INCREASED DEMAND

Otago Daily Times, Issue 26636, 5 December 1947, Page 5

INCREASED DEMAND

PETROLEUM SUPPLIES RATIONING IN BRITAIN POLITICAL MOTIVES NOT SUPPORTED / From E. G. Webber, N.Z.P.A. Special Correspondent Rec. 9 p.m. LONDON, Dec. 4. There is little disposition in the British oil industry to support the assertion that the rationing of petrol in Britain is largely a political move. The plain facts, according to representatives of the industry, are that although the current world production of oil is 40 per cent, above pre-war, the post-war demand has increased to an unprecedented degree and has been further accentuated by the fact that the United States has now become a net importer instead of a net exporter of petroleum. The abolition of the basic petrol ration in Britain has naturally prompted the question as to why the British Government cannot take measures to ensure that adequate supplies for British needs are obtained from nondollar sources.

The answer to this, according to the oil industry, is that the present volume of petroleum products available to British companies is insufficient to cover their full commitments in the United Kingdom, dominion, colonial and foreign markets unless supplementary purchases are made from dollar sources. ' - According to the British Government, the imperative need to reduce these dollar purchases of oil has compelled it not only to abolish the basic petrol ration at home, but also to suggest that other members of the sterling bloc should embark on similar economy measures.

Even if these reductions were effected, however, so far as can be foreseen, the British Commonwealth countries must continue to rely upon dollar sources for part of their supplies for some time to come.

In regard to this it is worth noting that the second report of the Paris Economic Conference under the Marshall Plan estimated that imports of oil from dollar sources by Western European countries will continue at least until 1951. Not until this date are there reasonable grounds for hope that the increasing volume of petroleum products, which should by then be available to British .oil companies, mainly from sources in the MiddleEast, will relieve sterling countries of oil purchases from dollar sources.

This hope, of course, is governed by the troubled political situation in the Middle East for one of the chief weapons in the hands of the Arab Federation is the threat to cancel British oil concessions and > hold up supplies and development. The present bottleneck preventing increased oil production from reaching the markets is a lack of machinery and equipment for the construction of new refineries and pipe-lines, and a lack of steel for replacements of the hundreds of oil tankers lost during the war.

Two major oil companies, Shell and Anglo-Iranian are both taking energetic measurpes to overcome these difficulties, but some time must elapse before these will be fully effective. Oil tankers now represent 20 per cent, of new tonnage under construction in British ship yards, while in addition, 51 tankers have been purchased by British interests from the American Maritime Commission. Of this total, however, a number has still to be released.

Both companies are also energetically developing plans for the construction of new refineries in the United Kingdom and for extensions to their pipe-lines and refineries in the Middle East, which is coming increasingly into prominence as the major source of world petroleum supplies. Shell and Anglo-Iranian together own 50 per cent, interest in the great Haifa refinery and have embarked on plans to double its capacity. The Shell group also recently approved plans for the erection of new refineries at Thames Haven and near Liverpool. The Thames Haven refineries will have the largest capacity of any in Britain or Europe.