The Press TUESDAY, MAY 30, 1950. Petrol Markets And Rationing

Press, Volume LXXXVI, Issue 26125, 30 May 1950, Page 4

The Press TUESDAY, MAY 30, 1950. Petrol Markets And Rationing

The announcement that petrol rationing in Britain has ended means much more than that for the first time for more than 10 years petrol is “ off the ration ”, The end | of petrol rationing in Britain is, as the Minister of Fuel (Mr NoelBaker) put it to the House of Commons, the “ happy outcome ” of negotiations between the British Government and the American authorities over an issue which has strained Anglo-American understanding more acutely than any other which has arisen since the war. Strong words have passed, in public from the American side of the Atlantic. In January, the Secretary of State (Mr Acheson) stiffly rebuked the then British Colonial Secretary (Mr Creech Jones) for what the State Department regarded as misrepresentation of American opposition to British proposals for restricting dollar oil imports. There were threats of action to protect American interests and markets. In March, the United States Economic Co-operation Administration announced that Marshall Plan dollars for British oil expansion would be withheld until some agreement had been reached on Britain’s restrictions on the import of dollar oil. In the United States Senate, Senator Connally, chairman of the Senate Foreign Relations Committee, proposed an amendment to the Marshall Plan Act which would have barred discrimination against American business by Britain or any other country receiving Marshall aid. The amendment was not proceeded with after Britain agreed to “ modify ” its decision to cut dollar oil imports into the sterling area, but a sour atmosphere has continued; and as an incidental consequence the oil trade in many parts of the world has been disturbed by suspicions, apprehensions, and threats of retaliation.

The British position originated, of course, in the need to conserve dollars in every possible way. The dollar costs of oil to the sterling area being the largest single item in its dollar expenditure, the British Government naturally extended its dollar-saving campaign to include petroleum products. This became all the more urgent after devaluation of the pound. But American oil companies began to show alarm at British curtailment proposals, fearing their effects upon . both American sales of oil abroad and upon the domestic American market. The American oil industry is concerned about an imminent world surplus of oil; and there are some misgivings about the remarkable progress being made in the refining resources of Marshall aid countries with the help of American funds. Moreover, the American oil industry has the strong -argument at its back that oil is a military as well as an industrial resource. Therefore the continuous operation of American oil properties and installations at home and abroad is to a certain extent vested with a national interest. Finally, there was the economic argument, which appealed strongly to the Economic Co-operation Administration, that while Britain’s n ed to save dollars was recognised, recovery should not be achieved by means which “might result in a new pattern of protected trade, presenting “ additional obstacles to the return “of convertibility of sterling and “ liberalisation of trade ”, Thus, two good and strong cases were in conflict, and while an end to fundamentals in the conflict will not be found without more extensive study, compromise and agreement, something at least has been achieved in the arrangement which has eased the strain of the best part of a year and has produced as a “ happy outcome ” the end of petrol rationing in Britain. Full details of the arrangement have not been made known, but the broad principles are that major American companies will bring in additional supplies of petrol to Britain from the sterling area and will spend sterling acquired in the sterling area on additional goods and services in their operations, or on building tankers in Britain. The dollar drain imposed by oil requirements will not end, because’even oil produced by British oil companies has a high “ dollar content ”, which is caused mainly by conducting operations in hard currency countries, buying dollar equipment and paying licence fees and royalties. But the drain will be lighter, light enough to allow British motorists all the petrol they need and can pay for. Naturally enough, New Zealand motorists will expect to be put in the same position. Apparently they can be, as far as the American oil companies are concerned, and, presumably, British companies operating in New Zealand. Mr Noel-Baker told a press conference that similar arrangements to those in Britain could be extended to New Zealand if rationing ended. It remains to be added, however, that the tactlessness which has too strongly characterised the British handling of its oil case with the Americans has not ended with the “ happy outcome ” of the Anglo-American negotiations. It is astonishing that neither Mr NoelBaker nor the Commonwealth Relations Office thought it proper to keep the New Zealand Government informed about negotiations and a decision which directly concern New Zealand, especially since this country has continued petrol rationing at the specific request of the British Government,