FOREIGN TRADE: Oil Cutback

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Defense Mobilizer Arthur S. Flemming last week handed U.S. oil companies a knotty problem. Foreign oil, said he, is coming into the country too fast. If U.S. companies want to avoid their first taste of Government import curbs, they must cut crude-oil imports voluntarily by 7% during the last quarter of 1955 and the first of 1956. A House Judiciary subcommittee promptly let out a shout of warning. Asked the subcommittee: How could the oil companies comply without acting in concert and thus violating antitrust laws? Flemming pointed out that he had merely made a suggestion.

Nevertheless, Flemming made it clear that, one way or another, imports must slow down. Too much imported oil, the Administration feels, could discourage growth of domestic exploration and production. Early this year the Administration decided that 1955 crude-oil imports should be roughly 10% of 1954 domestic production. Flemming figures that this year's April-December imports will average about 740,000 bbls. a day. Approximately half that amount will be Canadian and Venezuelan oil, which is exempt from these quotas. The remaining 370,000, Flemming calculates, must be cut by 7%, or 26,000 bbls. a day, to fall in line with Administration policy. The new limit must hold through first-quarter 1956.

Oil companies will soon be asked to report to Flemming on their efforts to cut imports. If the results do not satisfy the Defense Mobilizer, he will reluctantly launch the Government "down a road of regulation which it has never traveled before."