INDICATIONS OF A PLANNED SHIFT IN THE FUEL ENERGY BALANCE OF THE USSR

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79T00935A000300200001-9
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 23
• Document Creation Date: November 9, 2016
• Document Release Date: August 27, 1998
• Sequence Number: 1
• Publication Date: August 1, 1955
• Content Type: IM

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INTELLIGENCE MEMORANDUM
INDICATIONS OF A PLANNED SHIFT
IN THE FUEL ENERGY BALANCE OF THE USSR
CIA/RR IM-413
1 August 1955
WARNING
THIS MATERIAL CONTAINS INFORMATION AFFECTING THE NATIONAL
DEFENSE OF THE UNITED STATES WITHIN THE MEANING OF THE
ESPIONAGE LAWS, TITLE 18, USC, SECS. 793 AND 794+, THE
TRANSMISSION OR REVELATION OF WHICH IN ANY MANNER TO AN
UNAUTHORIZED PERSON IS PROHIBITED BY LAW.
CENTRAL INTELLIGENCE AGENCY
Office of Research and Reports
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The purpose of this memorandum is to examine the implications
of recent Soviet developments that may affect the position of
petroleum in the fuel energy balance of the USSR. The memorandum
is in no sense a full analysis of the Soviet fuel energy balance.
It is concerned with the relative shares of petroleum and solid
fuels; it mentions hydroelectric power only incidentally and does
not discuss atomic energy for peacetime use.
This memorandum has been coordinated within CIA but not with
other IAC agencies.
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CONTENTS
Page
Summary and Conclusions . . . . . . . . . . . . . . . . .
1
I. Introduction . . . . . . . . . . . . . . . . . . . . .
..
3
II. Background . . . . . . . . . . . . . . . . . . . . . .
.
3
.A. Policy and the Fuel Energy Balance, 1930-54 ? ? ? ?
3
B. Postwar Investment in the Petroleum and Coal
Industries . . . . . . . . . . . . . . . . . . .
.
5
III. Current Developments . . . . . . . . . . . . . . . .
..
6
.A. Developments in the Petroleum and Coal Industries,
January to April 1955 . . . . . . . .
6
Possible Indications of a Planned Shift in the Fuel
Energy Balance . . . . . . . . . . . . . . . . . .
.
8
IV. Possible Underlying Causes . . . . . . . . . . . . . .
..
11
Appendix
Source References . . . . . . . . . . . . . . . . . . . . .
.
15
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(ORR Project 25.735)
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INDICATIONS OF A PLANNED SHIFT IN THE FUEL ENERGY BALANCE
OF THE USSR*
Summary and Conclusions
On 11+ May 1955 an article in Pravda sharply criticized the rela-
tively small share of petroleum in the fuel energy balance of the USSR.
On 25 May 1955 there was announced the appointment of N.K. Baybakov,
Minister of the Petroleum Industry and a leading petroleum specialist,
as chairman of the newly organized long-range planning commission.
These developments suggest that the share of petroleum in the Soviet
fuel energy balance will rise more rapidly than it has during the
Fifth Five Year Plan (1951-55) and that the share of solid fuels will
decline.
As determined by Soviet policy in the past, coal has had a predom-
inant and rising share in the'fuel energy balance, and petroleum has
had a small and declining share. That trend has been arrested during
the period of the Fifth Five Year Plan. Because of a higher level of
annual investment in the petroleum industry relative to that in the
coal industry, production of petroleum has increased at a faster rate
than production of coal. The new position on the fuel energy balance,
as outlined in the Pravda article, may anticipate significant changes
in Soviet planning.
The recent emergence of the Ural-Volga region as a petroleum area
more important than Baku has reduced costs of transportation of petro-
leum products to most parts of the USSR. This reduction may have been
so significant that the emphasis on greater utilization of less ef-
ficient local fuels is no longer justified on either economic or
autarchic grounds.
It is also possible that for the past several years Soviet planners
have seriously underestimated fuel requirements. The upward revision
of the plan for investment in coal and petroleum in the 1.91+8-.50 period,
the hydroelectric program of the early 1950's, and the numerous appeals
* The estimates and conclusions contained in this memorandum repre-
sent the best judgment of ORR as of 15 July 1955.
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and directives to reduce consumption of petroleum suggest recognition
of the fact that energy requirements exceeded original estimates.
Production of petroleum can be expanded more rapidly than production
of solid fuels, and a sharp increase in petroleum production may be
planned to meet 'these energy requirements sooner and with greater
assurance. The :^elative availability of petroleum reserves and coal
reserves may also affect such planning.
It is also possible that anticipated requirements largely exclude
fuels other than petroleum -- requirements, fa example, imposed by
the recently revived program for dieseliza,tion of the railroads and
by the apparent planned expansion of automotiv production during the
Sixth Five Year Plan (1956-60).
The Pravda article stated that the cost of
ton* of standard fuel in the petroleum industr
the coal industry and that labor productivity
production of a metric
was one-half that in
in the petroleum industry
ress on purely economic
was double that in the coal industry. Such st
factors sugges%E, that the controversy ove the;
petroleum and solid fuels may be part of a lai
basis of relative costs. Economic considerat
been subordinated to sociopolitical considera
the regional ausarchy policy, for example --
not be the Bove:-ning ones.
Changed strategic conditions also may unde
crease in the s::zare of petroleum in the Sovie-
Dependence upon the vulnerable Baku area for i
the nation's supply of petroleum may have imp,
tation on Soviet reliance upon petroleum. Th,
secure Ural-Volga area as a major source of s-
this limitation. Soviet strategists may feel
graphic distribution of the petroleum industr
effective defense of the petroleum industry i
*-Tonnages are given in metric tons through
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relative shares of
ger problem - that of
in the past, on the
ons, however, have often
ions in the USSR -- in
nd economic factors may
rlie the indicated in-
fuel energy balance.
predominant part of
used a strategic limi-
shift to the relatively
j.pply may have removed
that the changed geo-
now makes possible
i time of war.
ut this memorandum.
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I. Introduction.
A Pravda article of l1 May 1955 /* sharply criticized the fuel
energy balance of the USSR and called for an increased share for
petroleum in this balance. To implement this change, a sharp increase
in the production of crude oil and natural gas was advocated. If
acted upon, this proposal would effect substantial changes in the
levels of production and consumption of petroleum products and in
investment in the petroleum industry. This memorandum provides a
background against which to evaluate the possibility of a change in
policy regarding the fuel energy balance of the USSR and examines
current developments as they may affect that energy balance.
II. Background.
A. Policy and the Fuel Energy Balance, 1930 54.
A clear statement of prewar Soviet policy on developing pri-
mary sources of energy is attributed to the XVI Party Congress (1930).
One of the most important tasks of socialist development, according
to the statement, was a maximum increase in the production and utili-
zation of local fuels (peat, shale, coal, and natural gas), substi-
tuting them wherever possible for fuel hauled over long distances. J
The Party position on the role of petroleum in the fuel ener-
gy balance is reported to have been voiced in 1939 by A.Ye. Probst, a
fuel economist. He is alleged to have stated that "if an eight- or ten-
fold increase in the production of petroleum were required, this would
be not only practically unattainable, but also would be undesirable
from the point of view of the national economy." 3
From 1932 until 1951 the share of coal in the Soviet fuel
energy balance increased, and that of petroleum decreased. According
to a Soviet source, J the percentage of shares of fuel (in terms
of standard fuel) in the USSR was as follows:
Fuel
1932
1937
191+0
1950 Plan
Coal
59,1+
69.5
71.9
75.6
Wood
19.9
13.6
13.9
9,7
Peat
3.7
5.5
6.2
6.2
Crude oil
17.0
11.0
7.9
6.3
Natural gas
0.0
0.0
0.0
1.1+
Shale
0.0
0.1
0.1
0.$
* For serially numbered source references, see the appendix.
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On the basis of available data, it is not possible to extend
the foregoing tabulation. On the basis of kno ,production of petro-
leum products and coal and known production or production trends for
the remaining tyFes of fuel, however, it seems probable that in the
:L951-54 period tke relative share of petroleum roducts was rising
Moderately while the relative share of coal re ined stable.
As indicated in the tabulation above, he decisive mineral-
ization of the fuel balance he sharp rise in the relative share of
hard coal is the principal feature of the de elopment of the fuel
industry. 5J This feature of the Soviet fuel energy balance is in
sharp contrast to-the trend in the Free World.
The first; important postwar announcement by the Russians on
fuels was made in February 19+6 when Stalin announced certain long-
range goals (15 -:o 20 years) for coal (500 million tons) and petroleum
(60 million tons). J In March 19+6 the Fourth Five Year Plan (1946-50)
goals for coal (250 million tons) and petroleuxi (35.4 million tons) 7/
reflected approx:Lmately the same ratio (8 to 1 as indicated by Stalin.
Stated aims of tie Fourth Five Year Plan inclu ed intensive extraction
of coal from local fields and the substitution of local fuels for more
distant supplies. J Also planned was large-s ale development of both
natural and manufactured gas. J
The Soviet policy of increasing the shire of local and syn-
thetic fuels in the fuel energy balance is ref ected in several Soviet
publications that appeared during the period o the Fourth Five Year
Plan. Nikolayevskiy, a prominent petroleum ec nomist, 10 axxd
Probst, a member of the Academy of Scienct:s o the USSR, 11 both
stated views which supported development of 1 cal, low-quality fuels
and expansion of production of synthetic fuels, primarily for the
purpose of avoicLing long hauls of natural fuels -- particularly
petroleum. A s;_milar view was voiced in EL 191.9 article entitled
"The Saving of Y4azut* -- a Most Important Task for the National
Economy." 12 This article was an appeal to educe consumption of
mazut in all sectors of the economy, chiefly by the substitution
for mazut of fuols such as pulverized coal, generator gas, coking
gas, associated gas, dry gas, and coal.
-7 -Me term hard coal is used here in the Europes4 sense and includes
anthracite and oituminous coal.
* Mazut is a Soviet term for viscous liquids., principally residual
fuel oils, road oils, and bituminous tars.
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The Fifth Five Year Plan called for a 43-percent increase in
the production of coal in 1950 and an 85-percent increase in the
production of petroleum. 13 Other objectives of the announced Plan
included "improvement in the geographical distribution of industrial
enterprises /b-y7 bringing industry still closer to the sources of raw
materials and fuel with the object of eliminating irrational and
excessively long shipments." The objectives for the petroleum industry
included the development of production of synthetic liquid fuel. The
gas industry was to be developed further, with the production of natural
gas, coal gas, and shale gas "to increase by approximately 80 percent
in three years." Consumption of gas by households and automotive
vehicles was to be expanded. Production of peat was to increase by 27
percent, and further development of local coal deposits was to be as-
sured. Production of synthetic liquid fuel from shale in the Estonian
SSR was to be increased by approximately 80 percent.
The Plan objectives to increase the production and consumption
of local and synthetic fuels were reflected in an article in December.
1953. 14 This article stated that the XIX Party Congress (1952) di-
rected that because the available supply of liquid fuel was inadequate
to meet the demands of all consumers, the use of substitutes (solid
fuel and gas) for liquid fuel in all sectors of the economy be in-
creased. The article singled out the automobile and tractor park,
stating that it could be converted to the use of both natural and man-
ufactured gas, thus conserving a large quantity of gasoline for other
uses.
B. Postwar Investment in the Petroleum and Coal Industries.
According to available data, 15 the average annual investment
in the petroleum industry during the Fourth Five Year Plan was 3.9
billion rubles,* an increase from 1.9 billion rubles in 1946 to 6.2
billion rubles in 1950. Average annual investment in the coal industry
in the same period was 6.3 billion rubles, an increase at a more
moderate rate -- from 4.5 billion rubles in 1946 to 8.3 billion rubles
in 1950.
The 6.2-billion-ruble investment in the petroleum industry in
1950 apparently marked a turning point in the level of annual invest-
ment in the coal industry. According to a Soviet source, 16 invest-
ment in the petroleum industry during the Fifth Five Year Plan was to
be about 45.7 billion rubles, 2.3 times the total investment made
* All ruble values are given in terms of 1945 prices.
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during the Fourth Five Year Plan. If this leve of investment is
achieved, the average annual investment in the etroleum industry
during the Fifth Five Year Plan would be about .1 billion rubles.
Available data indicate that this level of inve tment would be either
slightly less or slightly more than that for th coal industry. 17
Thus the gap between relative levels of invest at in the coal and
petroleum industries has been narrowed considserbly, has been. closed,
or has shifted in favor of the petroleum i;adusttry.
In the 1946-51 period, estimated annua
ton increase in )utput was rising sharply in b
dustry and the cDal industry. This average a
most four times greater in the petroleum Indus
industry. If the Fifth Five Year Plan levels
petroleum and ccal industries are realized, thA
somewhat increased. Because the calorific va
is higher than that of coal, in terms of stan
the capital-output ratio would not be quite s
on the order of 2 to 1 or 2-1/2 to 1). The r
investment in tae petroleum industry undoubte
increasing demaad for light fractions in the
products.
Because standard fuel equivalent comp
cal :measure, it, is not completely satisfactor
substitutability between petroleum and coal
sectors of the economy -- the automotive and
tractor park, :'or example ---; any significant
precluded, except in wartime emergency condi
economic and t~chnieal considerations. The
fore, are only crude approximations at best.
III. Current Developments.
investment per million-
th the petroleum in-
ry than in the coal
f investment in the
s ratio would be
e of petroleum products
rd fuel equivalents,
divergent (probably more
cent sharp increases in
y are a reflection of
utput of petroleum
ison is a purely techni-
One hundred-percent
s not possible. In certain
agricultural machinery-
degree of substitution is
ions, on the basis of
hove comparisons, there-
A. Developments in the Petroleum and Cojal Industries, January to
Apri. 1955.
At th,: beginning of 1955 there was o evidence of dissatisfac-
tion in the USSR with either the level of p oduction of petroleum or
the share whi2h petroleum held in the fuel nergy balance. In January
1955 the Minister of the Petroleum Industry reported that the plan for
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production of petroleum had been fulfilled ahead of schedule. The
Minister also stated that tremendous sums had been allocated to the
petroleum industry and that there were available all of the prerequi-
sites for a further increase in petroleum reserves and for a con-
tinuing growth in the production and refining.of petroleum. 18J
Another indication that in January 1955 there was no inten-
tion of increasing the share of petroleum in the Soviet fuel energy
balance came with the announcement in that month that the coal
production goal for 1955 had been raised to 391 million tons, a gain
of about 4+5 million tons over 1954. This increase was the result of
an upward revision of 20 million to 25 million tons in the original
1955 coal plan. 19 A further change in the coal industry occurred
on 2 March 1955, when A.F. Zasyadko was dismissed as Minister of the
Coal Industry and replaced by A.N. Zademidko. Zasyadko's dismissal,
reportedly, was for unsatisfactory work. 20/
In April 1955 appeared the first significant indication of dis-
content with an important aspect of the Soviet petroleum industry. In
the leading article of the April issue of Neftyanoye khozy2ystyo, the
journal of the Ministry of the Petroleum Industry, there was severe
criticism of the Soviet natural gas industry. The article stated that
natural gas was the cheapest of fuels but that, along with associated
gas and manufactured gas, it had not been delivered to the national
economy in sufficient quantities. Current rates of development of the
gas industry were described as extremely unsatisfactory. It was re-
ported that the directives of the XIX Party Congress on the Fifth Five
Year Plan, which called for an increase of about 80 percent in the
production of natural gas, associated gas, and synthetic gas, were
not being fulfilled. Exploration for natural gas in the last 2 or 3
years was said to have been carried out on too small a scale, and
production of gas in the last 3 or 4+ years was reported to have grown
at a rate far from satisfactory. 21
It may be of significance that the article by A. Solodko pub-
lished in May 1955 cited the prohibitive cost of production of synthet-
ic gas, and the April article complains of an insufficient level of
production for all types of gas, including synthetic gas. This would
seem to indicate that as late as April 1955 the new point of view --
that presented by Solodko -- on the relative merits of fuels had not
crystallized.
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B. Possible Indications of a Planned ShiftJin the Fuel Energy
Balance.
The first indication of a possible pl
energy balance of' the USSR came with the appea
article in Pravda, of 14+ May 1955. 22/ A. Solo
scure technical miter on petroleum matters, s
of increasing the share of crude oil and natur
energy balance o:' the USSR. He stated that th
petroleum indust:?y had been much slower than w
possibilities for the development of the indus
Solodko also stated that the share: of
Soviet fuel energy balance had been decreasing
been increasing. To support his case, Solodko
of coal in 1953 was 11 times that in 1913 and
and that production of petroleum in 1953 was 5
1.7 times that in 1937. In 1932, Solodko fur
petroleum was produced for every 3 tons of co
half ton of petroleum for every 3 tons of coa
as a result of his trend solid fuels account
of the fuel ene:-gy balance of the USSR and ga
for only about 15 percent.*
Solodko stated that this fuel energy
sive," He declared that although coal would
tremely important role in the Soviet fuel ene
economically more advantageous if the share o
gas were increased. Solodko even went to the
that in foreign, countries the trend was towa
* The ratio apparently reflects the absolu
petroleum, probably for the purpose of e:mpha
** This statement would appear to be signif
would imply admission of a technological lag
in the Free World is toward a greater share
energy balance. In the US the role of Petro
creasing since before 1900. By about 1920 t
natural gas in the US fuel energy balance ha
cated by Solodko as representing the present
energy balance (85 percent solid fuels and
natural gas). 23 By 1952, crude oil and
percent of the US energy supply from mi;lera
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ed shift in the fuel
nce of the Solodko
o, a relatively ob-
ressed the importance
1 gas in the fuel
growth of the Soviet
s warranted by the
ry,
etroleum fuels in the
while that of coal had
reported that production
.5 times that in 1937
.7 times that in 1913 and
er reported, 1 ton of
1 and in 1953 only one-
. He pointed out that
d for about 855 percent
eous and liquid fuels
alance was "not progres-
ontinue to play an ex-
gy balance, it would be
crude oil and natural
extreme of pointing out
d just such an increase.**
e tonnages for coal and
izing the disparity.
cant inasmuch as it
in the USSR. The trend
or petroleum in the fuel
eum has been steadily in-
e share of crude oil and
reached the point indi-
level in the Soviet fuel
percent crude oil and
ural gas contributed 61.7
fuels and waterpower. 24+
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Solodko next advanced a number of arguments supporting his
position on increasing the share of petroleum in the Soviet fuel energy
balance. First, he referred to the efficiency of crude oil and natural
gas as sources of thermal energy. Second, he stated that the cost of
a ton of standard fuel obtained from mazut was one-half the cost of a
ton of standard fuel obtained from coal. Third, he affirmed that pro-
ductivity of labor per ton of standard fuel for workers engaged in
production of petroleum was double that of workers engaged in coal
mining. Fourth, he declared that the construction of an oilfield usu-
ally takes from 2 to 3 years and of a coal mine of equal capacity from
5 to 7 years.
The cost of a ton of standard fuel derived from natural gas,
according to Solodko, is one-fifth the cost of a ton of standard fuel
obtained from coal. The time and capital investment required for the
construction of a gas field and necessary trunk pipelines, he said, is
several times less than the time and capital required for construction
of a coal mine of equal capacity. Solodko stated that despite the
fact that the USSR had large reserves of natural gas, production was
not large and that natural gas did not hold its proper place in the
Soviet fuel energy balance.
Turning to consumption, Solodko stated that the use of petro-
leum fuels in railroad transport was very advantageous. He noted that
a diesel locomotive was four times more efficient than a steam loco-
motive and that the life of a diesel locomotive was almost twice that
of a steam locomotive.
Solodko devoted most of the balance of the article to placing
the blame for what he termed an insufficient increase in production
of petroleum resources. He attributed the failure partly to an under-
estimation by certain scientists of the potentialities of the USSR to
develop the production of crude oil and natural gas. This, he de-
clared, resulted from ignoring economic factors in planning the devel-
opment of the fuel industry.
Two fuel economists, A.Ye. Probst and N.M. Nikolayevskiy,
were singled out for attack. Probst was attacked for saying, among
other things, that an eightfold or tenfold increase in the production
of petroleum was practically unattainable and also was undesirable from
the point of view of the national economy. Probst was also attacked
for insisting on the "widespread" introduction of substitutes for
petroleum fuel and for predicting a more important place for synthetic
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fuels in the economy. Solodko pointed out that the cost of a ton of
gasoline produced from coal was six times that Df gasoline produced
:from natural crude oil and that the cost of gas produced from solid
fuel was three tc four times that of natural gas.
N.M. Nikolayevskiy, described as a doctor of economic sciences
working in the petroleum industry, was attacked for including among a
number of long-raLnge trends a decrease in consumption of petroleum
fuels by railroad transport by conversion to 1 cally available, low-
quality types of fuel and the introduction of substitutes such as
synthetic gasoline for petroleum fuels.**
Solodko also attacked "certain workers
ning Commission" for having subscribed to the 1
growth in the production of petroleum was unde
clared that workers of the Commission had not 1
rate of growth of the share of petroleum in th,
balance. Solodko said further that the level
in the development of the petroleum industry c
ficient. M.A. Shchedrin, Deputy Chairman of t
mission, also was attacked indirectly -- Solod
editor of one of Probst's books.
of the Soviet State Plan-
heory that a substantial
,irable. Solodko de-
mvisioned a sufficient
Soviet fuel energy
)f capital investment
Learly had been insuf -
ie State Planning Com-
io named him as the
Solodko concluded by stating that the USSR had the greatest
natural resourcEa of petroleum in the world. He remarked that a sharp.
increase in the production of crude oil and natural gas with a minimum
investment of money and time would permit the USSR to make extremely
advantageous changes in the structure of the fuel energy balance --
changes which would result in the conversion of a number of fuel-con-
suming sectors of the national economy from slid fuels to the more
economic and effective liquid and gaseous fuels.
* It would appear that Solodko has presente
would support his argument that Probst had un
troleum in the economy. For example, the f
only that evidence which
erestimated tae role of
rst statement attributed
addition, Probst's po-
ubstitutes for petroleum
cated self-sufficiency
n was a reflection of
pe
to Probst appeared in a 1939 publication. In
sition concerning widespread introduction of
fuels was part of a larger doctrine which adv
for individual economic regions. This positi
Party directives.
** Nikolayevs1:iy's position also was in line
eating self-sufficiency for individual econonl
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with the doctrine advo-
ic regions.
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On 19 May 1955, 5 days after the publication. of the Solodko
article, Pravda carried a speech delivered by Khrushchev, the Party
Secretary, to the All-Union Conference of Industrial Workers wherein
he indicated that long-range planning for energy was being considered
at the highest level. In this speech, Khrushchev discussed the
planned split of the State Planning Commission into 2 bodies, 1 for
long-range planning and 1 for current planning. Speaking of the long-
range planning body, Khrushchev said, "It is necessary to have long-
range fi-iterally, "perspective" plans for a number of branches Lof
the economyJ, and especially for energy production* over the course
of from 10 to 15 years." 25
On 25 May there was a further development which suggested that
the USSR might be preparing to reorient its views on the development
of primary sources of energy. On that date it was announced that
N.K. Baybakov had been released as Minister of the Petroleum Industry
and had been appointed chairman of the newly organized State Planning
Commission (for long-range planning). 26/ Baybakov is perhaps the
outstanding petroleum expert in the USSR. 27
IV. Possible Underlying Causes.
The content of Solodko's Pravda article clearly indicates a petro-
leum-solid fuel controversy (perhaps, more specifically, a petroleum-
coal controversy) and suggests the possibility of basic changes in the
Soviet concept of the fuel energy balance. These changes may be
affected by a number of factors, probably in combination and in vary-
ing degrees of influence.
The USSR has proved reserves of petroleum adequate to support a
sharp increase in the production of petroleum and natural gas. 28
Past reliance upon the Baku area for a predominant share of the
petroleum supply, however, resulted in high -- and in some cases ap-
parently prohibitive -- transportation costs, a situation which re-
stricted consumption. By. the shift to the Ural-Volga area (popularly
known as "Second Baku") as the most important petroleum-producing
region, 29 the length of haul of petroleum products to most parts
of the USSR, especially to the petroleum-deficit regions of Siberia,
* The term used here was energetika, which is the generic concept
that covers the production of both energy fuel and electric power.
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has been reduced. It is possible that this red'ction has so signif-
icantly changed the burden of transportation th t the emphasis on
greater substitution of local, and even synthetic, fuels is no longer
justifiable on economic grounds.
It is also possible that during the past s
planners have sharply underestimated fuel ener
apparent revision of the plan for investment i
the 1948-50 period 30 and the hydroelectric p
195015 31 sugge,;t recognition of the fact tha
exceeded original estimates. In addition, the
rectives urging 3r directing conservation of p
measures ranging from more careful handling to
quality fuels) in order to assure supply to mo
suggest that petroleum requirements have been
Those requiremerts may be met sooner by a shar
of petroleum then by increases in production o
fuels. As stated in Solodko's article, expan
production can be achieved in petroleum in ab
quired in coal.
It is possible that anticipated requireme
use of fuels otzer than petroleum. For examp
peatedly delayei plans for dieselization of t
ization program has been revived recently, 32
planned goal will require a greater supply of
expansion of automotive production is apparen
Sixth Five Year Plan, 33 and such an expansi
portant degree of reliance upon petroleum.
Changed strategic considerations also ma;
the share of petroleum in the Soviet fuel ens
upon the vulnerable Baku area may have impos,
upon that area as a regular source of supply
petroleum production and consumption were re
The shift to "Second Baku:" provides a more s
ally, and expansion of both production e.nd c
products may now be considered strategically
feel able to defend the petroleum industry i
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eral years, Soviet
requirements. An
coal and petroleum in
ogram of the early
energy requirements
umerous appeals and di-
troleum products (by
substitution with Low-
e important consumers
eater than anticipated.
increase in production
coal or other solid
ion of the rate of
ut half the time re -
is largely preclude the
e, the USSR has re-
e railroads. The diesel-
and meeting the
petroleum. A substantial
ly being planned for the
n would place an im-
underlie an increase in
rgy balance. Dependence
d strategic limitations
with the result that
tricted arbitrarily.
cure location strategic-
nsumption of petroleum
sound. The USSR may now
time of war.
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Another factor in the new Soviet position on the fuel energy
balance may be a higher level of technology that makes possible in-
creased production of both petroleum products and petroleum-consuming
equipment. Such an advance in technology would generate greater
requirements for petroleum. For example, advances in petroleum tech-
nology may make possible greater production of desired lighter frac-
tions. This, in turn, would make possible and desirable higher levels
of consumption. Advances in internal combustion equipment would
demand higher levels of production for the industrial and transport
sectors of the economy.
In support of its position on the share of petroleum in the
Soviet fuel energy balance, Solodko's article stated that the cost
of 1 ton of standard fuel in petroleum was one-half that in coal
and that labor productivity in the petroleum industry was twice
that in the coal industry. Resort to purely economic considerations
for support in the problem suggests that the controversy involving
petroleum and solid fuels may be part of a larger problem, that of
allocating resources more in accordance with relative cost than has
been done in the past.
In determining policy, however, economic factors have often been
subordinated to sociopolitical considerations in the USSR. For example,
the drive to achieve regional autarchy resulted in many regions in an
arbitrary exclusion of petroleum supply and the substitution of local,
low-quality fuels -- often despite prohibitive costs. Economic
factors, therefore, may not be the decisive ones in determining the
share of petroleum in the fuel energy balance of the USSR.
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APPENDIX
SOURCE REFERENCES
Evaluations, following the classification entry and designated
"Eval.," have the following significance:
Source of Information
Information
Doc. - Documentary
1 - Confirmed by other sources
A - Completely reliable
2 - Probably true
B
- Usually reliable
3 - Possibly true
C
- Fairly reliable
4 - Doubtful
D
- Not usually reliable
5 - Probably false
E
- Not reliable
6 - Cannot be Judged
F
- Cannot be Judged
"Documentary" refers to original documents of foreign governments
and organizations; copies or translations of such documents by a staff
officer; or information extracted from such documents by a staff
officer, all of which may carry the field evaluation "Documentary."
Evaluations not otherwise designated are those appearing on the
cited document; those designated "RR" are by the author of this report.
No "RR" evaluation is given when the author agrees with the evaluation
on the cited document.
1. Solodko, A. "Protiv nedootsenki nefti i gaza v ekonomike
strany" (An Argument against the Underevaluation of Crude Oil
and Natural Gas in the Economy of the Country), Pravda, 14
May 55, p. 3, U. Eval. ER 2.
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2. Probst, A.Ye. Sotsialisticheskoye raz eshcheniye dobychi i
potrebleniya topliva v SSSR Soc_Lalis Distribution of
Production and Consumption of Fuel i the USSR), Moscow,
GosplarLizdat, 1950, p. 16, U. Eval. [RR 2.
3. Solodko; op. cit. (1, above).
LI. Eidel'man, M.P. Statistika material' o-tekhnicheskogo
snabzhceniya (Statistics of Material- echnical Supply),
Moscow, Gosstatizdat, 1953, p. 213, Eval. RR 2.
5. Ibid.
6. Koshele~r, F.P. Osnovnyye itogi vypoi eniya pervoy
poslevDyennoy stalinskoy pyatiletki (Principal Results of
the Fulfillment of the First Postwar Stalin Five Year Plan),
Moscow, Voyenizdat, 1951, p. 42, U. Eval. RR 2.
j. Zakon o pyatiletnem plane vosstariovle i a I razvitiya
narodnogo khozyaystva SSSR po 1S)46-1050 99. (The Law on
the Five Year Plan for the Restorati n and Development of
the NE,tional Economy of the USSR, 1946-1950), Gospolitizdat,
1946, p. 11, U. Eval. Doc.
8. Ibid., p. 17.
9. Ibid., p. 20.
10. Nikolwrevskiy, N.M. Ekonomika razra otki neftyanykh
mesto:,ozhdeniy (The Economics of E loiting Petroleum
Deposits , Moscow, Gostopizdat, 194, p. 128-131, U.
Eval. RR 2.
11. Probst, op. cit., p. 15-19, 39, 45-40, 59, 63, 128-129
(2, aoove).
12. CIA. FDD U-5249, 23 Dec 1953, "The aving of Mazut -- a
Most Important Task for the Nationa Economy," U/OFF USE.
Eval. RR 2. (tr of ed in Za ekonomi to lives, no 11, 1949,
p. 1-3, U. Eval. RR 2)
13. Pravda, 23 Aug 1953, U. Eval. liR 2.
14. CIA. FDD Summary, no 202, 10 Sep 54, "Data on USSR Petroleum
Industry," p. 2-3, C. Eval. RR 2. (tr from Avtonobil'naya i
traki;orna a pro shlennost' , n D. 1 , 1953)
15. CIA. CIA RR 54, Postwar Investment in Industry in the USSR,
11 Feb 55, P. 33, S.
16. Livsh:Lts, R.S. Ocherki po razm.eshc eni pro sh:Lennosti SSSR
(Essays on the Distribution of Ind stry in the USSR),
Gosp:)litizdat, 1954, P. 354, U. al. RR 2.
17. CIA/RR 54, op. cit., P. 37, 51 (15 above).
18. CIA. FDD translation, 28 Mar 55, R suits of 1954 and Tasks of
the Petroleum Industry for 1955, p. 1, 5, U OFF 'USE. Eval.
RR 2. (tr of N.K. Baybakov. Neft noye khozyaystvo, no 1,
Jan 55, P. 1-12)
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19.
20. Ibid., 3 Mar 55, p. CC-l, U/OFF USE. Eval. RR 2.
21. TBystreye razvivat' gazovuyu promyshlennost'" (Develop
the Gas Industry More Rapidly), Neftyanoye khozyaystvo, no
4, Apr 55, p. 1-4, U. Eval. RR 2.
22. Solodko, op. cit. (1, above).
23. Putnam, P.C. Energy in the Future, New York, 1953, fig 4-11,
p. 83, U. Eval. RR 1.
24. Interior, Bureau of Mines. Minerals Yearbook, 1952, vol. 2,
Washington, 1954, p. 1, U.
25. Pravda, 19 May 55, p. 2, U. Eval. RR 3. (Speech of
Khrushchev to the All-Union Conference of Industrial
26.
27. Bol'shaya sovetskaya entsiklopediya, 2d ed
1950, U. Eval. RR 1.
28. Livshits, op. cit., p. 355 (16, above).
29.
vol 4, p. 2
30. CIA. CIA/RR 54, ok. Cit., p. 34 (15, above).
31. Ibid., D. 22.
32.
33? Ibid., no 98, 19 May 55, p. CC-15, U/OFF USE. Eval. RR 1.
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 fGtz;POPTS
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PrG; jest s Control Staff
Control Sheet
Series Number CIA /RR IM-413
Date of Document 1 Aug 55
t: oP
1 AD/RR
, 122 St/PC file copies
97
117
118
1 19 - 122 Extras filed in StLPC__
19-, ug,_55.
~ ~.m-
25X1A9a 119 BLO/FDD.-_7k_
25X1A9a
25X1 C8e
25X1A9a
25X1A9a
2
25X1A9a
25X1 A9aJ O ..-
C1as.sifica.tion
Number of CopieE 142
Returned
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t-.t for ORR, Report, C 1A /RR IM-413
Rec pient
3r' pwy Director., ?nte?,.lic!ence
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