Foreign Relations of the United States, 1969–1976, Volume XXXVII, Energy Crisis, 1974–1980

118. Briefing Memorandum From the Assistant Secretary of State for Economic and Business Affairs (Katz) to the Under Secretary of State for Economic Affairs-Designate (Cooper)¹

Washington, February 24, 1977.

SUBJECT

• Status of NSSM 237 on US International Energy Policy

The original NSSM request² called for a review of international energy policy in order to help develop measures to ensure a reliable supply of required energy imports at reasonable prices over the next five years. At a review by principals on July 14,³ it was decided to expand the NSSM’s scope and economic analysis.

A revised draft⁴ was prepared and went through a round of inter-agency consultation, prior to the November election. A new draft was then completed but not circulated⁵ since it treated long-range issues not requiring immediate attention by the outgoing administration.

The NSSM draft comprehensively analyzes our supply and price vulnerability, our collective vulnerability with other major consuming countries, likely future supply/demand/price paths, internal OPEC dynamics, and the impact of the energy crisis on non-oil LDCs. It concludes that, in the absence of new energy measures domestically and by other major consuming countries, our shared vulnerability will increase over the next decade, and we will face substantial upside price risk. The NSSM evaluates numerous possible policy actions and singles out several areas for attention by principals: the essentiality of a strong domestic energy program to undergird our international energy policy; the need for US leadership in the IEA’s reduced dependence exercise;⁶ the desirability of tactfully assisting Mexican oil development; the need to examine seriously the Saudi surplus asset question as well as the issue of an oil price agreement; the effect of energy technology assistance and political risk guarantees on LDC energy development; and specific energy issues related to CIEC. All of these issues are now being addressed in either the PRM on North/South issues or the one on the Economic Summit.

There was general interagency agreement on the analytical work in the NSSM but considerable divergence as to appropriate policy responses. These differences were particularly pronounced regarding aspects of the IEA reduced dependence exercise, the Saudi assistance, and the need for new domestic actions other than price decontrol. Some of these differences disappeared with the change of Administrations; others will, as mentioned, be resolved in the PRM context.

1. Source: National Archives, RG 59, S/S Files: Lot 80D212, NSSM 237. Confidential. Drafted by Bullen and cleared by Bosworth, Creekmore, and Richard R. Martin (EB/ORF/FSE).
2. Document 93.
3. See Document 99 and footnote 4 thereto.
4. See Document 104.
5. Not found.
6. See footnote 2, Document 100 and Document 105.