Foreign relations of the united states 1969–1976 volume XXXVII energy crisis, 1974–1980 department of state washington
R.W. Komer 2 2 Komer initialed “RWK” above this typed signature. 254. Memorandum From the Assistant Secretary of Energy for
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- Leslie J. Goldman
- 256. Telegram From the Department of State to All Diplomatic Posts
Komer initialed “RWK” above this typed signature.
254. Memorandum From the Assistant Secretary of Energy for
International Affairs (Goldman) to the Special Assistant to
the Secretary of Energy (Siemer)
Washington, January 8, 1980.
DOE Intelligence Requirements
Review of DOE’s requirements for intelligence on foreign energy
developments, and the Intelligence Community’s current ability to sat-
isfy these requirements, suggests three kinds of information we do not
now get which would be useful objectives of Department of Defense
interest. First, we need better information on tanker loadings and
movements. Second, detailed intelligence on foreign energy technology
programs generally is lacking. Third, more comprehensive nuclear pro-
Source: Department of Energy, Executive Secretariat Files, Job #8824, International
Affairs, 1/80. Secret.
796 Foreign Relations, 1969–1976, Volume XXXVII
liferation intelligence is essential. Additional thoughts on these three
needs are outlined below.
The Department of Energy requires additional, more detailed in-
formation on the movement of crude oil in world markets. As gov-
ernments and national oil companies have assumed more responsi-
bility for marketing and shipping, the quality and quantity of overt
information available to the US Government has declined. Many
oil-producing countries, including Iran, Saudi Arabia, Iraq, Libya and
the Soviet Union, now consider production and export statistics to be
“state secrets”, thus forcing DOE market analysts to rely on dated and
often incorrect “official numbers” to develop short-term forecasts of
supply and price. Moreover, in recent months the amount of crude oil
passing through the major international oil companies also has de-
clined, causing additional uncertainty. The DOD, and especially the US
Navy, might be in a position to provide independent and timely infor-
mation on oil tanker loadings, destinations, offloadings, shipping prob-
lems, and in-transit transactions.
It is important that the U.S. not be surprised by foreign techno-
logical developments in energy or energy-related fields. Community
reporting on the political and economic aspects of oil supply and
pricing generally is adequate. [8 lines not declassified] DOD assistance in
filling this disturbing gap in our energy intelligence capabilities would
enable the DOE International Energy Technology Assessment Program
to provide more complete and balanced studies in support of DOE pol-
icy development and program planning.
The wider use of nuclear technologies to meet national/interna-
tional energy demands, and the associated spread of various strategic
nuclear materials in both spent fuel and separated form will enable an
increasing number of countries to make nuclear and thermonuclear
weapons. The diffusion of this potential for nuclear weapons will im-
pact significantly on the criteria, procedures, and assessments involved
in nuclear-related export cases, the implementation and verification of
US bilateral technical agreements for nuclear cooperation, and the de-
velopment of US non-proliferation initiatives. The past limited role of
intelligence in providing a periodic watch of impending nuclear
weapon capabilities in certain countries is no longer adequate, but this
role must be expanded to provide a major input to national security
policy development, implementation and verification. DOD’s informa-
tion on the security concerns motivating nations to develop the capabil-
ity to produce nuclear weapons, and these countries’ technological
progress toward such capability, would be of particular use to DOE in
meeting our various non-proliferation responsibilities.
The DOE intelligence staff continues to work closely with the Intel-
ligence Community in defining and prioritizing collection, analysis
January 1979–January 1981 797
and production of energy related intelligence. However, energy intelli-
gence must compete for limited National Foreign Intelligence Program
resources with traditional military and political topics and, conse-
quently, does not have sufficiently high priorities to ensure adequate
attention. In addition to urging our friends in Defense to re-orient their
resources toward the three topics discussed above, I suggest that we so-
licit their support for DOE representation by Secretary Duncan on the
Policy Review Committee (Intelligence). Such representation, previ-
ously denied to Secretary Schlesinger by Admiral Turner, would pro-
vide a national-level forum for energy intelligence issues, thereby en-
abling DOE to influence the National Security Council guidance to the
Leslie J. Goldman
Goldman initialed “LJG” above this typed signature.
255. Editorial Note
From January 14 to 19, 1980, Edward Fried, a White House consul-
tant on international energy issues, conducted “exploratory talks” in
Paris, London, Bonn, Brussels, and Rome, with French, International
Energy Agency, British, European Community, German, and Italian of-
ficials on energy questions “with a view toward preparations” for the
Venice Summit in June and the IEA Ministerial meeting in March. Ger-
ald Rosen, Director of the Office of Fuels and Energy at the Department
of State, and John Treat, Deputy Assistant Secretary of Energy, accom-
panied him. (Telegram 7261 to Bonn, January 10; National Archives,
RG 59, Central Foreign Policy Files, D800018–0616) Discussion topics
included the outlook for the international oil market, the spot market,
import targets, stock policies, less developed countries, produc-
er-consumer dialogues, and other issues.
A summary of the delegation’s discussion with French officials on
January 14 is in telegram 1565 from Paris, January 15; with OECD Sec-
retary General Emile Van Lennep on January 14 in telegram 1107 from
Brussels, January 18; with IEA Executive Director Ulf Lantzke on Janu-
ary 15 in telegram 1107 from Brussels, January 18; with British officials
on January 16 in telegram 1189 from London, January 17; with EC offi-
cials on January 18 in telegram 1187 from Brussels, January 21; with
German officials on January 18 in telegrams 1288 and 1363 from Bonn,
798 Foreign Relations, 1969–1976, Volume XXXVII
January 22 and 23; and with Italian officials on January 19 in telegram
2119 from Rome, January 23. (All ibid., D800026–0247, D800031–0150,
D800029–0707, D800036–0487, D800038–0257, D800040–0056, D800039–
256. Telegram From the Department of State to All Diplomatic
Washington, January 24, 1980, 0936Z.
20298. Subject: Recent U.S. Energy Developments. Reftel: State
1. (Unclassified entire text)
2. This cable is the second in a series of reports on U.S. energy de-
velopments. (Reftel) It is a report of activities as of January 18.
3. Report on IEA Ministerial.
At the International Energy Agency (IEA) Ministerial meeting on
December 10, the major oil consuming nations took a significant step
toward stabilizing the world oil market by agreeing to control the level
of their oil imports. They set national oil import ceilings for 1980 and
agreed to establish a mechanism whereby the performance of each
country would be regularly monitored and the ceilings would be ad-
justed quarterly if necessary to take account of changes in the world oil
supply situation. This was an extension and reinforcement of target set-
ting process at the Tokyo Summit Meeting in June, 1979. (At Tokyo,
only the U.S., Japan, and Canada set national targets for 1980; the EC
Source: National Archives, RG 59, Central Foreign Policy Files, D800041–0694.
Unclassified; Priority. Drafted by A. Hegburg (DOE/IA) and Alan P. Larson (EB/ORF/
FSE), cleared in EUR/RPE, DOE/IA, AF/EPS, NEA/ECON, ARA/ECP, EA/RA, and
OES, and approved by Rosen.
In telegram 309970 to all diplomatic and consular posts, December 1, 1979, the De-
partment sent its “first of continuing, periodic reports on US energy developments.” The
reports were “intended to keep US Missions apprised of the latest developments, accom-
plishments, strategies and plans in the energy area.” The Department hoped that they
would “serve as a valuable information source to Ambassadors and senior Mission offi-
cials in informing host country officials of US progress in coping with energy problems.”
Telegram 309970 focused on “recent Congressional action on several of the President’s
energy initiatives,” including: 1) a windfall profits tax, 2) an energy mobilization board,
3) an energy security corporation, 4) solar energy, 5) energy conservation legislation, 6)
gasoline rationing, 7) assistance to low-income families, and 8) oil import quotas. (Ibid.,
See Document 251.
January 1979–January 1981 799
nations simply reaffirmed the EC group target established earlier at
The seven countries did set targets for 1985, but with vary-
ing degrees of commitment and specificity.)
—The 1980 ceilings of IEA nations total 24.5 million barrels per day
(MMB/D), including 1.4 MMB/D for bunkers. France, though not an
IEA member, was closely involved in this process through the EC. Due
to expected reductions in economic growth, and the demand restraint
and fuel switching effects of higher oil prices, there is a good chance
that the IEA nations will collectively import less than the sum of the
ceilings. The U.S. ceiling for 1980 is 8.5 MMB/D plus .4 MMB/D for the
—The IEA Ministerial also set national oil import goals for 1985.
The sum of these goals is 26.2 MMB/D. When bunkers are excluded the
collective goal becomes 24.6 MMB/D. This replaces the collective target
of 26 MMB/D (excluding bunkers) set in 1977. The U.S. goal for 1985 is
8.5 MMB/D for the 50 states, plus 0.4 MMB/D for territories.
—The Ministers also directed the IEA to develop an improved in-
formation system on stock movements and a system of consultation on
stock policies, and to consider additional measures leading to a more
coordinated approach to spot market activities.
4. US Energy Performance
—During the last several years the United States has instituted a
number of programs and policies aimed at reducing our dependence
on imported oil and our overall consumption of energy. The full effect
of these measures will take years to develop; however, results are al-
ready beginning to manifest themselves, in some cases dramatically, in
reducing our oil import and energy use. In the past we promised to
meet the energy challenge—we are meeting it as the preliminary data,
primarily for 1979, indicate.
—For example, on a 50-state basis in 1977, net imports averaged
8.6 million barrels per day (MMB/D) of oil. By 1978 we reduced that
level by nearly 600,000 B/D to about 8.0 MMB/D while 1979 levels are
expected to be 7.8 MMB/D.
—U.S. petroleum product consumption in 1979 was well over 2
percent below 1978. Preliminary data indicates that total energy con-
sumption was also less than in 1978. This occurred while U.S. GNP
grew at 2.3 percent in real terms in 1979. This represents a significant
change from the pre-1979 relationship between energy use and growth
—Our very positive contributions to reducing demand pressures
on the world oil market have not been limited simply to decreasing our
See footnote 4, Document 221.
800 Foreign Relations, 1969–1976, Volume XXXVII
oil imports, but include the overall performance in improving energy
efficiency in the major sectors of our economy.
—In the transportation sector gasoline demand during 1979 was
about 5 percent below that of 1978. Savings were due to a number of
factors including higher prices, fuel efficiency standards and voluntary
conservation. Our mandatory automobile fuel efficiency standards will
ensure continued progress in this area. The savings were greatest in the
second half of the year when shortages were not a constraint on
—We are also particularly pleased with the conservation perform-
ance of the U.S. industrial sector. Industry used about the same amount
of energy in 1978 as in 1973, in spite of economic growth and industrial
output increases during this period.
—In the residential/commercial sector our oil consumption be-
tween 1973 and 1979 has dropped by more than 200,000 B/D as a result
of higher fuel prices and government incentives for retrofitting existing
—Coal production in 1978 despite the prolonged strike was nearly
62 million tons above the 1973 level. In 1979 our coal consumption in-
creased by more than 10 percent over last year as a result of gov-
ernment policy requiring greater coal utilization for generating elec-
tricity and in direct industrial use.
—In 1978, our domestic production of crude oil was 8.7 MMB/D
largely due to our Alaskan North Slope fields reversing a long-term
decline in our oil production (when natural gas liquids (NGL) and
processing gains are included, total U.S. production was over 10.5
MMB/D). Overall there has been an increase in exploratory and pro-
duction work in the United States. As a measure of exploratory effort,
the number of seismic crews operating in the United States has in-
creased by 57 percent between 1973 and 1979. For production, the num-
ber of rotary rigs in operation in 1979 was almost double that of 1973.
—Domestic gas production appears more promising as a result of
pricing policies instituted by the U.S. Government; also the rate of de-
cline in reserves has been slowed down.
—Nuclear power continues to play an important role in our en-
ergy production providing an average of 12 percent of total domestic
electricity generation in 1979 compared with only 4.5 percent in 1973. In
pursuing nuclear power development we will continue to emphasize
safety in the operation of our nuclear plants.
—The commercialization and use of renewable energy and syn-
thetic fuels has been greatly enhanced by the initiatives proposed by
the President which are nearing final Congressional consideration. We
believe that these sources of energy will play an increasingly important
role in our energy future.
January 1979–January 1981 801
—At Tokyo the Summit countries agreed “on the importance of
keeping domestic oil prices at world market prices or raising them to
this level as soon as possible.” This is exactly what the US is doing.
Over one third of US oil production is now free of price controls and
this proportion will increase monthly until September 30, 1981, when
all domestically produced oil will be free of price controls.
—Even with price controls on part of US oil production, the differ-
ence between the price of imported oil and the composite or average re-
finer acquisition cost of crude oil has been much smaller than com-
monly realized. In 1978 this difference amounted to an average of $2.11
per barrel. The gap widened somewhat in 1979 as world prices rose
faster than domestic crude oil prices. In September 1979 (the last month
for which reliable figures are available) the composite price was 80 per-
cent of the price of imported oil. The percentage gap between import
prices and the average acquisition cost of crude oil to refineries will
narrow because each month a large percentage of domestic production
will be freed of price controls. By September 30, 1981 the gap will be
—With the exception of gasoline and propane, the retail prices of
major petroleum products have been decontrolled. In the case of gaso-
line, retailers are permitted to pass through fully all increases in
product costs. Refiners are permitted to pass through to gasoline re-
tailers 110 percent of the increased cost of crude oil used to produce
gasoline. Therefore, the ex tax prices of gasoline and other petroleum
products are almost the same in the US and Europe.
—Changes in prices can have as much or more influence on con-
sumer behavior than absolute levels. The percentage rise in the real
price of gasoline and home heating oil in the US since 1973 has been
greater than in major European countries.
5. Energy Legislation
The following developments have taken place in the energy legis-
lation reported in reftel:
A. Windfall profits tax
On December 17, the Senate completed action on its version of the
windfall profits tax legislation. On December 19, a House/Senate con-
ference committee began deliberations over resolving the differing pro-
visions in the separate versions passed by each body. In a major deci-
sion, the conferees agreed on a tax level of 228 billion dollars over ten
years and are now considering alternative tax regimes consistent with
this revenue target. The administration hopes that action on this bill
will be completed by the end of January.
B. Energy mobilization board
This measure is now before a joint House/Senate conference com-
mittee to resolve the differing versions.
802 Foreign Relations, 1969–1976, Volume XXXVII
C. Energy security corporation
This measure is also subject to conference committee
The Senate has already passed legislation providing $14 billion
over five years for solar and energy conservation. In the House there
are two bills under consideration, both of which provide for creation of
an energy bank to provide subsidized loans for residential and com-
mercial conservation. The bills differ, however, in two major respects:
—The Banking Committee bill provides for two separate banks,
one for solar and one for conservation, whereas the Interstate and For-
eign Commerce bill provides only for one bank;
—Only the Banking Committee version expands existing require-
ments that utilities provide energy audits for their customers.
To accelerate consideration of this legislation the House leadership
has agreed to let the House conferees consider solar and energy
conservation measures even though House action is not completed.
The conference is expected to begin discussion of these provisions
about February 1.
E. Gasoline rationing
The administration is preparing a standby gasoline rationing plan
under authority provided in the Emergency Energy Conservation Act
of November 5, 1979.
The plan would give the President authority to
impose an approved rationing plan at his discretion, if this is required
by a severe energy supply interruption or to comply with the obliga-
tion of the U.S. under the International Energy Program (i.e., the IEA oil
sharing program). The administration’s final plan will be submitted to
Congress; unless the plan is disapproved by joint resolution within 30
days, the plan is approved.
6. Mexican gas
The USG has also been working to enhance energy trade and coop-
eration with Mexico. The first contract negotiated under the framework
of the September 1979 U.S./Mexican agreement to facilitate the import
of Mexican natural gas
received final regulatory approval on Decem-
ber 28, 1979. This cleared the way for imports of 300 million cubic feet
per day of Mexican gas. This amount, about one half of one percent of
total U.S. consumption and 8 percent of U.S. natural gas imports, is the
The President signed the Emergency Energy Conservation Act, P.L. 96–102, also
known as the gas rationing bill, on November 5.
See footnote 4, Document 236.
January 1979–January 1981 803
equivalent of 50,000 barrels per day of crude oil imports. The price is
$3.625 per MMBTU with quarterly escalator based on a mix of world
7. International energy R and D cooperation
The U.S. continues to pursue an active program of international co-
operation in the development and commercialization of new or im-
proved energy technologies. The primary focus for our efforts is in the
International Energy Agency (IEA). We also conduct some bilateral,
and occasionally multilateral activities, though in most cases these are
complementary to or associated with our IEA efforts. The first meeting
of the International Energy Technology Group (IETG) was held in Paris
November 5 and DOE Under Secretary John Deutch was elected chair-
man. The IETG, growing out of a U.S. initiative at the Tokyo Summit,
will examine the need for international cooperation in the commercial-
ization of new technologies likely to be available in the mid-1980’s. The
Group’s report, to be issued in late March, will be considered at the
Significant steps in bilateral cooperation, primarily with Japan,
were taken during November and December. The most important of
these was Japanese agreement to participate in phase one of the SRC II
(Solvent Refined Coal II) liquefaction project as a quarter partner (the
same as Germany). The cost of the SRC II demonstration facility, to be
built near Morgantown, West Virginia, is now estimated at $1.3 billion.
The first meeting of the U.S.–Japan Fusion Coordinating Committee
was held November 8–9 in La Jolla, California, to review the progress
of joint research at the Doublet III Tokamak. The Japanese are contrib-
uting $50 million to upgrade the Doublet III facility.
A U.S.-Japanese high energy physics implementing agreement
was signed November 11 followed by a meeting which laid out an ex-
perimental program at various U.S. accelerator facilities. Japanese fi-
nancial participation will be some $5–7 million. High energy physics
cooperation is also being undertaken between the U.S. and the PRC.
Over 40 PRC scientists are now working in this field at U.S. accelerator
centers and universities. This is part of DOE’s agreement to collaborate
with the PRC in its effort to build the world’s fourth largest atomic par-
ticle accelerator outside Beijing and to begin contributing to research
into the fundamental properties of matter by 1985. The PRC also ex-
plored the possibility of collaboration with DOE in the field of mag-
Other significant recent bilateral activities include the visits of a
DOE alcohol team to Brazil to discuss possible areas of cooperation,
and a DOE coal team to Poland to review on-going cooperative activi-
ties in coal liquefaction.
804 Foreign Relations, 1969–1976, Volume XXXVII
8. Nuclear affairs
The 23rd IAEA General Conference met in New Delhi December
3–10 and provided an opportunity for numerous consultations on nu-
clear matters, particularly as the International Nuclear Fuel Cycle Eval-
uation (INFCE) is scheduled to be completed this February. The confer-
ence, in an unprecedented 46–29 vote (with 9 abstentions), rejected the
credentials of South Africa. The U.S. strongly opposed this action as in-
troducing political issues into the IAEA. This action does not affect
South Africa’s membership in the IAEA or the agreements under which
the IAEA applied non-proliferation safeguards with respect to certain
nuclear activities in South Africa.
The President has approved an amendment to the U.S.–IAEA
Agreement for Cooperation Concerning Peaceful Uses of Nuclear En-
ergy. The agreement incorporates new non-proliferation controls re-
quired by the Non-Proliferation Act of 1978. This agreement is the pri-
mary vehicle for U.S. peaceful nuclear cooperation with countries that
do not have bilateral agreements for cooperation with the U.S. The
amendment will soon be submitted to Congress, where it must lie for
60 days of continuous session before it may enter into force.
A U.S.–IAEA–Indonesia supply agreement was signed on Decem-
ber 7 in New Delhi. Under this agreement, the U.S. will supply 18.3 kgs.
of low enriched uranium for Indonesia’s Triga Mark II research reactor.
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