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

23. Memorandum of Conversation¹

Washington, December 9, 1974, 6:20–6:40 p.m.

SUBJECT

• Energy

PARTICIPANTS

• The Honorable Henry A. Kissinger, Secretary of State
• The Honorable Robert S. Ingersoll, Deputy Secretary of State
• The Honorable Thomas O. Enders, Assistant Secretary of State
• The Honorable William E. Simon, Secretary of the Treasury
• The Honorable Charles A. Cooper, Assistant Secretary, Treasury
• Mr. Robert Hormats, NSC Senior Staff Member

Kissinger: I wanted to have a meeting on energy before we . . . (Secretary makes telephone call.) What are the issues? I realize it’s interfering in Tom Enders’ style to let Cabinet officers know what he is going to do before he does it.

Enders: Well, there are 3 major issues here.

Kissinger: I have 20 minutes.

Enders: First, is the question whether we want some elements of a common import policy on oil in our overall approach.

Kissinger: Yes. The answer is Yes.

Enders: Fine.

Kissinger: But, having said that, you haven’t said anything. The question is, How?

Enders: The question is, Shouldn’t there be some differential between oil produced within the group of industrialized countries and OPEC oil?

Kissinger: I talked with George Shultz about this. He says we don’t need a floor price across the board. He argues that we need to do different things for different energy industries.

Simon: I also talked to George Shultz. We don’t need a floor price. We have to do something for some industries, and we should all do that.

Enders: But, Bill, how do we get a common policy with everybody subsidizing 300 different industries?

Kissinger: We do need some price protection.

Simon: Look, the current shale price is $7.50. The price for coal gasification is $8.25. What we did for the rubber industry in World War II could be a model for what we do now. The Government got into the first generation artificial rubber manufacture and then it was eventually turned over to private firms. Synthetic rubber is now better than the real thing.

Kissinger: But that sort of approach doesn’t help us with the other countries.

Simon: Well, I shudder at the thought of having to persuade other governments to subsidize our shale oil development. I think that is going to be impossible.

Enders: What about an approach using an indicative price at $6, $7, or $8 that we would apply and that would apply to any energy up to that price.

Kissinger: There are two arguments that are interesting here. One, we give the other industrialized countries something they have to do, and two, we create some pressure on OPEC to move prices down.

Simon: But that price is too high.

Kissinger: You think it is going below $7.00?

Simon: Yes, in 10 years, certainly. For us to go up to Congress now and ask for that sort of protection will be very difficult.

Kissinger: But the economics only point in that direction. If we do something like this, they don’t point in the opposite direction.

Simon: Not in terms of what’s happening now. We don’t have to do uneconomic things to solve this. We are soon going to be swimming in oil.

Enders: We could have a guide price but everyone could lock on to it as needed.

Kissinger: Chuck, what’s your view on this?

Cooper: I want to make sure I understand what Tom is saying. Then, you’re saying that everyone would agree to support everything up to that price? I would prefer a common tariff but it would take time to get there.

Kissinger: I think that the price will come down more rapidly as we are able to articulate consumer cooperation. Also, something like this would be very important for the political health of the West. It would be a tremendous accomplishment if we pull it off. We have all of these eunuchs from David Rockefeller’s Trilateral Commission² running around town saying that we are trying to confront the Arabs. I don’t know whatever possessed me to give those idiots my blessing. I shouldn’t talk that way about the brother of a very good friend of mine, but it’s true—George Ball,³ and all the rest, running around saying that we’re confronting the Arabs. What else could you expect? Lehman Brothers is investing in those countries. Even Pete⁴ feels this way. That’s the New York liberal line and he doesn’t want to deviate from it. The fact is that we are having a producer/consumer dialogue now. We talk with the Saudis and the Iranians every day. The question is, Should we have a multilateral dialogue? Why should we have a multilateral dialogue if the consumers are not organized? Why should we tie France, Italy, and the rest around our necks? Believe me, gentlemen, they are going to use this and they are going to make it a big issue.

Simon: I would like to suggest that Tom Enders and Chuck Cooper and a few others sit down up at Camp David and think this thing through and scrub it up.

Enders: That’s fine, and then we can present our recommendations to a Cabinet committee.

Kissinger: Do you think we could ever have a Cabinet committee meeting without people running out immediately afterwards and reporting to the President. I talked to the President about that this morning. He was wild about the food paper. Isn’t there something we can do? Can’t we collect the papers after the meeting, or keep the group smaller?

Enders: It really does put the President in an impossible situation.

Kissinger: Yes, he has to take the heat for all the politically difficult positions and the other people grab the glory for the easy ones.

Enders: I suggest that we come back from Camp David and, you will be back on when, the 16th?

Kissinger: Yes, and I will have Simon with me. Between you, me, and Giscard d’Estaing, Bill, the President is not going to get a word in.

Enders: Well, let’s get back on the 16th and get together with Simon, you and Rogers on the 17th and then take this directly into the President.

Kissinger: I have to testify on the Hill on the morning of the 17th; we can do it in the afternoon.

Simon: I am also testifying that morning.

Enders: We would have Morton, Zarb, and a paper.

Kissinger: Is that O.K. with you, Bill?

Simon: Yes.

Enders: O.K. then, Chuck and I and Parsky will scrub this up. One other issue. Should we decide now to spread out over the Congress on all of this?

Kissinger: No, not yet, it’s too early. We’ll look at this next week. I think Bill and I should initiate the process. Bill, we could get together with a large group of senators and congressmen. Let’s get the policy to them. I could take the political point of view and Bill, you could make the economic case.

Enders: Arthur Burns could also be there.

Kissinger: Do we need him?

Enders: The only reason I suggested getting together now to decide how we will handle the Congress is a question of your time. It’s going to be difficult for you.

Kissinger: I think this has to be kicked off at the Cabinet level. In the meantime, Tom, keep pushing the Europeans. Don’t let them up for air. Go back at them on the $25 billion.

Enders: Well, I am doing that, but I need a decision on this other issue.

Kissinger: Well, you and Chuck can work that out. Now, I would like three minutes of the Secretary of the Treasury’s time. Are you free for a few moments, Bill?

Simon: Yes.

Meeting broke up at 6:40 p.m.

1. Source: National Archives, RG 59, Central Foreign Policy Files, P840153–1413. Secret; Sensitive; Nodis. Drafted by Bosworth on December 10. The meeting was held in the Secretary’s office.
2. David Rockefeller, Chairman of Chase Manhattan Bank and Chairman of the Foreign Affairs Council, was the founder of the Trilateral Commission, a private group to dicuss global issues and foster cooperation.
3. George Ball was Under Secretary of State for Economic Affairs in 1961, Under Secretary of State from 1961 to 1966, and Ambassador to the United Nations in 1968.
4. Apparently Peter G. Peterson, Assistant to the President for International Economic Policy and Executive Director of CIEP from 1971 until January 1972, and then Secretary of Commerce until February 1, 1973.