The Press TUESDAY, DECEMBER 27, 1949. Sterling-Dollar Oil

Press, Volume LXXXV, Issue 25996, 27 December 1949, Page 4

The Press TUESDAY, DECEMBER 27, 1949. Sterling-Dollar Oil

For some months now, British and American officials in Washington have been trying to solve the tangled sterling-dollar oil supplies problem. A cabled message from New York recently, reporting an American technical journal’s allegations of British “ discrimin- “ ation ” against United States companies in British and other sterling oil markets, emphasises the pressing need for an early solution. It is underlined further by a later message reporting a new British oil import policy, which requires that any surplus from the sterling area’s increasing oil production must be absorbed before dollars can be spent on American oil. It is explained that under this policy American oil companies in the British market will be required to replace part of their dollar oil by surplus sterling production. Obviously, the policy will hit American oil producers, particularly producers in overseas fields who normally sell their products in the British and other sterling markets. Moreover, a sting is added to the discrimination charge by the substance in the American complaint that the British oil producers’ expansion programme (which has stepped up sterling oil production, and which promises greater increases) has been assisted by American dollars provided by the Economic Co-operation Administration. Britain’s main problem is, of course, to narrow down the dollar trading gap; and oil is probably the most important single commodity involved in this, besides being the most important single commodity entering into international trade. The British oil companies’ singularly strong position in the world’s oil market makes oil a commodity with which Britain can both earn and save dollars. In both earning and saving, however, British oil interests infringe upon American interests and markets—a consideration which has become more important to American producers now that it is evident that the world demand for oil has not expanded with the rapidity expected a year or two ago. But it is over-simplifying the position to regard it simply as a matter of advantage to one party and of disadvantage to the other in terms of trade. Much bigger considerations are involved. For example, it would be greatly to the disadvantage of Britain if, through inability to sell products, the development of American oilfields in the Middle East were brought to a standstill. American money spent on development, and revenue from Americanproduced oil make a powerful stabilising force, economic and political, in the Middle East, a vitally important strategic area of the world. Moreover, the availability to the United States of strategically-placed supplies of oil is as important to Britain -as it is to America itself. Thus, the sterling-dollar oil tangle, is more than a competitive problem, which might be solved m whole or in part by the United States facing the hard fact that it must be an understanding and forebearing creditor, and by recognising that if the money it has invested in European recovery is to bear fruit, expanded European production must be allowed to find markets. The oil problem cannot be solved so simply. In its present form it tends to tighten areas of closed trading and so runs counter to the multilateral trading objective; it hampers AngloAmerican political, economic, and trading co-operation in spheres where such co-operation is most desirable and most necessary. A successful outcome of the long negotiations at Washington is to be hoped for the more because there are abundant signs that trade competition is becoming increasingly an issue of importance between the United States on the one hand and Britain and the sterling area on the other.