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Imports of petroleum, a commodity on which the very existence of this country depends, should never reach such a point that they discourage domestic exploration.
Today, there is no reliable foreign source of oil for this country. Where there is political instability, and even strong Communist dangers, this includes all important foreign oil producing countries, the source of supply to this country and its allies can be sealed off overnight. Even a temporary cut-off of our oil supply would cause serious economic dislocations. Our dependence must be on domestic oil as long as such a source is available.
At the same time, however, a certain volume of imports is needed to relieve the pressure on domestic production and to help adjust to constantly changing conditions in domestic economy. Major importing companies, having tremendous investments made at government behest, should be permitted to import their quotas based on the present mandatory import control. However, imports should supplement, but not supplant domestic production of oil.
Assuming that domestic production and exploration are vital to our national welfare, demand and price of domestic petroleum must remain economically healthy. We must have a constant incentive to find and produce oil; for without that incentive it will be impossible to attract necessary investment capital. In times like the present when crude oil surpluses depress markets and threaten prices, imports should not be permitted to accent this condition. When prices drop, opportunities for profit are fewer, and risk capital finds a more favorable climate outside the expensive business of petroleum exploration.
The backbone of exploration in the United States is the independent. The independent has drilled the most exploratory wells and discovered the majority of our reserves. It is the independent who stabilizes the domestic oil industry by his continued efforts to explore in places and to depths where most large integrated companies probably would not. No act, such as excessive imports, should be permitted to cause the independent to curtail his continued search for new reserves.
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