Quota on Imports

The 18 biggest U.S. petroleum producers were over an oil barrel last week. Defense Mobilizer Arthur S. Flemming warned them that unless oil imports are cut voluntarily, the President may slap a rigid quota on imports to protect small U.S. producers. Flemming's suggestion: the oil companies should get together and work out an industry plan to restrict imports. The oil companies, which have had more than their share of antitrust suits, were not eager to work out any scheme that would, in effect, slice up a market between them. Furthermore, they do not agree with Flemming that imports have reached a dangerous level.

The import quota was originally set by a presidential Cabinet Committee in February; at that time it was ruled that imports should not exceed the level of 1954, when they accounted for 16.6% of total U.S. production. The big companies did not agree with the Cabinet ruling, but they insist that they have held the line. They argue that it is smaller companies that have pushed up imports of crude oil to nearly 15% above the 1954 level.

This has frightened some independent domestic producers and the coal industry, which have put pressure on Flemming to cut imports now. They argue that foreign oil will cut U.S. production, make America dependent on overseas supplies in wartime, slow the hunt for more oil reserves in the continental U.S. and put other fuel suppliers, e.g., coal-mine operators, out of business. Those in favor of oil imports answer that U.S. production is using up oil reserves that would be needed in war time. In any case U.S. production is up 5% this year despite increased imports.

But the most important split over imports lies in the argument over world trade. If the U.S. slaps a tough quota on oil imports, the economy of other nations, such as Venezuela, will be permanently damaged. Not only will the U.S. lose a strong ally and a source of the petroleum that its industrial society desperately needs, it will also lose a good customer. Venezuela sold $120 million worth of oil to the U.S. last year, but bought $900 million worth of goods in return.

Said one confused and angry oilman: "We've got to have foreign supplies of oil, and the Administration tells us to invest our money abroad, in line with its world-trade expansion program. So we do, and this happens. What do we do now?"

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