Iran, Texas and U.S. Oil Imports
United States Congress — August 13, 1954

The Mossadegh Project | October 17, 2019                     


Congressional Record of the United States of America

Excerpt from a Congressional discussion of U.S. oil imports following the Iran Oil Consortium Agreement of 1954.

Iran Oil Consortium | Archive of Documents (1953-1954)



August 13, 1954

IRAN AND OIL IMPORTS—NEED FOR A PROPER BALANCE BETWEEN IMPORTS AND DOMESTIC PRODUCTION




Mr. DANIEL. [Price Daniel, D-TX] Mr. President, will the Senator yield?

Mr. KNOWLAND. [William Knowland, R-CA, Senate Majority Leader] I yield to the Senator from Texas.

Texas Democratic Senator Price Daniel (1910-1988) Mr. DANIEL. Mr. President, Americans rejoiced a few days ago to learn that the bitter British-Iranian oil dispute had been settled and that this valuable natural resource will be available to the Western World rather than to Soviet Russia. [Iran Oil Consortium Agreement, announced August 5, 1954]

The community of free nations stands to gain from this settlement. The western nations will have access to the oil, and revival of the industry will add greatly to the stability of the whole Middle East.

All of this will be true, Mr. President, only if Iranian and other Middle East oil producers use discretion, judgment, and statesmanship in determining the amount of oil which they will export to western oil-producing nations.

Even now oil imports to the United States are too high. They have reached the point of supplanting rather than supplementing domestic production.

A better balance between the two must be established if we are to prevent great losses and eventual destruction of our domestic petroleum industry.

Let me make it clear, Mr. President—I realize that we must keep Middle East oil from going to Russia. We must receive some imports to supplement domestic production. However, it is equally important that we preserve and protect our domestic oil industry. It will serve no useful end for America to save the economy and oil industry of the Middle East if it is done in a manner that would destroy the economy and national defense potentialities of the United States.

Other Middle East countries must reduce their total output of oil proportionately so as to absorb the Iranian production when it is resumed. The total imports from the Middle East must be kept within present figures, or reduced, if we are to prevent destruction of the domestic oil-producing industry.

DANGERS OF EXCESSIVE IMPORTS

Mr. President, we have reduced domestic production to the breaking point. In Texas our conservation commission—the Texas Railroad Commission—has found it necessary to cut production of Texas wells to 15 days per month. This situation is not confined to Texas. While we have made the largest reductions in output, other States and producers have been similarly affected.

Excessive imports constitute a threat to the economic health and security of the entire Nation. Accessible oil at home is vital to our defense. Foreign supplies are not reliable if war should come.

Some have argued that we should use the Middle East oil now and save our own for the future. That would be excellent if we knew where all the oil in this country is located and if our domestic industry and its millions of employees could go without their livelihood for several years on end. Neither of these conditions is possible. All of the oil in this country has not been discovered. The search for new reserves must continue, and it can and will continue only if there is a healthy and profitable industry. The search for new oilfields is being retarded even now by necessary reduction of production.

INDEPENDENTS SUFFER MOST

A man will not risk a million dollars wildcatting for new oilfields if he cannot expect to produce at a rate necessary to return the cost of his investment. Giant corporations may be able to wait but not the independent producers, who are the lifeblood of a healthy oil industry. Five major American oil companies will share in the new eight-company monopoly established by the settlement with Iran. These companies have other holdings in the Middle East. They can survive the blight of excessive imports, but not so with the independent producers whose income is confined to domestic production. Their problem was recently explained in an editorial in the August 6, 1954, edition of the Abilene Reporter-News, of Abilene, Tex.

I ask unanimous consent that the editorial be inserted at this point in my remarks.

There being no objection, the editorial was ordered to be printed in the RECORD, as follows:

OIL IMPORT PROBLEM

The bothersome and dangerous Iranian oil situation was near to settlement Thursday as representatives of 8 big western oil companies and the Iranian Government announced an agreement to start up that country’s paralyzed oil industry within 2 months, after the long shutdown resulting from the dispute between British oil interests and the Iranian Government.

The great Abadan refinery and the surrounding oilfields will be operated by a consortium of the eight companies. The contract runs for 25 years, with the privilege of 35-year renewals.

Four of the eight operating companies are American-Standard of New Jersey, Standard of California, the Texas Company, and Socony Vacuum.

While this is good news to the Western World because it removes the threat of Communist conquest of Iran and its great oil riches, it carries implications of trouble for our own oil producers. It means Iranian oil will once more flow into world commerce, and as it finds markets here and there it will tend to flood the United States with oil imports, particularly from South America.

Heavy imports to this country have already pinched our independent producers, forcing cutbacks of production, particularly in Texas. The blow falls heaviest on the independents because the majors are both producers and importers.

Although the independents have steered away from handling the problem by higher tariffs, in the interest of world trade as a definite part of building dikes against communism, the Independent Petroleum Association of America, headquarters in Tulsa, recently proposed a reciprocal trade policy for United States oil imports.

Basically, this plan would apply to each country exporting oil to the United States a volume of oil related to the amount of United States goods it imports. Since this preserves the very spirit of reciprocal-trade agreements, it offers a persuasive and sensible solution to a problem that, unless remedied, may work untold financial injury and perhaps ruin upon the independent oil producers of Texas and other States.


Mr. DANIEL. Due credit should be given to the American oil companies operating in the Middle East for the extent to which they have reduced imports by practicing industrial statesmanship. I referred to this in a speech in the Senate on June 24-CONGRESSIONAL RECORD, pages 8852 to 8854. However, they must do more. Only additional voluntary reductions by importers of foreign oil will solve this problem without legislation. I hope that we can avoid legislation, but, as stated in the speech referred to, I shall advocate action by the Congress if this problem is not solved by the industry itself.

Gen. Ernest O. Thompson, chairman of the Texas Railroad Commission, is recognized as one of the world's leading authorities, if not the leading authority, on oil conservation and production. On August 4, 1954, General Thompson released a statement concerning the Iranian oil settlement and the danger of increased imports. I ask unanimous consent that General Thompson’s statement be inserted at this point.

There being no objection, the statement was ordered to be printed in the RECORD, as follows:

STATEMENT BY GEN. ERNEST O. THOMPSON, CHAIRMAN, TEXAS RAILROAD COMMISSION

We are glad Iran has been saved for service with the free world and not lost to Russian domination. Iran was in a critical position.

It is to be hoped that as Iran oil production is resumed that those other oil-producing countries around the Persian Gulf will reduce their output proportionally so as to avoid further flooding of the world markets with oil and causing wasteful storage.

In 1950, when Iran closed down production of 650,000 barrels daily, these neighboring Persian Gulf countries upped their production. Kuwait was producing 350,000 barrels daily in 1950, now produces 930,000 barrels daily. Iraq was producing 136,000 barrels daily in 1950, now 600,000 barrels daily. Saudi Arabia has increased to 955,000 barrels daily now, which is 60 percent greater than in 1950.

It would seem only fair that as Iranian oil moves back into the picture those companies operating around the Persian Gulf should reduce in the proportion that they moved into the void in 1950 and later years.

These wells in the Persian Gulf area average 6,000 barrels of oil each per day.

They are no deeper on the average than Texas oil wells.

Texas oil wells average 19 barrels per well per day.

Imported oil and products are supplanting our domestic oil here and abroad. Our oil imports increase constantly, while our oil exports dwindle.

Due to oversupply, Texas oil wells are allowed to operate only 15 days this month of August 1954.

There are 150,000 producing oil wells in Texas today.

It would not seem fair to our own people to permit more oil imports.


Divvying Up the Loot: The Iran Oil Consortium Agreement of 1954
Divvying Up the Loot: The Iran Oil Consortium Agreement of 
1954

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Related links:

President Eisenhower Tells the Press: Iran Situation “Looks Much Better”

Statement by Anglo-Iranian Oil Company on Iran Oil Deal | August 5, 1954

Oil From Persia | The Mercury (Australia), November 1, 1954



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