A confidential report "Oil" issued by the Ministry of Foreign Affairs of Japan in March, 1939 concludes Japan's future energy policy like this.
Chapter 17 Conclusion
As known according to the above, the oil industry has very unique points. First, the oil producing areas are extremely biased. Coal and the like are distributed all over the world but, on the contrary, oil is not produced at all in regions where it is not concentrated and produced locally in the world. Secondly, since petroleum is a liquid, it is more profitable to combine large areas into one without dividing one oil field. Third, the oil produced in the oil wells is cultivated from the nature, so the rise and fall is fierce. Mexico had an annual production of 15,300,000 tons around 1925, which was the second largest in the world, but today it is one-third of that time and has fallen to the seventh largest in the world. Fourth, because petroleum is a liquid, it requires a huge amount of money to store and transport. Due to these four properties, the oil business inevitably tends to be concentrated under large capital. However, because oil is military essential, it will eventually come under the state control.
Naturally, countries that have no choice but to import oil from abroad are in a very dangerous position. Overseas dependence of oil, especially for Japan, will result in overseas payments of hundreds of millions of yen in peacetime and, depending on the will of the world's largest oil producers, supply to Japan may be interrupted and this will be a fatal weakness in the war. Needless to say, it is necessary to give deep consideration to the future oil policy on this point.
As already mentioned, the oils that Japan has traditionally imported are mainly California oil from North America and the Dutch and British East Indies. It is impossible to import Soviet oil for a long time in the future because the former Soviet-Japanese oil import business was only the result of temporary dumping by Soviet's national policy. Also, Mexican and Venezuelan oils are not realistic even if they could supply enough capacity because of the high rate of tolls on the Panama Canal and long-distance freight. The possibility of oil imports from Iraq and Arabic region is not realistic yet. Therefore, our future choice for supply will still be North American California oil and East Indian oil. But how this makes import difficult during the war is as discussed in the previous chapter. Then, what kind of measures should Japan take?
Of course, we must think that there is nothing that can be considered in response to this other than the policies that Japan is actually taking and that each country is taking. In other words, they are none others than these
1. Development of domestic oil fields
2. Development of artificial oil industry from coal
3. Positive use of coal and diluted gasoline with alcohol
The two countries of Britain and France depend on foreign oil, which is completely different from ours. These two countries own oil sources within their territory or within their interests and have a powerful navy. Even if a war may break out, they are ready to respond. The situation is completely different from the fact that our oil source relies on Britain and the United States. Even if our navy is as reliable as the British and French fleets, their difficulty to protect imports from within their own interests is different from our difficulty to protect imports from oil sources under the siege of the enemy. It is easy to guess how big the difference is.
France relies on the oil storage policy and stores oil in peacetime. Japan's oil industry law imitates this but in reality each oil company is suffering that there is a limit to oil storage and the cost is enormous. Heavy oil is cheap in price and can withstand storage, so it is better to take possession and rely on storage policy but, in the case of volatile oil for airplanes and automobiles, it is difficult to withstand long-term storage.
Of course, the use of alcohol and coal as an auxiliary means is merely an auxiliary means, so it is unlikely that it will be useful for the fundamental solution of the oil problem.
After all, the Autarkie must be the only oil policy left behind by the development of less dense oil fields and the promotion of the development of the artificial oil industry. As discussed in Chapter 12 Section 8 Japan, there are not a few promising oil-impregnated areas in Japan.
On October 14, 1937, the Fuel National Policy Study Group proposed emergency measures about the domestic oil resource development and the government is going to invest 300 million yen to increase 1.6 million tons of oil production in five years as a five-year continuous project. This is just right as fortunately coal is not scarce in our country. Also, if we develop the undeveloped coal fields in Manchuria, Sakhalin and North China for the artificial oil production, self-sufficiency will not necessarily be impossible. The Planning Institute's production capacity expansion plan for the coming 1941 will also be aimed at reaching that point ultimately.
The above mentioned is limited to the problem domestically (or through Japan, Manchuria and China) but it will be necessary to consider Japan's southward policy too. Of course, the construction of the East Asian New Order is a great project but, in order to achieve that big project, there must be enough materials to meet its spirit. Manchuria, North and Central China could often produce them. Albeit scarce in petroleum resources, rich coal will facilitate the production of artificial oil. Moreover, the colony must be to the south. Mankind can follow the culture in the temperate zone and the material basis for this culture is in the tropics. A nation that does not control the tropics lacks all its resources. Therefore, Japan should turn its eyes to the south for the completion of the East Asian Community. Of course, this does not necessarily mean that the Dutch East Indies and Borneo should be occupied by force. Moreover, as suppliers of oil, rubber and other tropical resources, we should not forget that these regions are also part of Asia.
Source: 石油 - NDL Digital Collections
Chapter 17 Conclusion
As known according to the above, the oil industry has very unique points. First, the oil producing areas are extremely biased. Coal and the like are distributed all over the world but, on the contrary, oil is not produced at all in regions where it is not concentrated and produced locally in the world. Secondly, since petroleum is a liquid, it is more profitable to combine large areas into one without dividing one oil field. Third, the oil produced in the oil wells is cultivated from the nature, so the rise and fall is fierce. Mexico had an annual production of 15,300,000 tons around 1925, which was the second largest in the world, but today it is one-third of that time and has fallen to the seventh largest in the world. Fourth, because petroleum is a liquid, it requires a huge amount of money to store and transport. Due to these four properties, the oil business inevitably tends to be concentrated under large capital. However, because oil is military essential, it will eventually come under the state control.
Naturally, countries that have no choice but to import oil from abroad are in a very dangerous position. Overseas dependence of oil, especially for Japan, will result in overseas payments of hundreds of millions of yen in peacetime and, depending on the will of the world's largest oil producers, supply to Japan may be interrupted and this will be a fatal weakness in the war. Needless to say, it is necessary to give deep consideration to the future oil policy on this point.
As already mentioned, the oils that Japan has traditionally imported are mainly California oil from North America and the Dutch and British East Indies. It is impossible to import Soviet oil for a long time in the future because the former Soviet-Japanese oil import business was only the result of temporary dumping by Soviet's national policy. Also, Mexican and Venezuelan oils are not realistic even if they could supply enough capacity because of the high rate of tolls on the Panama Canal and long-distance freight. The possibility of oil imports from Iraq and Arabic region is not realistic yet. Therefore, our future choice for supply will still be North American California oil and East Indian oil. But how this makes import difficult during the war is as discussed in the previous chapter. Then, what kind of measures should Japan take?
Of course, we must think that there is nothing that can be considered in response to this other than the policies that Japan is actually taking and that each country is taking. In other words, they are none others than these
1. Development of domestic oil fields
2. Development of artificial oil industry from coal
3. Positive use of coal and diluted gasoline with alcohol
The two countries of Britain and France depend on foreign oil, which is completely different from ours. These two countries own oil sources within their territory or within their interests and have a powerful navy. Even if a war may break out, they are ready to respond. The situation is completely different from the fact that our oil source relies on Britain and the United States. Even if our navy is as reliable as the British and French fleets, their difficulty to protect imports from within their own interests is different from our difficulty to protect imports from oil sources under the siege of the enemy. It is easy to guess how big the difference is.
France relies on the oil storage policy and stores oil in peacetime. Japan's oil industry law imitates this but in reality each oil company is suffering that there is a limit to oil storage and the cost is enormous. Heavy oil is cheap in price and can withstand storage, so it is better to take possession and rely on storage policy but, in the case of volatile oil for airplanes and automobiles, it is difficult to withstand long-term storage.
Of course, the use of alcohol and coal as an auxiliary means is merely an auxiliary means, so it is unlikely that it will be useful for the fundamental solution of the oil problem.
After all, the Autarkie must be the only oil policy left behind by the development of less dense oil fields and the promotion of the development of the artificial oil industry. As discussed in Chapter 12 Section 8 Japan, there are not a few promising oil-impregnated areas in Japan.
On October 14, 1937, the Fuel National Policy Study Group proposed emergency measures about the domestic oil resource development and the government is going to invest 300 million yen to increase 1.6 million tons of oil production in five years as a five-year continuous project. This is just right as fortunately coal is not scarce in our country. Also, if we develop the undeveloped coal fields in Manchuria, Sakhalin and North China for the artificial oil production, self-sufficiency will not necessarily be impossible. The Planning Institute's production capacity expansion plan for the coming 1941 will also be aimed at reaching that point ultimately.
The above mentioned is limited to the problem domestically (or through Japan, Manchuria and China) but it will be necessary to consider Japan's southward policy too. Of course, the construction of the East Asian New Order is a great project but, in order to achieve that big project, there must be enough materials to meet its spirit. Manchuria, North and Central China could often produce them. Albeit scarce in petroleum resources, rich coal will facilitate the production of artificial oil. Moreover, the colony must be to the south. Mankind can follow the culture in the temperate zone and the material basis for this culture is in the tropics. A nation that does not control the tropics lacks all its resources. Therefore, Japan should turn its eyes to the south for the completion of the East Asian Community. Of course, this does not necessarily mean that the Dutch East Indies and Borneo should be occupied by force. Moreover, as suppliers of oil, rubber and other tropical resources, we should not forget that these regions are also part of Asia.
Source: 石油 - NDL Digital Collections
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) Treaty". 
) then Japan's own moderate industrial capacity doesn't appear so inadequate as it otherwise did.
