In Search of a Policy

"Tell me the sort of agreement that the United Nations will reach with respect to the world's petroleum resources when the war is over, and I will undertake to analyze the durability of the peace that is to come." --Harold L. Ickes.

Honeymoon's End. This statement by the U.S. Oil Boss was still freshly inked in the current issue of the American Magazine when the whole problem of what the U.S. should do about oil came sharply into the foreground. The gist of a special report on the all-important subject, made by Ickes' Foreign Operations Committee of 13 U.S. oil executives and two British representatives, leaked out, via the New York Times. Then Honest Harold released the full text, which he had not yet read. With a bang, the honeymoon between Ickes and the oilmen was over.

On three important preliminary points, the Oil Czar and the oilmen agreed, 1) The U.S. is drawing on its own reserves so heavily that it is on the verge of becoming a net importer of oil.* 2) As Ickes put it in the American: "The capital of the oil empire is on the move to the Middle East." 3) The U.S. had better get into that empire in a big way, and fast. To do so the U.S. must find its postwar oil policy right now.

Stumbling Block. The policy is the stumbling block. Ickes' mind is not yet made up, but his words & deeds clearly indicate that he wants the U.S. Government to get a big piece of the world oil reserves. Last month California Arabian Standard Oil Co. (half owned by Texas Co. and half by Standard of California) attempted to get Government funds for a $120,000,000 expansion in the Middle East. This blew up because Ickes--plus the U.S. Army & Navy--wanted a direct Government stock interest.

The oil industry agrees with California Arabian: there should be no Government managerial interest in world oil. In a sense the industry wants to have and eat its cake. The report last week called for plenty of official diplomatic support for whatever deals private U.S. interests negotiate.

Mr. Ickes' Foreign Operations Committee avers that private enterprise is the better means to insure U.S. participation in world oil because "private enterprise can operate with a minimum of political complications." Mr. Ickes maintains just as stoutly that no foreign nation would dare to toy with a U.S. Government interest, as it might (and has in Mexico) with privately owned corporations.

Both sides also have case histories to cite. In Saudi Arabia, U.S. companies got hold of major interests between 1933 and 1939, despite much higher bids on the part of other world powers. They were successful precisely because their interests were obviously nonpolitical. But the Ickes side argues that most nations of importance have long had a Government-private-enterprise combine in the world oil fields (Great Britain, The Netherlands).

U.S. v. Britain. On the sidelines of the intramural U.S. fight, the oil-conscious British are fearful. The new U.S. Government interest in world oil makes them fear all-out, competition instead of the gentlemanly understandings they expect from U.S. oil companies. When California Arabian made its deals in Saudi Arabia and in Bahrein, they did the English out of a very nice thing: earlier British exploration had indicated no oil. But at that time the U.S. Government did not even have a consul in Arabia.

In the past year, scores of highly placed U.S. travelers have shuttled between the U.S. and the Middle East. On the record were such trips to An bia as that by Franklin D. Roosevelt's envoy extraordinary, Brigadier General Patrick Jay Hurley: a trip to the U.S. by Ibn Saud's two sons, Prince Feisal and Prince Khalid (TIME, Oct. 18), and last week a new military mission to Arabia, led by Major General Ralph Royce. All these peregrinations were carefully billed as strictly nonoil, of course.

The newest mission is perhaps the most important. Harold Ickes has just dispatched an oil mission headed by Geologist Everette Lee De Golyer, 57, a distinguished scientist who is by general agreement the best in his field.

The stakes in the Middle East are enough to concern any nation. And U.S. oil companies, even without any Government help, already have more than a toehold. This is how things stack up today:

> Saudi Arabia is ruled by wily, 63-year-old King Ibn Saud, absolute monarch of the biggest Arabian kingdom since the days of Mohammed, which makes him the world's No. 1 Moslem. With perhaps the biggest potential of all, Saudi Arabian oil is a 100% U.S. concession. Of its 800,000 sq. mi. of territory, 240,000 are under lease to California Arabian Standard Oil.

> Though the Sheik of the Bahrein Islands has long been a British protege, California Arabian controls the situation there too.

> Rights to the newer oil fields in the sultanate of Kuwait at the head of the Persian Gulf belong 50% to Gulf Oil and 50% to Britain's Anglo-Iranian Oil Co.. which is 57% Government-owned.

> But the biggest and oldest producers in the Middle East are: 1) the great fields of Iraq, which are jointly controlled by Anglo-Iranian, Standard of New Jersey and Socony, the French and the Dutch; 2) Iran, which, since the days of Britain's famed Wildcatter William d'Arcy, has been a wholly British operation. Of the current oil production in the Near East, Britain controls almost 80% v. a mere 15% for the U.S.

Uncertain Outcome. With its present limited refinery capacity, the whole Middle East Hemisphere produces less than 6% as much as the vast flow of oil that comes from the Western Hemisphere. But proved reserves in all of the U.S. and Latin America are estimated at 30 billion bbl. v. 31.5 billion for the Eastern Hemisphere, including Russia. And the East has not yet been intensively explored.

For a world, still locked in a cataclysmic war, that could not operate for a second without oil, the future disposition of this last great reservoir is a matter of incalculable importance--too important, perhaps, for even the individualistic U.S. to leave wholly in the hands of private enterprise. But whatever the final outcome of last week's Ickes-industry explosion, it should serve one very useful purpose: from now on the U.S. will have to do more than talk and travel. It must evolve a policy.

*According to PAW figures, 95% of all the United Nations' aviation gas comes from the U.S. and 65% of the U.S.'s total overseas tonnage for war is devoted to carrying oil. Another shocker-statistic: in the continental U.S. one well has been drilled for every three sq. mi. v. one in every 526 sq. mi. for the rest of the world.

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