1180 
This does not sit much better with socialist than with capitalist, or mixed, na- 
tional governments and casts an added aura of doubt about the United Nations 
and its bodies, which was not needed. 
The Pell Treaty calls for the establishment of a Licensing Authority; the 
Danzig Treaty, for a Specialized Agency, Authority, or Ocean Agency; the 
Borghese Treaty for an elaborate Ocean Government of Executive, Legislative, 
and Judicial Character; the Hichelberger (Commission to Study the Organiza- 
tion of Peace) recommendations include the establishment of an International 
Authority for the Sea; the Auerbach recommendations include those for an 
International Registry and an International Fund. Each contemplates a con- 
siderable new machinery of government in the international field, not to grow 
with need out of established international machinery, but as new creations to 
perform new duties not now being carried out. 
None of these persons or organizations appear to have attempted to calculate 
the amount of new money that will be needed to run the new machinery. They 
have rather naively assumed that it will come from the normal national sources: 
now supporting international activities, or from the sea by taxing newly the use 
of the resources of the sea. 
If it is going to come out of national treasuries by traditional means it appears: 
obvious that other useful activities of the United Nations will require to be 
curtailed, because national legislative bodies in all parts of the world are 
becoming increasingly reluctant to provide added funds to the United Nations 
and its specialized agencies. 
If it is going to come as new revenue from taxes on new ocean-based industry 
two things may be said: 
(a) These will be taxes on the operations of national companies which 
‘will not come into national treasuries, and the number of nations who are 
likely to vote for such a thing in the General Assembly are not many; and 
(6) These will be added financial burdens on new industry in the ocean, 
further decreasing its competitive ability against land industry, and thus 
delaying further the initiation of new use of ocean resources. 
Because of the presumed (but not evident) great mineral wealth of the seabed 
all of these schemes are aimed first, and most heavily, at mineral wealth, but 
all of them either directly or indirectly assume functions respecting living 
resources. The difficulties that would arise from such new taxation schemes: 
ean be summarized as follows: 
(a) Petroleum resources have been, to date, the spectacular providers of new 
income from the sea to governments, chiefly arising from bids for rights to drill 
on the United States Continental Shelf. Practical extraction of oil from the 
seabed is now limited to somewhat less than water depths of 200 meters. Drilling 
and extraction under greater depths is technologically feasible now, but not 
economically feasible. The economics of the oil industry are too complex for an 
outsider to fathom, but the fact that production is not moving deeper backs up the: 
statements by oil people that not only have economic levels been reached, but 
that the oil companies presently using seabed resources have not got that produc- 
tion, even, to a profitable level. 
The people who informed Ambassador Pardo about the billions of dollars of 
profit available for picking up on the seabed appear to have reasoned from this. 
syllogism: The United States has collected a few billion dollars from its petro- 
leum people for rights to drill on its continental shelf; there is petroleum and 
other resources beyond the 200 meter isobath or 50 mile from land (whichever 
is greater) limit; therefore the revenue which an international agency could 
collect for rights to drill or mine out beyond that limit could run into many 
billions of dollars:per year net profit. 
This syllogism conveniently overlooks some vital facts, among which are: 
1. The United States petroleum business is protected by tax allowances and 
quota provisions in this enormous market to the extent that crude sells here 
for about twice the world price (roughly $3.00 versus $1.50 per barrel). This. 
enables it to pay the United States Government these phenomenal costs for the 
right to drill on its Outer Continental Shelf. These screw-ball economies do not 
obtain for other petroleum production outside the U.S. customs area, and are 
not necessarily a permanent condition here (24). 
2. The cost of drilling production wells for petroleum goes up exponentially 
with depth of water (25) and that is why production lags so far behind explora- 
tion as to water depth. New technology presently in sight, but not yet applied, 
does not mitigate this problem much. Cost goes up with depth of water. At the 
