Troubled Waters

For three months in Washington, British, Canadian and U.S. oil experts have been conferring on a broad and complex question: How can Britain cut down on its greatest dollar drain, the $625 million a year it spends to buy and produce oil? ECA had tried to help: it had allocated $30 million for the construction of oil refineries in Britain.

Last week, without so much as a by-your-leave to the U.S. conferees, Britain announced a solution all its own. Beginning Jan. 1, it will ban imports of fuel oil to Britain from the dollar areas until all oil from sterling areas is used up. Imports of dollar gasoline will be cut by one-third. Britain hoped that it could thus save 5% to 10% of dollar expenditures on oil, because in the last few months the oil supplies of the sterling area have gradually changed from shortage to surplus.

Other members of the sterling areaitain: it prohibited imports of oil from the huge Bahrein refinery built by Standard Oil Co. of California and the Texas Co., whose products in the past have been considered by Britain as coming from the sterling area. Altogether, U.S. refineries faced a possible drop of 100,000 barrels a day in sales.

While many a U.S. oilman realized that Britain had to conserve its dollars, some thought that the sudden ban was really an attempt to freeze U.S. oil out of the sterling area for good. Some Congressmen from the oil states were already up in arms: ECA, which must go before Congress this month for more money, feared that they might force a cut, particularly since ECA itself had helped cause the sterling oil surplus. It was also a blow to the U.S. idea of freer world trade. Said one ECA oilman: "Everything that happens in international trade happens first to oil. If oil gets through this crisis, other commodities will also."

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