PPS files, lot 64 D 563, “Strategic materials (oil)”

No. 280
Report by the Departments of State and Defense 1

secret
NSC 138/1

Foreign Petroleum Policy

1.
The question of the applicability of anti-trust laws to the international operations of the oil companies has called attention to the fact that there are many complex and intricate problems, of great importance in our national security and foreign policy, inherent in the situation. These problems are likely to be of substantial duration, and the effective disposition of the current action against the oil companies will contribute only to a partial solution of them. It is the conviction of the Departments of State and Defense that the entire situation needs to be examined in all its aspects by responsible Executive departments.
2.
The Departments of State and Defense therefore recommend that the commission proposed in the report submitted to the National Security Council in response to NSC Action No. 692 be asked to undertake a full study of the problem, and to report within a year. For this purpose the Commission should have its terms of reference extended to include the following: [Page 649]
a.
Clarification and development of national objectives and a national economic and political policy on foreign petroleum.
b.
A determination of the security objectives of the United States and its allies in regard to petroleum and the development of a program for assuring the achievement of these objectives.
c.
Examination of American foreign petroleum operations and recommendations as to the best means of assuring consistency between United States objectives and oil operations in such fields as pipeline agreements, concessional arrangements, marketing arrangements, and transport.
d.
A definition of the proper role of the United States Government in regard to foreign oil operations, and recommendations on the development of effective cooperation abroad between the Government and the petroleum industry.
e.
Review of the impact upon United States objectives of nationalism and tendencies toward nationalization in underdeveloped countries where oil is produced by American companies.
f.
The study of petroleum problems faced by consuming countries, such as cost, assurance of supply, and machinery for distribution.
g.
Review of relationship of anti-trust law and policy to United States objectives in foreign petroleum.
h.
Consideration of intergovernmental relationships concerning petroleum, and recommendations on possible changes in these relationships.
i.
Recommendations on means for coordinating United States Government action in the more complex situations where security, political, economic, foreign, and domestic influences come into play.
j.
Recommendation for such legislation as might be required.
3.
In making this recommendation, the Departments of State and Defense recognize that portions of this problem have been and are being attacked either separately by various Government agencies, or together through the National Security Council. This material should provide a useful background for the study now suggested. (NSC 97, 129/1, and 136 have a bearing on this subject.) The Departments of State and Defense believe that these efforts should be joined in a fundamental attack on the problem, for the purpose of evolving a truly national program, properly coordinated, and carefully designed to assure the clarification and achievement of the objectives of national policy in this highly important and sensitive field. Failure to approach the problem on such a basis can result only in recurrent crises and improvised solutions.