The Ambassador in Brazil (Caffery) to the Secretary of State

No. 5380

Sir: With reference to the Department’s telegram No. 789 of September 12, 4 p.m.,3 I have the honor to report as follows with regard to the oil pool committee as it functions here.

The committee is formed of representatives of the five major oil companies as follows:

  • Wingate Anderson, representing Standard Oil do Brasil and the Caloric Company,
  • Granville D. Bentley, representing the Texas Company of South America, Ltd.,
  • Cyril W. Nave, representing the Atlantic Refining Company of Brazil,
  • John C. Reed, representing the Anglo-Mexican Petroleum Company, Ltd.

It includes a sub-committee and a working committee, both appointed from officials in these companies. The committee was unofficially formed in the month of June of this year. While the National Petroleum Council is not officially represented, the head of the Petroleum Council, General Horta Barbosa, is its unofficial chairman and the committee’s policy is that of closest cooperation with the National Petroleum Council. The oil companies were at first apprehensive that the committee might be considered as contrary to the Brazilian anti-trust laws but experienced no difficulty in having its formation approved by the National Petroleum Council. As pointed out in my telegram No. 1241 of September 9, Noon, there seemed to be no necessity for the National Petroleum Council or any other department of the Brazilian Government to be officially represented on the committee.

The Latin American Petroleum Supply Committee in New York advises the committee here of tanker space available for Brazil which is then divided equitably between the companies, but no completely satisfactory solution has been arrived at regarding equitable distribution of products in this country. It was at first thought that quotas [Page 176] for petroleum products might be assigned to the individual municipalities in Brazil, but this plan did not meet with the approval of the National Petroleum Council. At present, consumer quotas are based on the first six months consumption in 1941 by states. (It so happens that there is only one point of importation in each state in Brazil.)

The committee’s chief problem here is in supplying fuel oil for industrial use, and it is felt by them that, while clean tanker space has been made available in sufficient quantity, the lack of dirty tanker space is a matter of some concern.

No provisions appear to have been made for a system of rationing although the National Petroleum Council has, since June of this year, been “studying the matter”. The National Petroleum Council has also been reluctant to indicate which industries should receive preference and which should make sacrifices. The Federação das Industries is cooperating with the committee in trying to solve the problems of fuel saving in the São Paulo industrial region, chiefly by suggesting improvements in present combustion methods.

As the matter stands at present, the National Petroleum Council has requested that the following proportions of Brazil’s consumption of petroleum products be maintained: aviation gasoline 100 percent; diesel oil 100 percent; fuel oil 85 percent; kerosene 100 percent. In order to accomplish this, motor gasoline imports would have to be cut to 75 percent of the 1940 consumption. The maintaining of these proportions would mean roughly a 22 percent cut in tanker space, which is approximately what the New York committee has removed from the Brazilian trade.

Respectfully yours,

For the Ambassador:
John F. Simmons

Counselor of Embassy
  1. Not printed.