Whether we made as good a trade as we should have, I cannot say, because I am not familiar with all the details. But I believe that the general idea of working it out along those lines is sound. Whether there are items that we would like to sell in Venezuela that are kept out as a result of their tariffs, I do not know. But certainly they do buy an awful lot of materials from the United States.

Mr. UTT. That is correct. They do buy about half a billion dollars worth a year, but most of those items are items which they do not produce in Venezuela, and are not in competition with their local industry. Practically, when any merchandise is in competition with their local industry, they do have a restriction and a protective tariff against it.

My question is: Are you, as an American citizen, disturbed over their tariffs against certain imports?

Mr. SWENSRUD. I would think it is a matter of degree. If they went too far in that direction, I would be, yes.

Mr. UTT. But you are not ready to declare war, or anything, on Venezuela because they do have a slight tariff on some American goods?

Mr. SWENSRUD. We would be in an awful lot of wars if we did that. I simply think in the case of Venezuela they have a growing industry. They are trying to foster industrial development there. They probably have the same problems that our country had at the time when it was developing its industrial strength. I think there are stages in a nation's development when perhaps it has more reason for tariff than at other stages.

Mr. UTT. Do you think it is any more important to protect our infant industries than it is to maintain the established industries which we have which are being terribly upset and disturbed, according to the testimony we have, by the importation of this residual fuel oil?

Mr. SWENSRUD. I am sure you know better than I how complicated the tariff questions are, and you can look at them philosophically or in terms of a particular industry, and in all sorts of ways. I do not believe there is any too simple an answer to the question.

I believe we have a reason to protect infant industries. I certainly do not think either the railroads or the coal industry could be said to be infant industries.

On the other hand, we certainly have a right, too, to protect industries that are essential to our national defense. To me, it is a matter of degree. I do not believe in high tariffs as a matter of principle, although I recognize that some tariff protection in individual cases is undoubtedly warranted.

Mr. UTT. You know, of course, that our average tariff, including all free goods and taxable tariff goods, is considerably under 10 percent? You would not call that a high tariff barrier, would you?

Mr. SWENSRUD. You mean our tariff situation? I have the feeling that at the present time our tariff situation. is not what you might call a high tariff situation.

Mr. UTT. The whole thing I was trying to drive at is that if we are not terriby disturbed about the tariffs that Venezuela has, why should we think that Venezuela, in as firm financial condition as they are in, would be so unfriendly and upset if we did have some protection against the importation of residual fuel oil?

Mr. SWENSRUD. I think it is purely a practical problem. I think we all recognize the importance and desirability of having good relations with a country like Venezuela. It is a fact-I do not think there is any question about it-that the Venezuelans are very much interested in this question. They are certainly very much interested in the amount of the tariff, and I am sure they would be interested in anything that would tend to restrict imports into this country of Venezuelan oil.

That is only a natural thing, I think, considering how important oil is as her principal export. It is a good deal like sugar in Cuba. I am sure it is the same type of problem. The export of oil from Venezuela is undoubtedly by far the major source of their external revenue. Anything that threatens that is bound to cause a great deal of concern and apprehension in Venezuela.

Mr. UTT. I do not think anyone on this committee is making any attempt to raise barriers that would keep out great percentages of the imports. It is more or less, as you say, a matter of degree, and probably if our criteria are the same, we would arrive at the same conclusion, both of us.

Mr. SWENSRUD. Yes.

Mr. UTT. Secondly, you made reference to the fact that you were being injured by the use of natural gas. Would you say that we are importing any natural gas into the United States at the present time? Mr. SWENSRUD. No.

Mr. UTT. Then why are you talking about tariffs on natural gas? Mr. SWENSRUD. I didn't. I merely said that I did not think it was desirable to try to protect an industry from the consequences of competition.

Mr. UTT. Your own words were that "we are not asking for a tariff on natural gas."

Mr. SWENSRUD. I used the word then in quotation marks.

Mr. UTT. That is what I thought. I realize that industry has to meet its own domestic competition, and there is no attempt to raise barriers as between States, because I know my State of California imports about 80 percent of its natural gas from the San Juan Basin. Mr. SWENSRUD. Right. I am sorry I did not make that clear at the time.

Mr. UTT. One other item. We have had testimony to the effect that for every one barrel of oil that has been removed domestically, there has been discovered a barrel and six-tenths additional oil. Would you say that that is a correct statement, or not?

Mr. SWENSRUD. For every barrel of oil that has been removed
Mr. UTT. Each year.

Mr. SWENSRUD. Oh. We discovered a barrel and six-tenths?
Mr. UTT. Yes.

Mr. SWENSRUD. That certainly would not apply every year; maybe as a generalization, I do not know. I would doubt that. I have the figures on it here.

We have increased our reserves over and above our production by varying amounts from year to year. It would be pretty hard to draw a generalization unless you took a particular period and worked the figures out. It is true that we have discovered oil more rapidly than we have used it in this country. There is no doubt of that. We have

to discover it more rapidly than we use it or our production could not be further increased.

Mr. UTT. That is correct. The thing that I was driving at is that if we continue on that same graph of discovering more oil for every barrel we remove, the end is not in sight.

Mr. SWENSRUD. No. I do not know if it is in sight. We certainly have not reached it. Some day I think we will reach the point where we find it extremely difficult to further increase our reserves, considering the high level of production. In other words, if we are producing 10 million barrels a day in this country, I think we will run into it at some point. I do not know whether it will be 1960, 1970, or 1980, but somewhere along the line-and I rather think we will within this century-we will reach the point where it will be very difficult to further increase the level of domestic production of oil.

Mr. UTT. On page 4 of your prepared statement, you said that there were approximately 45 billion barrels of oil in the known reserves in the United States.

Mr. SWENSRUD. No; not 45. There are now about 33. I said we would have to have about 45 by 1960 to sustain a production capacity of a million barrels a day.

Mr. UTT. So the present known reserve is approximately 35 billion? Mr. SWENSRUD. Between 32 and 33 billion.

Mr. UTT. Could you estimate the amount of that which is in the continental United States as opposed to the amount in the tidelands? Mr. SWENSRUD. That is practically all onshore, because the way these figures are estimated, they do not speculate about possibilities. These are what were considered to be proved reserves.

Mr. UTT. Are there not proved reserves in the California coast that are known and proved reserves, amounting to several billions of barrels?

Mr. SWENSRUD. You mean offsore?

Mr. UTT. Yes.

Mr. SWENSRUD. Of course, there is some offshore there actually under production, but there would be no barrels included in these figures I quoted except where there were actually wells producing oil and tapping known reserves.

Mr. UTT. You would say, then, this 3 billion barrels does not include any of the known reserves along the Pacific coast, then?

Mr. SWENSRUD. Not much, I would say. There is some there at Long Beach, and up at Santa Barbara, and a few places along the coast there are wells going out into the ocean a way.

Mr. UTT. Huntington Beach and Newport Beach, both.

Mr. SWENSRUD. Yes.

Mr. UTT. In fact, we are producing around 41,000 barrels a day off the coast of California.

Mr. SWENSRUD. The reserves that are backing up that production would be in these figures.

Mr. UTT. They would be in here?

Mr. SWENSRUD. Yes.

Mr. UTT. The thing that I am getting at, then, is that you do not believe what we have heard from the experts in the Senate, Senator Morse, Senator Douglas, and Senator Kefauver, to the effect that there are over 200 billion barrels of known reserves in the tidelands that the United States is giving away to the States?

I

Mr. SWENSRUD. No, sir; that could not be a true statement. There certainly are no known reserves. Known reserves are reserves you know are there. They do not know it at all.

Mr. UTT. You would say that they were speculating?

Mr. SWENSRUD. It is definitely speculative and definitely optimistic, in my view.

Mr. UTT. That is all, thank you.

The CHAIRMAN. Mr. Goodwin will inquire.

Mr. GOODWIN. I am sorry I did not have the privilege of hearing your entire statement, but I gather from your response to questions from the gentleman from California, Mr. Utt, that you think Venezuela is one of our very best friends?

Mr. SWENSRUD. Yes; I should say that Venezuela is a very good friend of ours. I was commenting on their being a good customer. That is the connection in which it came up. We were talking about the importance of free trade in the world or of trade, let us say, not necessarily free trade but increasing trade, and the fact that while we are a large importer of oil from Venezuela, Venezuela is likewise a very good customer of goods made in the United States.

I think it illustrates this principle of trade.

Mr. GOODWIN. Do you know of any country that you think we ought to be more careful about maintaining friendly relations with than Venezuela?

Mr. SWENSRUD. I tried to emphasize this point: That I believe that we have a great interest in American companies having oil reserves in various parts of the world, because at any time when the world security is involved or the security of the free world, we need a lot of oil. W will need a lot of oil in this country to fulfill our future requirements, and certainly in a war we would need oil in many parts of the world, and likewise we ought to try to keep it from falling into the hands of our enemies. Therefore, good relations with those countries of the world that have very large oil resources, such as those in the Middle East, and Venezuela, to my mind is a very important thing. We should maintain good relations with those countries.

Mr. GOODWIN. That is all, Mr. Chairman. Thank you.

The CHAIRMAN. We thank you, sir, for the statement you have made here to the committee and the information that you have given

us.

The next witness is Mr. Eugene Holman, president, Standard Oil Co. of New Jersey.

Mr. Holman, we are glad to see you here, and if you will just give your name and the capacity in which you appear for the record here, we will be very glad to hear you.

STATEMENT OF EUGENE HOLMAN, PRESIDENT OF THE STANDARD OIL CO. OF NEW JERSEY

Mr. HOLMAN. Thank you very much, Mr. Chairman.

Chairman Reed, I have about a 20-minute statement, and I have 4 or 5 charts I would like to show you afterward, if that is agreeable with you, sir.

The CHAIRMAN. How many minutes?

Mr. HOLMAN. About 20 minutes for the statement, and about 4 or 5 charts which I think will take 5 or 10 minutes.

The CHAIRMAN. All right, go ahead.

Mr. HOLMAN. My name is Eugene Holman. I am a director and the president of Standard Oil Co. (New Jersey).

Jersey-to use the company's customary nickname-has been engaged in the oil business for about 80 years. While initially organized to engage in domestic oil operations, Jersey began, almost from its founding, to extend American commerce overseas through the export of petroleum products. Then, early in the 1900's, the company started to obtain producing and refining interests abroad to supply its foreign markets and to supplement United States supplies.

Today, in the United States, Jersey affiliated companies produce crude oil in 18 States, have refineries in 7 States, and market petroleum products in 27 States and the District of Columbia. Abroad, Jersey affiliates produce crude oil in 14 countries, refine in 20, and market in 125.

In the United States, and even more markedly abroad, the large crude oil producing centers are far removed from the large oil consuming centers. As a result, the task of having the right types and quantities of petroleum products in the right places at the right times presents problems in logistics which require the utmost flexibility of supply and transport.

I give this brief review because H. R. 4294-the bill now before you would, if enacted, profoundly affect our country's domestic economy and foreign trade, and I judge you are interested in knowing the views of Jersey as a company with considerable experience in both domestic and foreign trade. I appreciate the opportunity to appear before your committee and to give you these views. They have been formulated, I sincerely believe, after careful study of the pertinent data and in the light of what we believe will serve the best interests of our Nation as a whole.

H. R. 4294 would extend the Reciprocal Trade Agreements Act for 1 year, but with amendments in the nature of restrictions that are not contained in the present legislation. In addition, the bill would limit imports of crude oil and heavy fuel oil through imposition of quotas, and would provide for higher duties on lead and zinc.

First, I should like to explain briefly why we oppose the broad restrictions which the bill would place on the present Trade Agreements Act. Then I should like to discuss in somewhat greater detail the provisions of the bill respecting oil.

Jersey favors extension of the Trade Agreements Act. While I recognize that there may be some disagreement as to its effects, our experience is that the act has worked well. Certainly, with our country enjoying its greatest prosperity, it is hard to see how the act and the agreements made under it can be regarded as having injured our domestic economy. On the contrary, they have helped expand world markets for American goods and commodities. They have helped other nations to expand the markets for their goods and commodities. And they have contributed importantly to strengthening the free world's economy, and that is a major element of defense against communism.

This is not to say that the act has solved all problems. But progress is being made in the right direction, and the Trade Agreements Act alone has, in our opinion, created conditions conductive to solutions. Other nations, of course, must reciprocate by eliminating some of their