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Conclusions
Petroleum producers in the United States, particularly
those operating in the State of Texas, have been obliged to
cut back production. Despite these cutbacks, however, there
is no evidence that all domestic producers have been seriously
injured. They have, of course, lost the revenue from the
additional sales that would be made 1f imports were restricted.
But without that revenue it seems clear that from the
standpoint of production, drilling, profits, explorations,
and employment the current level of the operations of the
domestic industry is more favorable than in any year except
1948.
The cutback of oil production in Texas is also related to
production in other States. In 1949 Texas, which produced 40
per cent of the total United States output, accounted for 92
per cent of the outback in production in the United States.
The cutback in other states was therefore small and the State
of Louisiana actually increased production.
This is a domestic as well as an import problem.
Venezuela is now cutting back production about 159,485
barrels daily, and it will make further cuts. It is also
curtailing exports to the United States by 20 per cent. This
is a recognition of the oil import problem by the country from
which most imports into the United States originate. This
decision of the producing companies with the concurrence of the
Venezuelan Government to share with United States producers
in the cutbacks which are necessary for lack of market outlets
for all oil that could be produced would seem to represent a
definite contribution to a solution of the problem.
The present policy of the British Government in reducing
purchases of dollar and other hard currency petroleum is
aggravating the problem. Unless corrected, world markets for
petroleum will be sharply divided between hard currency and
sterling with the latter having the edge because of the shortage
of dollars in many petroleum importing countries. A serious
attempt should be made to prevent the spreading of the British
plan.
The voluntary cutbacks already made in production in
Venezuela, the reduction in shipments to the United States,
the prospect of further cuts and the contraction of the sterling
market for Venezuelan petroleum represent an ensemble of factors
detrimental to the economy of Venezuela and the living
standards of its people. The hope is expressed that this situ-
ation will not be aggravated by additional restrictive measures.
WJDonnelly/cd
2/10/50
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"ocrText": "-5-\nConclusions\nPetroleum producers in the United States, particularly\nthose operating in the State of Texas, have been obliged to\ncut back production. Despite these cutbacks, however, there\nis no evidence that all domestic producers have been seriously\ninjured. They have, of course, lost the revenue from the\nadditional sales that would be made 1f imports were restricted.\nBut without that revenue it seems clear that from the\nstandpoint of production, drilling, profits, explorations,\nand employment the current level of the operations of the\ndomestic industry is more favorable than in any year except\n1948.\nThe cutback of oil production in Texas is also related to\nproduction in other States. In 1949 Texas, which produced 40\nper cent of the total United States output, accounted for 92\nper cent of the outback in production in the United States.\nThe cutback in other states was therefore small and the State\nof Louisiana actually increased production.\nThis is a domestic as well as an import problem.\nVenezuela is now cutting back production about 159,485\nbarrels daily, and it will make further cuts. It is also\ncurtailing exports to the United States by 20 per cent. This\nis a recognition of the oil import problem by the country from\nwhich most imports into the United States originate. This\ndecision of the producing companies with the concurrence of the\nVenezuelan Government to share with United States producers\nin the cutbacks which are necessary for lack of market outlets\nfor all oil that could be produced would seem to represent a\ndefinite contribution to a solution of the problem.\nThe present policy of the British Government in reducing\npurchases of dollar and other hard currency petroleum is\naggravating the problem. Unless corrected, world markets for\npetroleum will be sharply divided between hard currency and\nsterling with the latter having the edge because of the shortage\nof dollars in many petroleum importing countries. A serious\nattempt should be made to prevent the spreading of the British\nplan.\nThe voluntary cutbacks already made in production in\nVenezuela, the reduction in shipments to the United States,\nthe prospect of further cuts and the contraction of the sterling\nmarket for Venezuelan petroleum represent an ensemble of factors\ndetrimental to the economy of Venezuela and the living\nstandards of its people. The hope is expressed that this situ-\nation will not be aggravated by additional restrictive measures.\nWJDonnelly/cd\n2/10/50"
}