Foreign Relations of the United States, 1947, The American Republics, Volume VIII

835.6363/8–447

Memorandum by the Assistant Chief of the Division of River Plate Affairs ( Atwood ) to the Director of the Office of American Republic Affairs ( Wright )

[ Washington ,] September 24, 1947.

Summary of Standard Oil’s Report to Ambassador Bruce

Present Situation:

A. Production and Consumption

1) In July it was estimated Argentina had only a two weeks’ reserve supply of gasoline.

2) World shortage of petroleum and refined products exists and will probably continue for several years.

3) Argentina must import 57% of consumption.

4) Refining capacity in Argentina not sufficient to handle all imported crude.

5) Production of YPF decreasing steadily since 1943. Production of private companies about the same 1935–43, with a decrease since 1943. Annual decline in total production the last three years approximately 8%.

B. Discriminations

1) Discrimination started in 1935 when YPF was given expansion and producing monopoly.

2) Standard offered to sell in 1936 but Argentine Congress did not ratify.

3) YPF consistently given greater and greater competitive advantage by various means—taxes, regulations, exemptions, number of street pumps, etc.

4) Recent forced increase in wages (20%) has aggravated situation and increased Standard’s operating losses. Private companies only get 25% of the recent 10 cent increase in gasoline prices (represents about a 6¼% increase in price).

Remedies Suggested by Standard to Miranda ¹³

1. Immediate Remedy

Reorganization of industry to permit normal development of YPF activities without interfering with legitimate activities of private companies. If assurances could be given for period of fifteen years, companies could contract advantageously for normal and constant supply for Argentina.

2. Permanent Remedy

Argentina would have to encourage and stimulate exploration and exploitation by private capital duly controlled by the State which could cooperate with YPF to increase national production.

Standard’s Suggestions to Bruce Regarding What Is Necessary To Provide Incentive To Continue the Oil Business In Argentina

A. Immediate

1) Abolition of import-export controls.

2) Abolition of the quota and price fixing systems.

3) Establishment of a reasonable competitive basis for refining and marketing.

B. Permanent

1) The elimination of the State’s exclusive veto power and all present discriminatory legislation.

2) The establishment of a sound legal basis on which private capital (foreign and domestic) can produce, transport, refine and market on fair, competive terms.

Rollin S. Atwood

13. Miguel Miranda, President of the Argentine Economic Council and of the Central Bank.