590. Memorandum of a Conversation, Department of State, Washington, July 10, 19571
SUBJECT
- Possible Limitation of Crude Oil Imports from Venezuela
PARTICIPANTS
- Dr. Carlos Perez de la Cova, Minister Counselor for Petroleum Affairs, Venezuelan Embassy
- OSA—Mr. Bernbaum
- ARA—Mr. Rubottom
- OSA—Mr. Bartch
Mr. Rubottom invited Dr. Perez de la Cova to call at the Department this afternoon to give him an indication of the progress attained to date by the Special Committee to Investigate Crude Oil Imports. Mr. Rubottom began the conversation with the assurance that the Department is aware of Venezuela’s great interest in this matter, which will be given full consideration. He said that although the Committee had not reached any conclusions, it has under consideration a proposal to effect limitations on crude oil imports through the individual voluntary action of importing companies. He added that the proposal does not envisage any differentiation in treatment among imports from various areas. Mr. Rubottom said he did not know when the Committee would submit its conclusions and recommendations to the President, but that from what he had heard, he understood that this would be in the very near future. In reply to a question, Mr. Rubottom said he honestly did not know [Page 1159] what conclusions Gordon Gray had reached as a result of his individual talks with various oil importing companies regarding the feasibility of affecting limitations through voluntary cooperation.
Mr. Rubottom remarked that there were two important points he thought Venezuela should keep in mind: (1) the fact that Venezuela’s crude prices were based on U.S. Gulf port prices and would decline if, as a result of a shortage of storage space or of other factors, Gulf prices fell; and (2) that if Venezuela could be given assurance of an opportunity to participate in supplying the growing U.S. domestic consumption of crude oil this would be of material benefit to its economy. Dr. Perez de la Cova agreed to the validity of these two points.
Dr. Perez de la Cova noted that neither the ODM nor the Department of Justice, which had both been represented in the Advisory Committee on Energy, Supplies and Resources Policy, was represented in the Special Committee. He understood why the ODM was not represented, since it had already taken a position on the imports problem, but he was unable to understand why Justice was not included in the new committee. Although he believed that voluntary cooperation was preferable over formal controls to most of the petroleum industry, he pointed out that some of the newer companies had not acted in cooperating voluntarily in the past. He said he had heard that there may be some anti-trust obstacles to implementing limitations through voluntary cooperation of importing companies. Mr. Rubottom replied that that was also under study.
Dr. Perez de la Cova declared that his Government desired to be realistic in facing possible limitations of crude oil imported into the U.S. and that he was certain that the producing companies in Venezuela felt the same way. He said that when the policy of attempting to limit crude oil imports through voluntary restrictions was placed into effect in the U.S. two years ago, there were some in the Venezuelan Government who thought that this might be considered a violation of the Supplemental Trade Agreement between the two countries. However, in view of the fact that this limitation was aimed primarily at individual importing companies rather than at the Venezuelan Government, no action was taken. He said he hoped that it might be possible for his Government to adopt a similar realistic attitude in the event that the Special Committee recommended voluntary limitations. Mr. Rubottom said that he hoped so, too. He added that he had been receiving a great deal of mail from people in Texas calling for some action to limit oil imports in order to stimulate domestic exploration and development activities.
Dr. Perez de la Cova remarked that he had heard a number of rumors concerning a new formula for relating the level of crude oil imports to U.S. domestic production or consumption, but Mr. Rubottom [Page 1160] said he could substantiate none of them since nothing had yet been decided upon. Dr. Perez de la Cova expressed his appreciation to Mr. Rubottom for inviting him to call, and said he would be pleased to come in at any time to confer with him further.
- Source: Department of State, ARA Files: Lot 59 D 12, Chronological–Date File, 1957. Confidential. Drafted by Bartch.↩