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

94. Memorandum From the President’s Assistant for National Security Affairs (Scowcroft) to President Ford¹

Washington, February 16, 1976.

SUBJECT

• International Energy Agency Adopts Long Term Energy Cooperation Program

On January 30 the International Energy Agency adopted a long term program of cooperation² which closely resembles the one proposed in Secretary Kissinger’s speech of February 1975.³ The following are major points in the program:

—A minimum safeguard price (MSP) of $7 per barrel FOB Persian Gulf (equivalent to $8–$8.50 landed in the US). State believes that authority to implement the MSP is available to the President in the national security provisions of the Trade Expansion Act of 1963. To avoid a potential showdown with Congress, our negotiators stated that the agreement binds the US to the extent that authority is presently available to the Executive to implement such a price. If such authority is not available the Executive is bound to seek necessary authority from the Congress should implementation of the agreement be required (i.e., a drop in the world price below the MSP).

—Agreement of participating countries to consider, on a case-by-case basis, off-take guarantees to other IEA members joining us in large scale energy projects in the US.

—Agreement to establish an overall R&D strategy for the group, including technical assistance in helping each country develop its own R&D program, expanded exchanges of R&D information, and joint projects.

—Establishment of conservation targets, a monitoring of conservation programs, and an exchange of information on conservation techniques.

—Agreement not to impose new restrictions on access of IEA members to energy investment and supplies in other IEA countries (Canada, because of its provincial problem, reserved on this provision).

A few aspects of this long term program posed difficulties for individual IEA member countries. But the widespread conviction that it was important to make progress in the IEA in the face of continuing OPEC domination of oil prices overcame this reluctance. No participant believes that these efforts will substantially weaken OPEC in the immediate future. Consumer cooperation, especially with respect to new investment, technology and reduced consumption, could begin to restore a better balance to the energy market, thereby strengthening consumer position relative to OPEC after four or five years.

US leadership in IEA has persuaded countries which were at first reluctant participants to realize that their ultimate interests were in strong consumer cooperation. Compared to the chaos of the immediate post-embargo period, when consumer nations were going their separate ways and were tempted to deal with OPEC on OPEC’s terms, consumer solidarity and confidence have come a long way.

We are currently examining possible approaches to the next phase of our international energy policy. A joint NSSM/CIEPSM study is examining measures to ensure a reliable supply of required energy imports at reasonable prices over the next five years, with special emphasis on the possibilities for influencing OPEC pricing and production decisions.⁴ It will examine the following:

—projections of US energy dependence;

—possibilities for diversifying US imports and encouraging production in countries willing to export more oil;

—the character of the OPEC cartel and its likely performance, motivations and objectives;

—factors most likely to influence OPEC’s decisions in a way most favorable to us and our allies;

—ways to strengthen the IEA; and

—near term possibilities for encouraging OPEC restraint.

The study will be completed by the end of March.

1. Source: Ford Library, National Security Adviser, Presidential Subject File, Box 4, Energy (10). Secret; Sensitive. A stamped notation on the first page reads: “The President has seen.” Ford initialed the memorandum.
2. In telegram 3089 from USOECD Paris, January 30, Enders reported to Kissinger that the IEA Governing Board at its January 29–30 meeting adopted the Long-Term Cooperation Program. (National Archives, RG 59, Central Foreign Policy Files, P840090–1665) Telegram 3092 from USOECD Paris, January 31, provides a summary of the 2-day meeting. (Ibid.) Telegram 3305 from USOECD Paris, February 3, includes the text of the IEA Secretariat’s conclusions regarding the Governing Board’s discussions. (Ibid., D760040–0978) See also Document 90. For the text of the Long-Term Cooperation Program adopted at the January 29–30 Governing Board meeting, see Scott, The History of the International Energy Agency, vol. III, pp. 175–204.
3. See footnote 4, Document 39.
4. See Document 93.