Perils to the Free World's Essential Oil Supplies

Abstract

The Free World Depends Increasingly on Foreign Oil Since the beginning of World War II foreign oil has gained an ever greater importance in the oil supply of the United States and the other nations of the free world. During 1939 this country produced over 3.6 million barrels daily of crude oil and related products permitting, after satisfying domestic requirements, a net export of some 350,000 barrels a day. Beginning with 1948 the United States has been a net importer of oil, and during the first half of 1952, when production, at 6.7 million barrels daily, was over 85 per cent higher than in 1939, the net imports of the United States amounted to some 500,000 barrels daily. The most recent studies of the future development of the U. S. oil industry indicate that this trend toward an ever growing importance of foreign oil in the U. S. supply pattern will not only continue but is likely to be greatly reinforced. According to estimates of the President's Materials Policy Commission [PMPC], this country, by 1975, will produce 11.2 million barrels daily of crude oil and related fuels, including shale oil and other synthetics. Its requirements will be as much as 13.7 million barrels daily, necessitating net imports of 2.5 million barrels a day. As a result it is likely that the United States, which has in the past obtained the bulk of its imports from the Caribbean area, will in the future absorb not only the total surplus production in the other countries of the Western Hemisphere but will also require large supplemental quantities of crude oil from the enormously rich fields of the Middle East. Similarly the free countries in the Eastern Hemisphere, which procured a large portion of their oil needs before World War II from the United States and the Caribbean, import now over two-thirds of their greatly increased requirements from the Middle East and less than one-quarter from the Western Hemisphere. This change in the supply position of the United States and free world is based on a fundamental shift in the relative size of proven crude oil reserves in the United States and in foreign oil-producing countries. At the end of 1938 U. S. reserves, at 17.3 billion barrels, constituted 61 per cent of total free world reserves of 28.5 billion barrels. By the beginning of 1952 proven crude reserves in the United States, although they had risen to 27.5 billion barrels, represented only 29 percent of the reserves of the free nations, which had reached a total of 95.5 billion barrels. Foreign reserves, mostly located in the Middle East, had accordingly increased from 11.2 billion to 68 billion barrels. If the most recent estimates for Middle East oil reserves had been used, the latter figure would even be some 20 billion barrels higher.