Imports should be allocated to prime users of crude in direct proportion to refinery runs.

The special exemptions included in the present program should be eliminated as quickly as practicable.

Gentleman, it has been a privilege for me to appear before you today to express my views on this most important matter. I shall be happy to answer any questions that you may have.

Mr. EDMONDSON. Thank you very much, Mr. Swearingen, for a very fine statement.

The gentleman from Pennsylvania wants to comment before questioning begins.

Mr. SAYLOR. Mr. Swearingen, taking a look at you and your age, I am astounded at your first paragraph. You say you are a graduate of the University of South Carolina. Now, it made its reputation just a few weeks ago by getting into the playoffs in the basketball

tournament.

Then you say you are a graduate of Carnegie Mellon University. If 30 years ago your certificate says Carnegie Mellon, I will eat it. You are a graduate of Carnegie Tech.

Those of us who live in that area love the old name. Merely because the Mellon family came along and gave some money to them and tried to move in on Andy Carnegie's old establishment, I do not think you should desecrate your diploma. After all, Carnegie Tech had a great reputation to turn out engineers before anybody heard tell of the Mellon family's interest in education.

Mr. SWEARINGEN. I appreciate your comments, Congressman. My diploma does read Carnegie Institute of Technology. I am now a trustee of Carnegie Mellon University.

The university, in common with most other privately supported schools, had great difficulty in raising money over the years. The Mellon family was generous enough to make a substantial bequest to the university. We found it exceedingly difficult to raise similar sums of money from other residents of western Pennsylvania and throughout the country. We felt it was only appropriate to associate their name with the name of Mr. Andrew Carnegie, the founder of the school.

Mr. SAYLOR. I have no objection whatsoever to changing their name, but I just did not want the public to think that you are so young that you are a graduate of Carnegie Mellon.

Mr. SWEARINGEN. Thank you, Congressman.

Mr. SAYLOR. I want to congratulate you on an excellent statement. I am very sorry I have to leave, but I have some bills to handle on the floor.

Mr. EDMONDSON. Mr. Swearingen, I would like to ask you to look back at page 6 of your statement, where you state "My own company's appraisal of the current outlook has led us to reduce our North American exploration and development program substantially.

Could you tell us you do not have to be precise in dollars and cents-but would you tell us in general terms how significant that reduction has been when you say "substantially."

Mr. SWEARINGEN. Mr. Chairman, our company is a publicly owned company, its stock is traded on the New York Stock Exchange every

shareholders, to the public, to the Securities and Exchange Commission. I consider this to be a piece of proprietary information which I would not like to make public. We would like to have this on a private basis. I would be glad to furnish it for you.

Mr. EDMONDSON. Could you for the record state it is a reduction in excess of 10 percent, 5 percent?

Mr. SWEARINGEN. Mr. Chairman, I would prefer to stand on exactly the words that appear in the text, a substantial reduction.

Mr. EDMONDSON. All right, sir. I think your statement has weight as it is given, but I think you add a great deal of muscle to the weight if you would be a little bit more precise about your term.

Mr. SWEARINGEN. Mr. Chairman, we debated this at great length in preparation of this statement. I expected you might ask this very question. We concluded that for competitive reasons and the other reasons I cited to you, that we would prefer not to make this statement public at this time.

Mr. EDMONDSON. All right.

On page 16, you make reference to growth savings that might accrue to consumers if there were no import controls. You put that figure at approximately $3.4 billion per year. Would you clarify what you are referring to when you speak of gross savings to consumers? Are you confining that figure strictly to oil or are you including gas in that gross savings figure?

Mr. SWEARINGEN. I will ask Mr. McGinnity.

Mr. McGINNITY. That gross savings figure is concerned with oil, not gas.

Mr. EDMONDSON. You are thinking of nothing but the savings that you would predict for the consumer from oil prices themselves. Mr. McGINNITY. Yes, sir.

Mr. EDMONDSON. Standing alone.

Mr. MCGINNITY. If you note, we also say that there would be an impact, an additional adverse impact through the loss of low-cost gas energy, which we have not quantified in this 3.4 billion.

Mr. EDMONDSON. I know many members of the subcommittee will have some questions this afternoon. I have some additional questions myself but the House is now in session, and we have several bills of our own committee on the floor under suspension. So under the circumstances, the Chair has no alternative but to recess the committee until 2 p.m.

We are seeking permission to set during general debate at 2 o'clock and assuming that permission will be granted, we will be back in at 2 p.m. And, Mr. Swearingen, I would appreciate it if you could be with us at that time.

Mr. SWEARINGEN. I would be happy.

Mr. EDMONDSON. The subcommittee stands in recess.

(Whereupon, at 12 o'clock, the committee adjourned, to reconvene at 2 o'clock.)

AFTERNOON SESSION

Mr. EDMONDSON. The subcommittee will resume.

Mr. Swearingen, if you will, take the chair, please.

On page 13 of your prepared statement you make reference to a

deal, and I want to say personally I share your feeling that the risk of extension of Soviet influence to the Middle East is something that apparently received very little attention in the report of the majority on this task force. Your speculation that if the Middle East were to go under Russian control, the likelihood of a shutoff of oil to the west would be very strong is certainly one I think you will find majority agreement on in this committee, at least.

Are you aware of any instances other than the Libyan situation of politically-directed or politically-caused increases in the price of oil to American companies over the contract price in the Middle East?

Mr. SWEARINGEN. Well, I think, Mr. Chairman, this has been the history of oil concessions undertaken throughout the world over the last 25 to 30 years.

Mr. EDMONDSON. Would you cite another instance?

Mr. SWEARINGEN. The one in particular that comes to my mind at the present is the original concession of the Anglo-Arab in Saudi Arabia called for the payment of royalties to the Government of Saudi Arabia on the basis of so many gold shillings per ton. I do not recall offhand the number at present.

Through pressure of the Saudi Arabian Government, that contract was revised. I believe it was subsequent to the war, to go on a 50-50 profit-sharing basis, where profits were computed on the basis of a posted price, the profits computed against that price regardless of whether the oil was moved to market at that price or some lower price.

This led to demands by the Arabian Government on the AngloArab Oil Co., which was British-owned at that time, to make similar changes in their concession in Iran.

The British company refused and this led to the revolution which took place in Iran about 1952, with Mr. Mossadegh coming into power. And the aftermath of that was an absolute suspension of movement of any oil from Iran to the Western World for a period of about 2 years.

Mossadegh was finally overthrown. The Shah came back, and at the time the concession agreements were changed, and again Anglo-Arabia, which is now British Petroleum, ended up with a 40-percent interest in the concession and a number of American companies were brought in and the Government again increased its take.

Mr. EDMONDSON. Do you know of instances in any of these Middle Eastern countries where the opposite result has been effected, where the outside company has been able to increase its take once it established itself?

Mr. SWEARINGEN. No, I do not.

Mr. EDMONDSON. The whole trend has been the other way, to increase the share going to the host country, has it not?

Mr. SWEARINGEN. Exactly.

Mr. EDMONDSON. The gentleman from California.

Mr. HOSMER. I just have one here on your last recommendation about the reserve of domestic capacity. You mean by that capacity to produce oil and over and above what is being produced at any one particular time?

Mr. SWEARINGEN. Yes, I do.

Mr. HOSMER. And you say, when that falls below a million barrels,

shareholders, to the public, to the Securities and Exchange Commis sion. I consider this to be a piece of proprietary information which I would not like to make public. We would like to have this on a private basis. I would be glad to furnish it for you.

Mr. EDMONDSON. Could you for the record state it is a reduction in excess of 10 percent, 5 percent?

Mr. SWEARINGEN. Mr. Chairman, I would prefer to stand on exactly the words that appear in the text, a substantial reduction.

Mr. EDMONDSON. All right, sir. I think your statement has weight as it is given, but I think you add a great deal of muscle to the weight if you would be a little bit more precise about your term.

Mr. SWEARINGEN. Mr. Chairman, we debated this at great length in preparation of this statement. I expected you might ask this very question. We concluded that for competitive reasons and the other reasons I cited to you, that we would prefer not to make this statement public at this time.

Mr. EDMONDSON. All right.

On page 16, you make reference to growth savings that might ac crue to consumers if there were no import controls. You put that figure at approximately $3.4 billion per year. Would you clarify what you are referring to when you speak of gross savings to consumers? Are you confining that figure strictly to oil or are you including gas in that gross savings figure?

Mr. SWFARINGEN. I will ask Mr. McGinnity.

Mr. McGINNITY. That gross savings figure is concerned with ol, not gas.

Mr. EDMONDSON. You are thinking of nothing but the savings that you would predict for the consumer from oil prices themselves. Mr. McGINNITY. Yes, sir.

Mr. EDMONDSON. Standing alone.

Mr. McGINNITY. If you note, we also say that there would be an impact, an additional adverse impact through the loss of low-cost gas energy, which we have not quantified in this 3.4 billion.

Mr. EDMONDSON. I know many members of the subcommittee will have some questions this afternoon. I have some additional questions myself but the House is now in session, and we have several bills of our own committee on the floor under suspension. So under the circumstances, the Chair has no alternative but to recess the committee until 2 p.m.

We are seeking permission to set during general debate at 2 o'clock and as uming that permission will be granted, we will be back in at 2 p.m. And, Mr. Swearingen, I would appreciate it if you could be with us at that time.

Mr. SWEARINGEN. I would be happy.

Mr. EDMONDSON. The subcommittee stands in recess,

(Whereupon, at 12 o'clock, the committee adjourned, to reconvere at 2 o'clock.)

AFTERNOON SESSION

Mr. EDMONDSON. The subeonenittee will resume.

Mr. Swearingen, if you will, take the chair, please.

On pice 13 of your prepared statement you make reference to s

& and I want to say personally I share your feeling that the risk of venson of Soviet influence to the Middle East is something that

rently received very little attention in the report of the majority ot task force. Your speculation that if the Middle East were to goder Russian control, the likelihood of a shutoff of oil to the west w'd be very strong is certainly one I think you will find majority agreement on in this committee, at least.

Are you aware of any instances other than the Libyan situation of pally directed or politically-caused increases in the price of oil to Aerican companies over the contract price in the Middle East?

Mr. SWEARINGEN. Well, I think, Mr. Chairman, this has been the history of oil concessions undertaken throughout the world over the 23 to 30 years.

Mr. EDMONDSON. Would you cite another instance?

Mr. SWEARINGEN. The one in particular that comes to my mind at the present is the original concession of the Anglo-Arab in Saudi Ama called for the payment of royalties to the Government of Saudi Araca on the basis of so many gold shillings per ton. I do not recall od the number at present.

Trough pressure of the Saudi Arabian Government, that contract was revised. I believe it was subsequent to the war, to go on a 50 -50 pro sharing basis, where profits were computed on the basis of a pd price, the profits computed against that price regardless of

er the oil was moved to market at that price or some lower

I led to demands by the Arabian Government on the AngloAr's Oil Co., which was British-owned at that time, to make similar eges in their concession in Iran.

Te British company refused and this led to the revolution which tok place in Iran about 1952, with Mr. Mossadegh coming into power. A the aftermath of that was an absolute suspension of movement of any oil from Iran to the Western World for a period of about 2 year.

Madegh was finally overthrown. The Shah came back, and at the tin the concession agreements were changed, and again Anglo-Arabia, snow British Petroleum, ended up with a 40-percent interest in, the concession and a number of American companies were brought and the Government again increased its take.

Mr. EDMONDSON. Do you know of instances in any of these Middle Fern countries where the opposite result has been effected, where the outside company has been able to increase its take once it estab

elf?

M-, SWEARINGEN. No, I do not.

Mr. EDMONDSON. The whole trend has been the other way, to inere he share going to the host country, has it not?

Mr. SWFARINGEN. Exactly.

Mr. EDMONDSON. The gentleman from California,

Mr. HOSMER. I just have one here on your last recommendation ghot the reserve of domestic capacity. You mean by that capacity to pre oil and over and above what is being produced at any one ***** · ·lar time?

Mr SAFARINGEN. Yes, I do.

Mr. Hosmer. And you say, when that falls below a million barrels,