Foreign relations of the united states 1969–1976 volume XXXVII energy crisis, 1974–1980 department of state washington
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- Ingersoll 365-608/428-S/80010 298 Foreign Relations, 1969–1976, Volume XXXVII 88.
October 14. That evening Algeria submitted a paper, which the U.S. delegation
called “unhelpful,” for tabling the next day. The paper contained suggested guidelines
for the commissions as proposed by the group of seven OPEC/LDC countries. The text of
the paper was transmitted in telegram 26677 from Paris, October 15. (National Archives,
RG 59, Central Foreign Policy Files, D750357–0032)
Telegram 26806 from Paris, October 16. (Ibid.)
The Rising Price of Oil,
October 1975–January 1977
Moscow, October 20, 1975, 1216Z.
15002. Subject: Paris–Moscow Developments. Dept Pass USDel
Secretary. From Under Secretary Robinson. Ref: A. Moscow 15000; B.
State 248482; C. Secto 16028.
1. As reported reftel A we finally signed documents on grain
agreement and oil letter of intent in accordance instructions reftel B. We
have fought lengthy and aggressive battle here in Moscow to achieve
your price objectives and sincerely regret we were unsuccessful in this
However I believe that as result of your initiative commencing
in July we have achieved in agreements signed today important ben-
Source: National Archives, RG 59, Central Foreign Policy Files, P840083–1118. Se-
cret; Immediate; Nodis; Cherokee.
In telegram 15000 from Moscow, October 20, Robinson reported the signature of a
grain agreement and a letter of intent for an oil agreement with the Soviet Union, known
as the “barrels-for-bushels” deal. In telegram 248482 to Moscow, October 18, the Depart-
ment authorized signature of the agreements. And in telegram Secto 16028 from Tokyo,
October 18, Kissinger instructed Robinson and Enders to begin preparing papers for the
November Economic Summit in Rambouillet, France, and the December Ministerial
producer-consumer conference in Paris. All are ibid., P850012–2398, P840178–2480, and
D750362–0831. Kissinger was in Tokyo en route to Beijing.
The U.S. negotiators in Moscow, led by Under Secretary Robinson, hoped to “ex-
tract from the Soviets a major oil price discount,” which would be “of use publicly in the
U.S” as a “demonstration of the concessions obtained” through the use of “agro-power.”
Rush reported that Robinson told him: “The Soviets are not anxious to sell us oil in the
first place, since they already have export commitments. They are even less anxious to
sell oil at a highly concessional price, because they can readily obtain world market prices
from other countries.” (Telegram 26519 from Paris, October 12; ibid., D750355–0268) At
one point, the U.S. position included a “demand” for a “straight 15 percent discount” on
Soviet oil. (Telegram 26555 from Paris, October 14; ibid., P840083–0974) According to
French sources, Robinson’s Soviet counterpart in the negotiations had been “visibly dis-
turbed” by this request. (Telegram 15052 from Moscow, October 20; ibid., D750364–0388)
Consequently, Robinson proposed returning to an earlier approach, using a different and
less open price discount, which had previously produced tentative acceptance from the
Soviet side. (Telegram 26555 from Paris, October 14; ibid.)
294 Foreign Relations, 1969–1976, Volume XXXVII
efits for the American public, farmers and maritime interests.
more, although we may have bent de´tente somewhat through our ag-
gressive efforts to achieve Soviet acknowledgment of oil price discount,
we can recover from this. Further negotiations leading to a second-
stage oil agreement calling for transfer of advanced U.S. technology
and equipment to expand oil production from existing Soviet facilities
could prove beneficial to both sides in this effort. Our challenge will be
to continue to signal U.S. agri-power and at same time develop new
economic dimensions with the Soviets, thus further strengthening
2. I am pleased with the final results at Prepcon II in Paris
was threatened at one stage with confrontation and breakdown a` la
Paris in April. However as result of U.S. leadership this was avoided
and we established what I believe is sound basis for constructive dia-
logue. Your initiative in this effort was fully credited and the French
have acknowledged to me their appreciation for this initiative and the
U.S. leadership which resulted in successful conclusion Prepcon II. I am
in full accord with you (reftel C) that we must carefully plan for
Prepcon III or Ministerial meeting of the Conference on International
Economic Cooperation (CIEC) now scheduled commence December
16. My office will assume responsibility for coordinating this effort and
I will cable them today regarding my view of an overall plan for the De-
cember 16 meeting.
3. I also believe it is important that my office assume coordinating
responsibility in developing our position for the Economic Summit. I
depart Moscow today October 20 for Paris to participate in a three-day
session of the OECD Executive Committee meeting in special session
and therefore will not be back in Washington until Friday afternoon
October 24. However I am cabling my office today outlining sugges-
tions for the Economic Summit and requesting that they work closely
with S/P and EB in preparing message to be sent you Thursday Tokyo
The letter of intent provided that: 1) the Soviet Union would offer to sell 10 million
metric tons of crude oil and petroleum products annually to the United States; 2) the U.S.
Government could purchase the oil for its own use or U.S. firms could purchase it; 3) 70
percent of what the Soviet Union sold would be crude, and the rest would be products;
4) some portion of the crude or products would be shipped to the United States, “partly
in tankers used to transport grain from the United States to the Soviet Union”; 5) some
portion of the crude or products could be delivered to “Europe or other agreed marketing
areas”; and 6) the prices of crude and products would be “mutually agreed at a level
which will assure the interests of both the Government of the United States and the Gov-
ernment of the Union of Soviet Socialist Republics.” (Telegram 15048 from Moscow, Oc-
tober 20; ibid., D750363–0939)
See Document 85.
Telegram 15047 from Moscow, October 20. (National Archives, RG 59, Central
Foreign Policy Files, D750368–0761)
October 1975–January 1977 295
accordance with instructions reftel C.
4. I welcome the suggestion reftel C that once I have returned to
Washington I plan to remain for time required to complete objectives
paras 2 and 3 above. This is essential if I am to fulfill my commitment to
provide you with effective coordination of U.S. international economic
October 23. See Document 87.
Telegram From the Department of State to Secretary of State
Kissinger in Tokyo
Washington, October 23, 1975, 0122Z.
Tosec 160270/251836. Subject: Strategy Paper for Summit. Refer-
ence: Secto 16028.
Paris for Robinson, Eyes Only, exclusively.
1. Following is strategy paper for Summit which has been devel-
oped with Hartman, S/P and Hormats. I am sending this simulta-
neously to Chuck Robinson in Paris who may comment directly.
Hormats is working on a scenario paper and draft communique´ for
[Omitted here are paragraphs unrelated to energy.]
105. Our underlying objectives are (A) to reduce the OPEC manip-
ulation of price and supply, and thus (B) to restore the independence of
action of industrial countries under US leadership.
State of Play:
106. Deadlock with the Congress has undercut our leadership on
most energy issues.
107. In the absence of an effective U.S. lead few countries have
taken more than perfunctory action on conservation (Britain, Germany
Source: National Archives, RG 59, Central Foreign Policy Files, D750367–0849. Se-
cret; Immediate; Stadis. Drafted by Enders, Boeker, and Preeg and approved by Enders.
Repeated Immediate to Paris.
See footnote 2, Document 86.
296 Foreign Relations, 1969–1976, Volume XXXVII
and France have the best program), or on alternative supplies (nuclear
is lagging in all countries, and government policies on petroleum and
gas pricing and taxes inhibit development in Canada and Britain as
well as the U.S.).
108. Despite this weakness, fewer industrial countries now think
that the solution can be found in negotiations with the producers than
did six months ago. This is because of repeated evidence at Prepcons I
and II of producer reluctance to negotiate on oil prices, combined with
repeated failure in IEA exercises to identify multilateral oil deals that
would be both in our interest and negotiable. The best we could get,
most people reason, is the current price indexed. That would provide
protection against an eventual increase in the real price, but the future
is so uncertain that most countries are not interested in committing
themselves. Only France seems at this moment to retain interest in an
oil commodity agreement.
109. The latest OPEC price increase
was taken lying down by the
Europeans, but it has stiffened the Japanese, who now talk of taking a
firmer line with the producers.
110. With this conjuncture, chances now are fair that the IEA will
adopt its Long Term Program on December 1, with a minimum safe-
guard price at about $7 a barrel.
Canada (worried about having to
soften its nationalistic stand on foreign access to Canadian energy), Ja-
pan (worried about Diet reaction to MSP) and France (which sympa-
thizes with the MSP concept but wants to preempt any IEA action and
is trying to get the EC to block action) each presents a problem. But all
of these resistances seem to be reducible as of this point (October 22).
111. The United States also has a major possible action open to it
between now and the Summit. Conferees are now working to finish the
Congressional alternative to the Ford energy program. The emerging
bill will have most of the provisions we want, except oil decontrol. By
law, oil price controls come off November 15. Congress is pledged to
complete action beforehand. The President can thus go to the Summit
with an agreed bill, the best he can get but with a low conservation con-
tent. Or he can veto or plan to veto the House–Senate bill. The Presi-
dent’s willingness to face the unpopularity of a veto on oil price decon-
trols is his most important energy card vis-a`-vis the Europeans and
112. In their new tough mood, the Japanese are talking about using
the Summit to “complete consumer solidarity” (i.e., bring the French
into IEA). We have, however, no indication from Paris that this would
See footnote 4, Document 82.
See Document 90.
October 1975–January 1977 297
be feasible; if anything the Gaullists are even more opposed to member-
ship now than last year, when they won a Cabinet debate on the
113. The most important thing is that the President will have made
up his mind on oil decontrol by the time he leaves for the Summit. Fur-
ther uncertainty on this issue—the key to the administration’s energy
policy—would be destructive. This is particularly true since the Presi-
dent is scheduled to lead off on energy. The Europeans and Japanese
will be nervous about an energy policy by veto. But even with decon-
trol by veto, the US would recover some of its lost prestige in energy.
The President has enough strength to sustain a veto, provided he gives
some or all of the $2 import fee.
114. With such a base, the Summit can give a sense of direction on
two issues: Negotiations with the producers and reduced dependence.
On the first it would be worthwhile talking through the issue: The dam-
aging economic and political effects of high oil prices; the relative unat-
tractiveness of indexation (it gives you protection against real price in-
creases, but ratifies cartel gains and exposes political leaders to charges
they are conspiring with producers to put prices up, and makes cartel
management easier); the unlikelihood of obtaining a cut in prices, and
therefore the difficulty of attempting to negotiate prices with the pro-
ducers. On that basis, we are forced back on what we can do within our
own borders. The Summit should recommit IEA members and France
to lessened dependency.
115. There is likely to be little advantage, and much potential mis-
chief, in following the Japanese idea of trying to get France in the
IEA. Giscard has no internal political base for such a move, even if he
wanted to make it. Attempts to negotiate with France now would only
delay the Long Term Program, and demoralize the agency. The Japa-
nese should be turned off in advance.
298 Foreign Relations, 1969–1976, Volume XXXVII
Minutes of the Rambouillet Economic Summit Meeting
Rambouillet, November 16, 1975, 4 p.m.
Energy, Raw Materials, and Development
President Giscard: I turn the floor over to President Ford, who will
begin the discussion of energy.
President Ford: Strong domestic energy programs are absolutely
critical. As the largest consumer of energy, the United States is deter-
mined to be in the forefront in conserving energy and developing new
supplies. We have defined our short and long term energy objectives
and reorganized our government machinery to achieve them. Our goal
is to dramatically increase all domestic energy sources, decrease de-
mand, and cut oil imports sharply. Our target is to hold our imports of
oil in 1985 to a level 10 MMBD below what they otherwise would have
been. Conservation will account for half of this massive import reduc-
tion; new domestic supplies for the remainder.
The achievement of these objectives will require a tough, compre-
hensive national program of energy conservation and accelerated en-
ergy production. I submitted such a program to the Congress in Jan-
been slower than we had hoped.
The Congress is now in the final stage of completing a comprehen-
sive legislative package on energy. This legislation does not cover fully
the proposals I made in January. In some areas, it would provide a
good basis for a serious national energy program, including conser-
vation. In other areas, however, such as the domestic pricing provi-
sions, it falls short of what I had proposed. We have made significant
legislative progress, but we still have a long way to go.
The new energy bill has some attractive features. It would provide
many elements for a medium term mandatory energy conservation in
the United States. For example, it would impose new automobile effi-
ciency standards; it would create new incentives for more efficient use
of energy in private industry; it would establish efficiency labelling re-
quirements for electrical appliances; and it would create a new pro-
Source: Ford Library, National Security Adviser, Memoranda of Conversations,
Box 16. Secret; Nodis. This is the record of the third session of the Economic Summit held
November 15–17 in the Chateau de Rambouillet, about 30 miles outside of Paris. The
memoranda of conversation of the first, second, and fourth sessions, which took place on
November 15, November 16 at 10:45 a.m., and November 17 at 10 a.m., respectively, are
ibid. All the memoranda of conversation are printed in Foreign Relations, 1969–1976,
volume XXXI, Foreign Economic Policy, 1973–1976, Documents 122–125. A list of partici-
pants at the Summit is in the memorandum of conversation of the first session.
See footnote 3, Document 33.
October 1975–January 1977 299
gram under which individual states will be encouraged to develop
their own energy conservation programs.
At the same time, this energy bill could substantially strengthen
our ability to withstand any future embargo. It would provide me with
the authority I need to impose mandatory restraints on energy con-
sumption in a crisis and take the other emergency measures necessary
to implement the IEP oil sharing agreement. In addition, the legislation
would authorize the creation of a large, new emergency oil stockpile.
We would be able to initiate promptly a strategic storage program of
150 million barrels, with an eventual target of one billion barrels.
However, the provisions of the new bill dealing with domestic oil
prices are less satisfactory. The question of price decontrol has been
perhaps the most controversial issue in our domestic debate over the
past year. I strongly advocated the removal of artificial price controls
on our domestic oil out of conviction that these prices should reflect ac-
tual market value. Others have wished to defer any decision on the fu-
ture of price controls, arguing that the economic impact of decontrol
would be unacceptably harsh. The bill contains a proposed compro-
mise on this key issue. The composite domestic oil price would be
rolled from $8.75 per barrel at present to $7.66 in 1976 and then allowed
to increase gradually with eventual full decontrol after 40 months. The
pace of decontrol is much slower than I would have liked. Because of
less than completely satisfactory pricing provisions, but other very de-
sirable elements, I will carefully review this bill after it is completed be-
fore making a final decision.
I should stress our conservation effort over the past year, even
without the new program, has produced substantial results. As a result
of higher prices and increased public awareness of the need for con-
servation, the US is using one million B/D less of imported oil than
would otherwise be the case. This saving, which has already been ad-
justed to remove the effects of the economic slowdown and bad
weather, translates directly into reduced demand for oil imports. These
savings will continue to grow.
We also initiated a voluntary automobile fuel economy program to
ensure that automobile manufacturers increase by 40% the efficiency of
their vehicles by 1980. This program will lead to an import savings of
two MMBD by 1985. In the 1976 model year alone, a 17% increase has
been achieved. In addition, we have undertaken major programs to ex-
pand the use of coal in place of oil and gas in existing power plants and
to encourage construction of new power plants for electrical generation
that do not depend on imported oil. To stimulate development of new
supplies, we are:
—Moving rapidly forward to complete a pipeline to begin moving
Alaskan oil to markets in the lower 48 states by 1978.
300 Foreign Relations, 1969–1976, Volume XXXVII
—Accelerating the leasing of frontier OCS areas.
—Seeking authorization for a $100 billion Energy Independence
Agency to provide financial support for new energy projects.
—Working with Congress to complete action on an $11 billion syn-
thetic fuels program to complement our unprecedented research and
development effort and make commercial production of synthetic fuels
—Actively encouraging construction of a fourth uranium enrich-
ment facility by private interests to enable us to achieve our ambitious
targets for nuclear power and ensure that we meet our commitments to
provide enrichment services to foreign purchasers; and
—Expecting early congressional authorization to open up our sub-
stantial Naval petroleum reserves for exploration and development.
These actions will bring on millions of barrels of additional do-
mestic oil supplies during the coming years. I am also pressing
Congress to end price controls on domestically-produced new natural
gas, and the Senate has already voted to do so.
I am convinced that these and other new measures that make up
our comprehensive program will enable us to achieve our energy objec-
tives. I am fully committed to their realization, and I am convinced that
the American people will support me in this effort.
While recognizing the preeminence of national programs in
meeting the energy challenge, we have all participated in varying de-
grees in cooperation and collaboration among ourselves and with other
major oil consuming countries. Our bilateral consultations have been
extensive and productive. We have joined together in the OECD’s Fi-
nancial Support Fund to protect against destabilizing movement of
OPEC assets. Some of us have agreed to an oil sharing arrangement in
the event of a new embargo and supply disruption. We attach particu-
lar importance to this achievement.
After months of negotiation, those countries that have chosen
closer collaboration are nearing agreement on concrete measures to im-
plement their commitment to long term cooperation. The package of
—Review and comparison of members’ conservation programs to
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