flooded with oil imports, no further secondary recovery projects will be started in Ohio, and many now in operation will cease. We appreciate the fact that in recent years considerable sentiment has developed along lines of free-trade and reciprocal-trade agreements. We further believe that the best interest of our country will be served in both peace and war if our own producing industry is given favorable consideration and kept in a healthy condition. Our present difficulty lies in the fact that western crudes, which are being replaced by imports, are replacing our local production. We believe that limiting imports would divert western crudes to other refineries and thus open up a market for Ohio crude at refineries in our State. Some of our association members are reluctant to come to Congress for a solution of our problem. We are, however, authorized to present to your committee the above facts showing the seriousness of the situation facing us in Ohio. The CHAIRMAN. Does that complete your statement, Mr. Foraker? Mr. FORAKER. Yes. The CHAIRMAN. I would like to say, Mr. Foraker, that you have made a presentation here in which I concur, and especially the statement on the second page. I have the honor to represent Allegany County as part of my Congressional District, which is an oilproducing area. In fact, it practically stabilizes the economy of that country, and there they are forced into secondary operations which are soexpensive that if it were not for the 272-percent depletion allowance, many of them would have to close down. Of course, the excess importation of foreign oils can also close them down. Thank you very much for your information. Mr. Jenkins will inquire. Mr. JENKINS. Mr. Foraker, I think it would be well if you would have inserted in the record the names of these two gentlemen associated with you, Mr. Ira Korst and Mr. James Upham. As I understand it, you two gentlemen agree with Mr. Foraker in his statement. Mr. Korst, you are the secretary of the association? Mr. KORST. That is right, sir. Mr. JENKINS. Mr. Upham? Mr. UPHAM. I am an ex-president of the association. Mr. JENKINS. I will ask you, Mr. Upham, in reference to the statement made here by Mr. Foraker: It is highly probable that if the market continues to be flooded with oil imports, no further secondary recovery projects will be started in Ohio. Does that not mean if you are forced to close down a lot of these stripper wells that you are now operating, never will be opened up again? Mr. UPHAM. That is exactly right, Mr. Jenkins. Mr. JENKINS. And that oil will be lost to the Nation? Mr. UPHAM. That oil will be lost forever. It is too small to recover after that. Mr. JENKIN. Over what portion of the State of Ohio do your operations extend? Mr. UPHAM. Seven counties. Mr. JENKINS. They are all leading gas- and oil-producing coun Mr. UPHAM. Yes, sir; they are. Mr. JENKINS. Do you produce gas, also? Mr. UPHAM. Yes, sir; very much. Mr. JENKINS. What effect will this have on your gas developments? Mr. UPHAM. We either get an oil well or a gas well or a dry hole in every operation, and along with our usual income, a sizable part of it is oil. Of course, if we do not have any market for this oil, we will just be out of income. Mr. JENKINS. Mr. Foraker makes the positive statement that if these importations are continued, you very probably will go out of business. Mr. UPHAM. There is no question. We will just have to. There is no place else for us to go. Mr. JENKINS. About how many landowners do you have as royalty owners in your organization? Mr. UPHAM. There are several thousand in the entire organization. Of course, there are 27,000 oil wells in Ohio, and the oil royalties are divided up among many more than that when it comes to royalty. Mr. JENKINS. Frequently, 5 or 6 different farms will be tapped to 1 well? Mr. UPHAM. That is it. Mr. JENKINS. My experience has been, down in my section at least, that that is about the only cash income of a lot of these people who get this royalty. Mr. UPHAM. That is exactly the situation. Mr. JENKINS. That is what they use to pay their taxes with, and so forth. There are thousands of them in the great State of Ohio. Mr. UPHAM. That is correct; I agree with you wholly. Mr. JENKINS. That is all, Mr. Chairman. The CHAIRMAN. Mr. Curtis of Missouri will inquire. Mr. CURTIS of Missouri. I would like to ask you one question, if I may. You say in your statement, on page 1, there will be a loss of oil reserves to the Nation if you shut a well down or abandon it. Is there any reason why it cannot be opened up at a later date? Do you understand my question? Mr. UPHAM. I understand your question. The situation is this: We have many thousands of wells which make less than a barrel a day. Those are old wells, which formerly in their younger days were sizable wells. Now they are down to where you are reaching what is left in the ground. That is seeping in very slowly. Those are small wells, and there are many thousands of them. When you put it all together, you have a lot of oil. If they are once abandoned or left stand idle, they deplete to nothing, because you have casing in the ground and you have cave-ins. You have surface equipment, that all just deteriorates to nothing. The other point about it is this: Due to the high price of materials, if you can sell your material for more than you will get out of that oil, you will abandon the little bit of oil and leave it in the ground, and you will haul that material off and sell it. Mr. CURTIS of Missouri. It would not be economical to try to go back and pick up that oil? Mr. UPHAM. It is not like a ball laid up on a shelf. It will not stay that way. Mr. CURTIS of Missouri. I wanted to get that clear in my own mind. Thank you. The CHAIRMAN. We thank you for your appearance and the contribution you have made. It is a very fine statement. Mr. FORAKER. Thank you. The CHAIRMAN. The next witness is Mr. Russell B. Brown, general counsel, Independent Petroleum Association of America. Mr. Brown, we are always glad to see you here in the interests of the oil people whom you represent so well. Of course, we know you, but for the benefit of the reporter, if you will kindly give your full name and address. STATEMENT OF RUSSELL B. BROWN, GENERAL COUNSEL, INDEPENDENT PETROLEUM ASSOCIATION OF AMERICA, WASHINGTON, D. C. Mr. BROWN. Thank you, Mr. Chairman. It is a pleasure to come before this committee. I have been appearing before it for some 23 years, and I have always had the very best of respect and consideration, and I appreciate it. My name is Russell B. Brown. I am general counsel of the Independent Petroleum Association of America. I appear here representing that association on this occasion. Also, Mr. Chairman, if I may, I have been authorized by the following associations to say that I speak for them-I would like to read their telegrams of authority and present them for the record. IPAA is authorized to speak for and otherwise represent this wholly independent association of crude-oil producers in matter of reducing foreign importations to 10 percent of our domestic production. For the past several months the east Texas oil field has been allowed to produce only 18 days per month; yet in an effort to retain our pumpers and maintenance labor and office help we have paid the full wages for the calendar month but they are working only about 60 percent of the time. EAST TEXAS OIL ASSOCIATION, Executive Vice President. Mr. SIMPSON. What was the name of that association? This is your authority to represent the Indiana Oil & Gas Association and appear in the hearing representing this association for the purpose of limiting the importation of foreign crude oil into this country to 10 percent of the domestic production in line with the proposed Vursell amendment to the Trade Agreement Act. JOE VOL BUTT, President, Indiana Oil & Gas Association, Evansville, Ind. From Mount Pleasant, Mich. : Michigan's producers of oil and gas are vitally interested in the adoption of a proper governmental policy on oil imports. My canvass of the independent operators of Michigan indicates that they favor legislation along the line of that introduced by Congressman Vursell of Illinois amending the Trade Agreements Act. I accordingly authorize you to appear in our behalf in support of this very necessary legislation. J. WALTER LEONARD. From Owensboro, Ky.: Efforts of your association regarding control of oil imports greatly appreciated. Need of controls more outstanding each day. I and many others in Kentucky are fully behind you. Best wishes for your success. GEORGE P. ELLISON, President, Kentucky Oil & Gas Association. LOS ANGELES, CALIF., May 8, 1953. RUSSELL B. BROWN, Washington, D. C.: Our agency passed resolution deploring excessive imports crude petroleum at annual meeting but illness of L. P. St. Clair has delayed release. Please represent independent oil producers agency at forthcoming hearing. L. P. STOCKMAN. DEWEY, OKLA., May 8, 1953. RUSSELL BROWN, Care Independent Petroleum Association of America, Washington, D. C.: Please represent our association as favoring resolution regulating foreign oil imports at 10 percent of 1952 domestic demands. NORTHEAST OKLAHOMA OIL PRODUCERS, INC., Mr. Chairman, we appear here today to present our views on the trade-agreements program. Our appearance is for a twofold purpose, as follows: First, to support the general provisions of the Simpson bill which: (1) Provide for a 1-year extension of the act; (2) strengthen the escape-clause procedure; (3) strengthen the peril-point procedure; (4) establish the Tariff Commission as the final administrative authority on peril-point and escape-clause findings and in certain other respects; and (5) strengthen the Antidumping Act. Our endorsement of these five provisions is based upon specific experiences we have had which, to us, have convincingly demonstrated the need for improvements in the existing laws. I will amplify this experience later. Second, and of more direct concern, we appear to support the establishment of a legislative quota which would limit the total quantity of crude petroleum and all products derived therefrom which may be imported, to 10 percent of domestic demand. This overall quota is provided for in the first paragraph of section 13 of the Simpson bill, which is, in substance, the same as H. R. 4688 recently introduced by Congressman Vursell of Illinois and S. 1552 recently introduced by Senator Carlson of Kansas. The second paragraph of section 13 of the Simpson bill would establish a specific quota on a single and individual petroleum product, namely, residual fuel oil, limiting imports of that single product to 5 percent of the domestic demand for that product. It is my understanding that this 5 percent quota on residual fuel oil was included in the bill as a means of correcting injury to the coal industry by oil imports. It is my further understanding that the coal industry and related groups will appear before you tomorrow to present their case. I point out the differences between the effect of these two paragraphs of section 13 so that it will be clear to the members of the committee that my testimony and that of most, if no all, of the petroleum industry witnesses which will follow me today, is directed to the provision of the Simpson bill establishing the overall 10 percent quota. The domestic oil producer is interested in the 10 percent overall quota because he is affected by all petroleum imports, whether it be crude oil, residual fuel oil, gasoline, kerosene, or any other product that displaces domestic oil in the home market. In contrast, the coal industry is primarily concerned, as I understand their situation, with the single product of residual fuel oil which is directly competitive with coal. From the standpoint of the domestic oil producer we do not feel there is a need for the special 5 percent quota on residual fuel oil. In fact, it removes from the overall 10 percent quota some of the flexibility which we believe would be desirable. It may be that from the standpoint of the coal industry the 5 percent quota is necessary. The final judgment will have to be left with the wisdom of this committee. It should be made clear that our position is not in support of "shutting out" imports of petroleum. I know of no such proposal. We do ask for some clear, understandable and fair relationship between imports and the production of oil, established by constituted authority. I believe that no one can question the fairness of the 10 percent relationship that we support. We support a reasonable limitation on total petroleum imports because imports are injuring the oil-producing industry in the United States and, more important, are weakening our Nation's security. Other witnesses will testify as to the extent of injury being suffered by domestic oil producers. I do want to point out that the industry, by an overwhelming majority, believes that imports have reached excessive levels and should be reduced. The following chart covering the history of oil imports from 1928 through 1953 shows the sharp increase during recent years. (The chart referred to follows:) Mr. BROWN. I call the attention of the committee to this chart. I would like to point out that prior to 1932, the imports of oil were coming in at the rate indicated here (indicating). Remember, in 1932 Congress passed an import tax on oil. That became effective in June. The first half of 1932 we imported 300,000 barrels a day. Following the imposition of the tax, in the second half we imported substantially 100,000-108, as I recall it. From that time, imports went along with demand pretty well, so it did not disturb production until 1939, when under the trade agreements program they made an agreement with Venezuela. At that time our imports were running along about 160,000 barrels a day. Then following the Trade Agreements Act agreement with Venezuela, our imports began to go up until the tanker shortage during the war. At that time we were depending on imports for about 280,000 barrels of our own needs. During the war, imports were reduced to less than 100,000 barrels a day during the early period of the war. Our foreign oil imports were reduced that much overnight. Following that, under the trade agreements program, we made an agreement with Mexico, and in that Mexican agreement we provided that the tax should be reduced on the first five percent of the oil |