Memorandum by Mr. Richard F. O’Toole of the Division of Brazilian Affairs to the Chief of That Division (Dawson)
Mr. Hoffman (PED)49 has discussed with representatives of Standard Oil, Gulf Oil and the Texas Company the intimation contained in the Brazilian Embassy’s memorandum of November 350 that the inadequate supply of petroleum products for Brazil results from the retention of tankers by the United States Government. Mr. Hoffman gave me the following information with regard to the matter.
Gulf obtains its supply for Brazil from the United States and is therefore subject to export licensing control over such quantities as are allocated to Brazil. As these quantities from our supply are relatively small Gulf has no tanker problem therein. Both Standard and the Texas Company, however, obtain their supply for Brazil from Caribbean sources, and since large quantities are involved both companies do have a tanker problem under existing conditions.
The current supply problem stems from a greatly increased worldwide demand for petroleum products, the transportation of which is hampered by an inadequate supply of tankers. In the case of Brazil, 1947 petroleum requirements are 40% higher than they were in 1946, while those for 1948 are estimated to be from 48 to 60% higher. Neither Standard nor the Texas Company has taken off tankers from the Brazilian run nor have they supplied less than Brazil’s normal supply of petroleum products. Their difficulty is to obtain enough tankers to meet the increased requirements.
Such tankers as are available for purchase (and they are very few) have jumped from 50 to 100% in price. Standard says that it is doing everything possible to increase its tanker fleet and in so doing is completely disregarding the extra premium costs. Tankers used to transport petroleum products to Brazil are either privately owned or chartered and at no time in the past has the Maritime Commission allocated any of its tankers to Brazil, contrary to a current belief in that country. Up until recently the Commission has allocated tankers to such countries as England, France and Italy but as of November 1 the Commission has ceased tanker allocations to all foreign countries in order that tankers, under its control, may be used exclusively in meeting United States domestic requirements.
Representatives of American oil companies point out that both [Page 466] Lloyd-Brasileiro and the Brazilian Navy have a number of tankers which are not being used on a full-time basis and they suggest that if these could be chartered by private oil companies, during the periods when not in use, it would help out the Brazilian petroleum supply situation. The tanker shortage is critical and is expected to continue so for some months.