products affects their customers, the individual and corporate consumers of New England, and affects them. New England, as is well known, depends upon outside sources for every drop of oil which its people use.

It is not my purpose here, nor is it that of my associates, to presume to be expert on the momentous issue of the foreign trade policy