Foreign Relations of the United States, 1955–1957, Foreign Aid and Economic Defense Policy, Volume X

251. Memorandum for the Files, by M. Robert Rutherford of the Fuels Division, Office of International Trade and Resources¹

Washington, April 24, 1957.

SUBJECT

• Meeting of the President’s Advisory Committee on Energy Supplies and Resources Policy, April 24, 1957

Invitations for this meeting had been extended by telephone and on short notice; no indication of the agenda was given. The meeting was attended by Mr. Murphy, accompanied by Mr. Rutherford of FSD.

Mr. Rutherford had learned informally, in advance of the meeting, that Mr. Gray would possibly present a proposition to the committee which would involve in some manner the certification to the President of the oil import issue under Section 7 of the Trade Agreements Extension Act of 1955. Mr. Rutherford suggested to Mr. Murphy that the following three points would represent the substance of the Department’s established position on the oil import issue:

(1) Can not agree that the fixed 1954 ratio of imports any longer represents the desirable proportion of imports,

(2) Can not agree that imports are yet of such a level as to threaten the national security,

(3) Therefore, can not join in an Advisory Committee approval of action by ODM to certify to the President under Section 7.

Upon calling the meeting to order, Mr. Gray informed the committee that his certification to the President under Section 7 was already en route to the President. Mr. Gray had also recommended to the President that: (1) the Presidential consideration of the matter should be undertaken by a panel of three prominent industry consultants, and (2) ODM be directed to pursue with the importing companies further an effort voluntarily to reduce imports in the direction of the 1954 formula—in order that the President would have the advantage of knowing whether his own actions could be successfully related to voluntary compliance by the companies.

Mr. Gray observed that, at the urging of Mr. Hugh Stewart of the Office of Oil and Gas, he had in the course of the last few days attempted to get in touch with the management of the ten principal importing companies. He had succeeded in talking with eight of the ten companies. His approach was completely rebuffed in one instance, and in the other instances he had received a sympathetic response but no concrete assurances that imports would be cut back. Appreciating the fact that he has no authority to impose restrictions upon the companies, Mr. Gray concluded that he had reached the end of the road in attempting to bring about voluntary restrictions by means of telephone calls and the writing of letters. He felt it imperative, therefore, that the matter be referred to the President and that further undertakings be with the more powerful threat of the authority which lies in Section 7.

Mr. Gray did not request the Committee’s comments on this course of action.

He did, however, proceed to the matter of how he might attempt the next round of voluntary restrictions—which he anticipated the President would request him to undertake. He observed that there is general agreement that no arbitrary percentage can be fixed, once and for all, as representing the desirable level of imports. He is, therefore, seeking an estimate of the amount of imports which would permit some growth and yet which would have some relationship to the 1954 standard. He wondered whether such a formula should be applied to the entire United States or only to Districts I–IV. He assumed that it is now well established that Canadian imports should not be considered.

Mr. Gray did not receive any fully adequate response to his inquiry. Mr. Fentress of Interior said that the Office of Oil and Gas had felt that the importing companies would in fact be going a long way in cooperating if they reduced their indicated excess of imports by 50 per cent. Mr. Humphrey made a suggestion, which seemed to be generally concurred in, that Mr. Gray should best approach the independent producing groups to find out how much “give” in the 1954 formula they would cognizance, before he approach the importing companies themselves to seek any reduction in their imports.

Mr. Gray has in mind that all of the import calculations henceforth will be given out to the public; he feels that his greatest hope of enforcement of restrictions lies in this element of publicity. Mr. Humphrey took a different position, saying that the only enforcement possible comes from the fear of the entire industry of legislative restraints on imports, i.e., Government interference in the industry.

Mr. Gray pointed out that the White House announcement of the Section 7 certification will come in time to influence the deliberations of the Independent Petroleum Association of America meeting scheduled for this coming week.

At the conclusion of the meeting, Mr. Murphy informed Mr. Gray privately that the Department of State does not concur in the course of action which is indicated and that the Department wished to reserve its position. Mr. Gray evidenced surprise that the efforts of the past two years have not had the full concurrence of the Department.

1. Source: Department of State, Central Files, 100.4/4–2557. Confidential; Limited Distribution. See footnote 1, Document 248.