Let me speak for a moment of the strategic importance of aluminum. At one time, the use of aluminum in defense materials was about 1 pound in 12. While present estimates of strategic aluminum are not available, it is clear that an adequate supply of aluminum must be readily available for the entire economy in order to hold the line on prices of other metals. Historically, a 1-percent decrease in the price of aluminum relative to the composite price of copper, lead, and zinc, has increased the consumption of aluminum by 1.4 percent. An increase in the price of aluminum caused possibly by action within the raw material producing country could unleash serious inflationary forces. A shortage of alumi num could create demands for other metals needed elsewhere in defense, and thus set up additional inflationary forces. Under wartime conditions, either a price increase and/or a shortage could occur. Improvements in the general capability of hostile submarines could well deny the United States the use of Caribbean sealanes. This was the experience in World War II which led the United States to spend over $20 million on four plants in Utah, Oregon, Wyoming, and South Carolina. The Korean war caused the reopening of one of these plants-again at substantial cost to the taxpayer. In light of the fact that private industry has presented us with the possibility of finding a domestic source for aluminum, it seems incumbent upon us to formulate a national policy which would encourage the rapid development of that resource to the fullest extent. The possibility that a new source of aluminum has been found in conjunction with a vast energy source makes the prospect even more attractive. We know that smelters are almost always placed near cheap power sources regardless of the distance involved. Now, we are presented with the possibility of processing domestic aluminum materials near a source of domestic power. The social, economic, and employment opportunities stemming from such a possibility are indeed dramatic. FOREIGN TRADE AND FOREIGN AID Since the Trade Expansion Act will be subject to review by the Senate this year, it is particularly timely that we should point out the relevance of the possible development of an oil shale and aluminum industry to our foreign aid programs and to our foreign trade agreements. Before the Senate decides whether it will renew the Trade Expansion Act, I believe that we should give careful scrutiny to the following points. The present administration has often stated its recognition, albeit in general terms, of the importance of minerals and fuels to this country. Only last September Vice President Humphrey, in an address to the American Mining Congress in Salt Lake City, referred to minerals and fuels as "the essence of our economie growth and the spectacular rise in our living standards"; and he went on to say: All of us then must be impressed with the achievements of the mineral industry in helping to lay the base for our national prosperity and our national strength. But such broad-brush treatment frequently overlooks the grave international implications of this country's practices and unhappy lack of policy with respect to the world's mineral resources. It is paradoxical in the extreme that our Federal Government in the past few years has seemed more concerned with the development of foreign resources than of our own. The U.S. Bureau of Mines tells us that as of 1964, the total value of direct foreign investments of the United States was over $44 billion. Approximately 40 percent of this, or almost $18 billion, was in mining and smelting and petroleum, with petroleum alone being valued at over $14 billion. The petroleum industry maintains its traditional position as the largest single industrial category of U.S. investment abroad. The impact of U.S. investment in foreign mineral and fuel producing countries is, of course, tremendous. The Eastern Hemisphere has benefited greatly from this. Its share of the non-Communist oil industry has shown the following growth: The income after taxes of the Eastern Hemisphere oil companies was $1,306 million in 1965. The total capacity is 14,200,000 barrels of oil per day of which 8,900,000 barrels of oil per day is produced by only seven companies. In addition to encouraging the export of American capital to increase reserves and production abroad, the United States, operating under the mandatory oil import control program, brings significant quantities of foreign oil into this country. Preliminary estimates provided me by the Department of Commerce show that about 900.7 million barrels of oil, valued at about $2,093 million, were imported into the United States in 1965. Í ask unanimous consent that the complete Commerce Department estimates be included at this point in my remarks. There being no objection, the estimates were ordered to be printed in the Record, as follows: Sources: Survey of Current Business, Statistical Abstract, Bureau of International Commerce. Mr. HANSEN. Mr. President, turning from the question of imports for a moment, we are confronted with a serious decline in our own domestic energy producing capabilities. In contrast to the phenomenal growth of the oil industry in foreign countries, our domestic drilling for oil has fallen off by 41 percent in the past decade and our oil finding success ratio is the lowest it has been in 30 years. Our ratio of domestic reserves has declined accordingly. In 1950, the ratio of reserves to production in the United States was 13.6 to 1. Last year, it was only slightly more than 12 to 1. This steady decline of exploration in this country has reached a point where annual consumption of petroleum products exceeds new reserves found. In pursuing this course we have enabled many foreign countries to operate without any national debts and we have greatly increased our own balance-ofpayments and deficit problems. The net effect of this combination of circumstances is that our Government has exposed our Nation to the whims and demands of foreign oil producing countries. This exposure is doubly serious in light of the fact that energy is, of course, the key to our complex industrial economy. We have, by our own practices, and by the lack of any comprehensive policy, placed a club in the hands of foreign countries and this club is being used more and more effectively on a daily basis. We see every day headlines such as these in our major national newspapers: "Venezuela Presents Tax Deficiency Claims of $100 Million." "Algeria, Syria Demand Increase in Payments From Oil Companies " "Iran Seeks 17-percent Boost in Oil Shipments." "Kuwait Asks $56 Million in Retroactive Taxes." "Aramco Pays Saudi Arabia $66 Million in Retro Taxes." "Libya Levies $134 Million Retroactive Tax Increase on 16 Oil Companies." "Oil Conflict in Iraq." All this indicates to me that the Government of our country must quickly recognize its responsibility toward its domestic resources if it is to remain competitive in the fast-moving marketplaces of this world. The impact of U.S. investment abroad is equally dramatic with respect to those countries producing bauxite. In 1952, Jamacia produced no bauxite whatsoever but 5 years later the country had become a major producer. These developments were aided and encouraged by the U.S. Government. Greece, Hindustan, and Ghana have all recently received substantial loans directly or indirectly from the U.S. Government to increase their activities in the aluminum industry. Norway and Germany have also received loans. Through such assistance Norway has become the fifth largest producer of raw aluminum as well as being the second biggest exporter. The experience in Norway demonstrates clearly what can be done in a market with rapidly expanding demands once a government policy to go ahead is determined. The United Nations through its Office of Special Funds Operations has given much encouragement to prospecting within the less-developed countries. Between $15 and $20 million will be spent by that office in the current year on mineral prospecting. On December 7, 1966, it was reported in New Delhi, India, that the Soviet Union was about to provide India another $330 million in economic aid. That economic mission was primarily for new industrial projects including expansion of a steel plant, aluminum plant, enlargement of iron mines, mineral exploration and development of petroleum resources. Not all of the competition with respect to the world's resources is by any means friendly to our national interest. China has doubled its aluminum production between 1960 and 1965. Its bauxite production increased from 150,000 tons to 350,000 tons in the 3 years 1958 through 1960. Its imports of crude aluminum decreased from 38,000 tons in 1958 to 18,000 tons in 1960. The latest figures from Vietnam indicate that even while North Vietnam was torn by war it increased its production of bauxite from 9,000 tons in 1955 to 200,000 tons in 1957. Further, we are hearing every day more and more about the economic feasibility of nuclear power. So far, economies have dictated that bauxite be brought to a cheap power source. But this may change dramatically in the future and we should not be surprised if, as a condition to the purchase of bauxite, the supplying country insisted on the development of a nuclear powerplant with which to process the raw material. Guiana has announced its policy that bauxite will hereafter be processed in the country of origin. In the weeks and months ahead we cannot expect that this ambition will be limited to Guiana, and it now seems unwise in the extreme to permit ourselves to become reliant on foreign countries for both raw materials and production facilities. With respect to aluminum, it once could be said that the lack of any domestic supply forced upon us the necessity of reliance on imported sources. Importation was thus a matter of necessity and not of policy. We are now, however, at the crossroads and the time is at hand for a bold new policy designed to stimulate the development of our domestic resources through concerted action by the Government and private enterprise. As I indicated earlier, the international aspects of resource development present a two-sided coin. On the one side we are concerned with foreign aid. The State Department has traditionally taken the position that full and unfettered trade should be stimulated between our wealthy country and underdeveloped nations. For this reason the State Department, exercising its terrific power in polcy determinations within our Government, has generally disfavored recent efforts to stimulate our domestic industries. But such a position presents a striking paradox in several instances. Let me cite, for example, the case with respect to Brazil. During fiscal year 1965 our foreign aid expenditures to Brazil equaled $285,900,000. Of this amount two of the largest items were loans which equaled $218,400,000 and military assistance equaling $14,300,000. On the other hand, a study of the Brazilian budget indicates that imports of petroleum and petroleum products have been steadily increasing into that country. The cost to Brazil for petroleum imports is currently running around $50 million per year. One of the principal reasons why Brazil finds it necessary to import oil is that it has been unable so far to bring to com mercial production its known oil shale reserves. This failure is accounted for in large part by the discouragement Brazil has received from our own country. Brazil has consistently sought technological assistance from the United States but we have been unable to supply this necessary assistance. Our failure in this regard can be laid directly to the do-nothing policy with respect to oil shale development that our Government has had up until the present time. I am hopeful that the necessary technology will be forthcoming in the near future. I am hopeful also that we will then see the futility of handing large sums of money over to a country such as Brazil only to watch at least a fifth of those American dollars spent to import raw materials into that very country which receives our largess. This folly could be reversed by merely providing our neighbors with technological assistance rather than dollar giveaways. A positive national policy by our own country would affect just such this needed reversal. BALANCE OF PAYMENTS Previously in my remarks, I pointed to the rapid expansion of resource development and investment in foreign countries. This leads us logically to the question of balance of payments. That question is one of the major problems facing the present administration. Indeed, the flight of gold is one of the major problems of our country in this entire century. It is becoming increasingly clear that we cannot solve the problem of the balance of payments by sanctions. Indeed, just within the past few days, Mr. Johnson in his economic report for 1967 saw fit only to say that the United States will "continue to move toward equilibrium as rapidly as the foreign exchange costs of the Vietnam conflict may permit." Compare this to the administration's talk last year, when it spoke of attempting to reach payments equilibrium in 1966. Now, I would say to you and to President Johnson that we cannot continue buying oil and bauxite abroad in face of a rapidly decreasing gold reserve. Despite the seemingly intolerable complexities of the balance-of-payments problem, one basic economic reality is obvious. That reality is that we must strive to increase our exports as we decrease our imports. This means that we must find our own sources of raw material as well as reduce the cost of our finished products. The U.S. petroleum industry showed a trade deficit of $649 million in 1964, nearly 75 percent more than in 1960. During 1960 to 1964, exports remained level while imports rose by over $300 million. The petroleum industry imported some $1,080 million worth of crude oil in 1964 plus another $590 million of refined products. Projections up to 1975 indicate that the trade deficit in the petroleum industry will continue to rise with estimates up to $1,702 million of trade deficit by 1975. Earlier, I indicated the dominant role played by just seven companies in the rapid increase of oil production in foreign countries. These seven companies paid $2.451 million to foreign governments in 1965. The percent paid to foreign governments rose from 50 to 65 percent in the 8-year period, 1957–65. In light of the growing competitiveness, indeed of the growing hostility, on the part of foreign governments whose countries produce vast quantities of petroleum or aluminum minerals, I believe that it is high time our own country, the United States, reassess its position in the world marketplace and take immediate steps to increase our competitiveness for the years ahead. Instead of simply reacting to circumstances as this government has been wont to do in the past, we should now act affirmatively by establishing a comprehensive and thoughtful policy which considers the needs of our industries and provides for the full development of our great natural resources. THE ROLE OF GOVERNMENT This now, then, brings me to the last point I wish to make in my remarks here before the Senate. It must be recognized that in order to develop fully, and in an orderly way, this new domestic industry, State and local governments, private industry, and the Federal Government will all have to act as mutually responsible partners. As was indicated at the beginning of my remarks, I am hopeful that the Senate will conduct hearings on the question of the governmental role in this industrial development in the very near future. First, on the agenda of these hearings should be an analysis of Secretary Udall's plans with respect to point 80-344-67-pt. 1-29 3 of his announced five-point program. The Interior Department's plans for regulation of the research and development phase and later the operational phase of the oil shale industry should be discussed before their publication. Our Senate hearings should examine these proposed procedures in detail and in depth. We should invite representatives of private industry for their views in order that procedures can be developed which will be fair to all parties, big or small. It will be of no service to announce an oil shale development policy only to find that the details of the administrative procedures inhibit, rather than promote, the entrance of private industry into this new field. Next, the Congress must concern itself with the need for increased research and exploration of our oil shale and associated mineral reserves. I have asked the Bureau of Mines to advise me of the exploration and study plans presently underway in the oil shale field. Dr. Walter Hibbard has been most helpful in this respect and I am sure that his remarks on what further authorizations and appropriations are necessary for future studies will be of great benefit to Congress. Next, we must begin to give close scrutiny to the long-range water requirements for such a fantastic new industry. I was greatly encouraged to see in President Johnson's budget request an item for a reconaissance study of the upper Green River Basin. This water study, which had been requested by Senator Simpson, my predecessor here in the Senate, and myself, will be the first step down the road to a full appraisal of our municipal and industrial water needs. But I am certain that further and broader investigations will be required in order properly to project the amount of industrial and municipal water which will be necessary for this new industry by the year 2000. Again, advice from the Department of Interior should be sought in this matter. I will be prepared to ask Congress for the necessary appropriations once such study plans are firm. And last, but by no means least, the States of Wyoming, Colorado, and Utah must be called upon for their views and their proposed action in regard to this new industry development. These States have traditionally been vested with policing power over such matters as conservation regulation. The proper regulation by the States of this new industry should prove to be no exception. I am hopeful that the State Legislatures of Wyoming, Colorado, and Utah will begin immediate plans for the drafting of necessary conservation regulations and for the regulation of air and water and land pollution. In this regard, it will be incumbent upon Secretary Udall to solicit the mutual cooperation of the affected States and to arrive at coordinated regulations and policing practices. The leaders of these three great States should be invited to present their views and their problems before Congress and to receive every assistance possible in dealing with the anticipated needs of local areas. The creation of whole new cities and their attendant municipal services must be anticipated. Proper leadtimes must be provided for in the establishment of new long-range taxation programs and local government authority. School, hospital, sewage, fire, and water districts should be created well in advance of a great burgeoning industry. The present chairman of our Senate Interior Committee recognized the vast implications of an oil shale development program several years ago. In 1965. Senator JACKSON called for informational hearings before his Interior Committee and introduced those hearings with these remarks: "All too often in dealing with problems affecting our natural resources, both economic and aesthetic, this Committee is faced with a condition, not a theory. Conditions often demand ad hoc solutions to immediate, limited problems. But as I pointed out earlier, such is not the case here today. We hope to have basic facts and issues presented, and then to be able to deliberate on broad, overall policy questions involved in the wisest and best course of action to take with respect to this great natural resource found so abundantly in our public domain." It is fitting that I should close with Senator Jackson's remarks, for nothing further can be added at this time. Now let us get on to the task at hand. REPORT OF THE OIL SHALE ADVISORY BOARD Hon. STEWART L. UDALL, RESOURCES FOR THE FUTURE, INC., Secretary of the Interior, Department of the Interior, Washington, D.C. DEAR MR. SECRETARY: I have the honor to submit herewith the report of your Oil Shale Advisory Board which you appointed last summer to identify and |