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

196. Telegram From the Department of State to Selected Diplomatic Posts¹

Washington, April 5, 1979, 0024Z.

84259. Action for USEEC. Subject: The President’s Energy Speech.² Reference: State 83465.³

1. As explained in reftel Ambassadors or senior Embassy officer are to deliver the following personal message from the President on April 5. In the greeting post should insert just the first name of the chief of government except Tokyo which should insert Mr. Prime Minister.

2. Additional information on speech will follow septel.

3. Any initial reactions should be reported.

4. Begin text.

Dear

Thursday night I will announce my decision to let US oil prices beginning June 1st to rise to world levels. This increase will take place gradually, but with increased domestic production and reduced consumption emphasized early in the process. Full decontrol will be achieved in September 1981.⁴ The phasing-out of some controls past the December 1980 deadline set at the Bonn Summit will minimize the burden on our anti-inflation program, which the Bonn Declaration defines as the United States’ top priority.⁵

In my speech, I will describe measures to restrain oil imports in fulfillment of our recent pledge at the International Energy Agency.⁶

I will also announce a major program for developing and testing new energy technologies, which will involve substantially increased expenditures. The costs of this intensified US energy research and development will be met from the proceeds of new taxes which I will ask the Congress to enact, in order to capture excessive oil company profits resulting from decontrol. My decision to decontrol oil prices is not contingent on passage of these taxes.⁷

The actions that I will announce are intended, in large measure, to stabilize the international oil market and currency markets, on which all our economies depend. I would appreciate any public or private comment you may wish to make. The initial international reaction will be important in shaping public opinion and future decisions of energy producers and consumers.

While my speech will deal with domestic measures, I will also state that success in developing new energy technologies requires intensified international cooperation. I hope that a wider international effort to this end can be mounted, which we can discuss at the Tokyo Summit meeting.

Sincerely,

5. End text.

6. Posts except Tokyo should use “Jimmy” as signature line. Tokyo should use “Jimmy Carter”.

Vance

1. Source: National Archives, RG 59, Central Foreign Policy Files, D790155–0557. Confidential; Immediate. Drafted by Carol K. Stocker (EUR/RPE); cleared by Schlesinger, Owen, and in EA and EB; and approved by Cooper. Sent to Bonn, Brussels, London, Ottawa, Paris, Rome, and Tokyo.
2. The President’s April 5 address to the nation on energy is printed in Public Papers of the Presidents of the United States: Jimmy Carter, 1979, pp. 609–614. He began the speech with the statement: “Our Nation’s energy problem is very serious—and it’s getting worse.”
3. In telegram 83465 to Bonn, Brussels, London, Ottawa, Paris, Rome, Tokyo, Jidda, and Riyadh, April 3, sent in anticipation of the President’s speech, the Department instructed Ambassadors or senior Embassy officers to “seek an appointment with high-level energy official to provide briefing before the President’s speech.” Briefing materials would be provided on April 4, and Carter would send “a personal message to the heads of state of the Summit countries and Jenkins of EC notifying them of his speech and asking them to make a public statement of support.” (National Archives, RG 59, Central Foreign Policy Files, D790153–1227)
4. The Embassy in Paris reported that Lantzke “thought U.S. decision to decontrol oil prices would be very welcome to International Energy Agency partners.” Lantzke also said that he “doubted that there would be significant criticism of the nine-month slippage” from the U.S. pledge at the Bonn Summit to reach world price levels by the end of 1980. “Given U.S. domestic considerations,” he commented, “the President’s program goes as far as can reasonably be expected.” (Telegram 11139 from Paris, April 6; ibid., D790157–0620)
5. See footnote 3, Document 157.
6. Carter was referring to the March 2 IEA decision to reduce consumption by 5 percent. See footnote 6, Document 192. At its March 30 meeting, the IEA Governing Board noted that member countries “had made a start toward implementation” of its March 2 decision “to restrain aggregate demand for crude oil on world markets by five percent by the fourth quarter of 1979.” The Board agreed that “the oil supply crisis was far from over,” and speakers at the meeting “repeatedly stressed that only strong, collective action could forestall a ‘disastrous’ upward price spiral.” Some delegations, as well as the IEA Secretariat, “thought the time had come to actively seek contacts with OPEC” but most “appeared to share the US delegation’s skepticism in that regard.” (Telegram 85953 to OECD capitals, April 7; National Archives, RG 59, Central Foreign Policy Files, D790159–0265)
7. Carter proposed a new windfall profits tax on the “unearned” profits of oil companies. The taxes would fund an Energy Security Trust Fund to develop alternative energy sources.