A Matter of Insurance

Last week the U.S. Army staked out a firm postwar claim in Canada's far northern Mackenzie River oilfields. The Army and Imperial Oil, Ltd. (a Standard Oil of New Jersey subsidiary), negotiated a new agreement giving the U.S. the right to 60,000,000 barrels of postwar oil.

When the Army launched its Canol pipeline-&-refinery project, the price for oil was fixed at $1.25 a barrel (plus production costs). The new price: 20-c- (plus production costs). Said Under Secretary of War Robert Patterson: "The new agreement is fundamentally a matter of insurance that in the future the defense of the continent will not be endangered as it was early in 1942 by lack of locally produced oil."

The new agreement was also calculated to silence Congressional critics who had complained that the U.S. stood to get exactly nothing out of the Canol adventure after the war. Whether the remote, mostly unproved Mackenzie fields could ever pay off commercially was still a gamble. Whatever happened, the U.S. would at least have something to show for its Canol money.

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