Office of the Historian

145. Summary of Conclusions of Special Coordination Committee Meeting1

Washington, March 24, 1978, 10:30–11:45 a.m.

SUBJECT

  • Petroleum Supply Vulnerability Assessment

PARTICIPANTS

  • State
  • Richard Cooper Under Secretary for Economic Affairs
  • Defense
  • David McGiffert Assistant Secretary for International Security Affairs
  • JCS
  • Lt. Gen. William Y. Smith Assistant to the Chairman
  • CIA
  • Hans Heymann National Intelligence Officer for Political Economy
  • Treasury
  • Helen Junz Deputy Assistant Secretary for Commodities and Natural Resources
  • Energy
  • Dale Meyers Under Secretary for Energy
  • Cecil Thompson Special Assistant to Assistant Secretary for International Affairs
  • OMB
  • Bowman Cutter Executive Associate Director for Budget
  • Randy Jayne Associate Director for National Security and International Affairs
  • CEA
  • Lyle Gramley Acting Chairman
  • Robert Litan Senior Staff Economist
  • White House
  • Zbigniew Brzezinski
  • David Aaron
  • NSC
  • Samuel P. Huntington
  • Sam Westbrook, III
[Page 472]

SUMMARY OF CONCLUSIONS

The United States must be prepared to deter or to cope with a number of plausible oil supply interruption contingencies, including those resulting from actions by producing governments and from physical destruction or seizure of oil facilities. The most probable interruptions will result from accidents or terrorist or guerrilla action, but these will usually cause only a minor disruption in the oil flow over a short period of time. While the political situation in the Middle East might at some point produce a voluntary production cutback and embargo by OAPEC, the second most probable cause of interruption would be Saudi decisions to cut back their production or not to increase their productive capacity because of technical problems, the $4 billion investment needed for expansion, and/or the feeling the oil was worth more in the ground. Any Saudi Arabian decision to limit production would be especially critical. Some felt, however, that Saudi interest in maintaining their leadership position in OPEC would induce them to make the capital investment necessary to increase production capacity to about 13 mmbd. A detailed CIA report on technical problems in OPEC oil fields, with a special section on Saudi Arabia, should be completed in about three weeks.2

For the near term, the U.S. faces major vulnerability to petroleum supply interruptions, even with the International Energy Plan,3 and would have to absorb this shortfall and distribute the imports primarily through crude and product allocation regulations. By the end of 1980, the U.S. will have greater protection and flexibility—primarily due to a 500 mmb Strategic Petroleum Reserve (SPR). The management of the SPR has been strengthened and short term goals brought more in line with expected results (the December 1978 estimate has been lowered from 150 to 100 mmb). All agreed it was probably desirable to accelerate SPR purchases so as to more quickly reduce vulnerability and take advantage of current low prices. DOE was directed to analyze ways to accomplish this, including acquisition of temporary storage facilities in the U.S., overseas, or afloat (in oil tankers), and to be prepared to address the subject at an SCC meeting in late April 1978.

DOD has underway an analysis of the requirements for US military forces to protect Persian Gulf oil facilities and SLOCs against hostile military action.4 The point was made that this analysis should consider the impact of a permanent US airbase and naval base in the region. In addition, DOD was tasked to produce contingency plans for [Page 473] the use of currently available forces to deal with the most probable Soviet and Cuban military threats (particularly by forces based in South Yemen) as well as by hostile local governments. A report on these contingency plans should also be ready for the April SCC meeting.

It was generally agreed that Saudi oil facilities were highly vulnerable to terrorist attacks and a State-Department-developed six-point program of action5 was approved subject to further study of the problems it might raise concerning technology transfer and of the ways in which it could be presented to the Saudis. The fragmentation of security planning responsibilities among a number of Saudi ministers and ARAMCO creates complex bureaucratic rivalries which will make gaining Saudi acceptance of an effective oil field security program particularly difficult. Ambassador West will be asked to recommend the best way of approaching the Saudis on this sensitive subject, and State will talk with ARAMCO officials in Washington to seek advice and support. The desirability of proposing a similar program for Iranian facilities will also be studied. The proposals on how to approach the Saudis and recommendations on an Iranian program will also be discussed at the SCC meeting at the end of April.

  1. Source: Carter Library, National Security Affairs, Staff Material, Office File, Box 8, Meeting File, SCC Meeting: #67, Held 3/24/78. Secret. The meeting was held in the White House Situation Room.↩
  2. Not found.↩
  3. See footnote 6, Document 9.↩
  4. See Document 144 and footnote 4 thereto.↩
  5. See Document 144 and footnote 6 thereto.↩