The Oil Paradox
Important as it is, the oil position is anything but simple. British-owned oil companies produce comfortably more than is required to meet this country's maximum petroleum needs, yet we continue to buy oil from dollar areas and to sell oil from other areas for dollars, ending up with a dollar deficit. The solution to the paradox is not easily arrived at. Part of the trouble is that the world is still suffering from an oil shortage—or rather from a shortage of refining capacity, which comes to the same thing—and refining equipment is to a large extent American, which means a capital outlay of dollars. Another complication is provided by royalties, which must often be paid in gold or convertible sterling. But even if these dollar obstacles could be overcome, it would still be impossible for this or any other country to make a sudden switch from the traditional sources of its oil supplies. The oil companies are not unnaturally budgeting for the days when competition regains something of its pre-war keenness—in the Far East it has already shown signs of doing so—and it is not in this country's best interests that British companies should bow themselves out of established world markets for the sake of an increase in the basic ration at home. This, of course, is no reason for an uncritical acceptance of the present state of affairs. Ministers have on occasions spoken as.if they regarded motoring as a form of Tory self-indulgence, and their explanations therefore deserve minute examination. It would be helpful, for example, to know whether the recent decision to allow Israel £500,000 of blocked sterling a month for the purchase of oil was an indication that we expect the Haifa refineries to remain out of use indefinitely, or as a broad hint• to Iraq to accept the inevitable and allow the flow of oil down the pipe-line to start again. There is no question of the enormous help it would be towards easing the world oil position if these refineries, with their potential capacity of eight million tons a year, were functioning again.
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