Mutiny for the Bounty

To dam a flood of foreign oil--and to soothe the politically potent ire of Texas' independent oilmen--the Interior Department two months ago set up a voluntary import curb on big oil companies. Last week the program's administrator. Navy Captain Matthew V. Carson Jr.. logged a mutinous crew and foul weather ahead. The companies were asked to cut imports 10% below their 1954-to-1956 levels, bring in only 755,700 bbl. of foreign crude a day. But Captain Carson's first statistics showed a daily August total of 982,300 bbl. The companies themselves estimate daily imports from now through December at 849,300 bbl. Though he professed no dismay. Carson warned tautly: "The only alternative to this program is mandatory action by the President, and I feel certain that such action will be taken if the program breaks down."

Failure Ahead. There were plenty of signs last week that it might. The pressure against the quota came from companies that only recently began bringing in foreign crude. The quotas, based on the 1954-56 import level, squeeze them hard. Although allocated a total of only 262,600 bbl. daily, they imported 354,600 bbl. a day in August, estimate a 337,200-bbl. rate in December. Both Tidewater and Standard of Indiana appealed for quota boosts, held that the formula has actually cut their imports 22% below the levels they had planned to supply recently built U.S. refineries that are processing foreign crude. Tidewater charged the curb meant "confiscation" of its new $200 million refinery in Delaware City, Del.

Even an established importer, Sinclair Oil Corp., asked for relief, demanded a quota boost from 62,200 bbl. daily to 74,800. At a hearing before Captain Carson, Sinclair President J. E. Dyer challenged the program's premise that cheap foreign oil is endangering the nation's security by cutting down oil exploration. Despite accelerated exploration in recent years, he said, the nation's reserves are not increasing fast enough. "To disrupt and impair our sources of supply abroad and jeopardize relationships of industry that have been built up with foreign nations over a long period of years can result in a more serious threat to national security than any temporary excess of crude-oil imports."

All or None. If Sinclair and the other complainants refuse to go along with the cuts, they will wreck the plan. To date, the six other companies that had been importing heavily for years and whose base-period levels are high have agreed to abide by their quotas. The six (Atlantic, Gulf, Socony, Standard of California, Jersey Standard, Texas), which imported 573,800 bbl. a day in July, plan to cut to 471,000 bbl. by December, 22,000 below the Government's request. But last week they showed signs of weakening, nervously eyed the appeals for quota boosts. Gulf Executive Vice President David Proctor warned Carson: "Any decision permitting substantial increases in allowable imports based on alleged inequities can only result in a chain reaction."

In short, if everyone does not go along with the cuts, then no one will. But scuttling the voluntary plan will bring new measures for mandatory curbs on imports since domestic producers are now swamped by the overproduction begun during the Suez crisis. Doing what it could to cope with excessive inventories, the Texas Railroad Commission last week cut the state's 42% share of U.S. production to only twelve days in October, the lowest Texas output since 1939.

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