The President has directed that an assessment be made of the
vulnerability of the United States to disruptions in world petroleum
supply.2 This memorandum confirms the interagency
effort underway to accomplish this task and establishes the terms of
reference for the assessment.
The assessment should be focused on the period between now and 1985.
The assessment will be submitted for consideration by the Special
Coordination Committee.3 In accordance with the attached
terms of reference (Tab A), the Departments of State and Defense will
chair working groups composed of members from the interested agencies.
The Department of State will submit its report to the National Security
Council by September 2, 1977; the Department of Defense by September 9,
1977.
Tab A
PETROLEUM SUPPLY VULNERABILITY ASSESSMENT
Terms of Reference
Objectives
1. To identify and assess the vulnerability of the United States and
its allies to petroleum supply interruptions and substantial price
increases.
2. To identify the petroleum supply disruption and substantial price
increase contingencies for which the United States should be
prepared.
3. To identify and assess the policy options available to the United
States to reduce its vulnerability to petroleum supply disruptions
and substantial price increases and to cope with these contingencies
should they occur.
Specific Issues to be Addressed
A. International Energy Analysis (Chaired by
the Department of State)
—World petroleum market analysis by country to identify the range of
supply and demand estimates and assess their validity with special
emphasis on the dependence on foreign sources of the United States,
the Soviet Union, and the advanced industrial economies.
—Analysis of the vulnerability of the world petroleum supply system
to interdiction, including acts of terrorism, acts of nature, and
premeditated political, economic, or military action.
—Analysis of possible supply disruption scenarios to include those
that would be most stringent and those that are most probable;
determination of the implications for supply disruptions of
potential
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political
discontinuities such as sudden changes of regime or government in
important OPEC/OAPEC
countries.
—Analysis of the probability and impact of sudden substantial
petroleum price increases precipitated by OPEC/OAPEC action, both in times of normal supply
conditions and in times of a supply interruption.
—Analysis of options available to the United States acting alone, and
the United States in conjunction with its allies, to deter supply
interruptions and substantial price increases, and cope with and
overcome them should deterrence fail; determination of the optimal
size, crude oil and refined product mix, and date of completion of
reserve petroleum stocks in the United States and its allies;
assessment of the credibility and deterrent value of various levels
of petroleum reserves.
B. Military Contingency Analysis (Chaired by
the Department of Defense)
—Analysis of the adequacy of petroleum resources to meet military and
civilian needs of the United States and its allies under the most
stringent and the most probable wartime scenarios; assessment of
sce-narios short of war in which forces must be kept at high states
of readiness due to increased threats.
—Analysis of the vulnerability of the world petroleum supply system
to interdiction, including acts of terrorism, acts of nature, and
premeditated political, economic, or military action.
—Identification of petroleum supply interruption scenarios which
would significantly impair United States ability to execute existing
military contingency plans.
—Analysis of United States military and related requirements for
securing petroleum resources in each of the above scenarios; similar
analysis with the addition of allied forces.
—Assessment of the existing and planned United States and allied
military capabilities to meet requirements noted above.
—Identification and assessment of additional policies and options
that would fulfill any requirements noted above which would be unmet
due to inadequate existing or planned military capabilities.
C. Integrated Overview Report (National
Security Council staff)
—Synthesis of the reports of the Departments of State and Defense
into an integrated overview report to serve as the basis for review
by the Special Coordination Committee.
—The integrated overview report should include:
—Identification of major issues.
—Identification of United States policy choices.
—Identification of topics requiring further analysis.
