13. Memorandum From Victor A. Mack of the Department of the Treasury to the Executive Director of the Cabinet Task Force on Oil Import Control (Areeda)1
- Treasury Comments on Task Force Staff Paper X–1, “Oil Import Issues”2
Attached are Treasury comments on certain of the 49 items in Task Force staff paper X–1.
We have prepared a separate statement on item 29, dealing with various aspects of the balance-of-payments impact of additional oil imports.3
- We feel the staff analysis tends to understate the security problem, takes too sanguine a view of available emergency oil sources, brushes too lightly over the rationing problem, stresses only the unfavorable aspects of the present system or a substitute control system, tends to argue much more strongly for an unrestricted imports policy than prudence would suggest, and has not accorded proper importance to the extremely adverse impact on our trade and balance-of-payments accounts of an unrestricted imports policy.
- The severe adverse trade and balance-of payments impacts involved in a policy of unrestricted oil imports cannot be ignored by the Task Force.
- Treasury would not consider the Task Force has recommended to the President a policy in the national interest, if such policy requires us to be so dependent on foreign sources for our crude oil supplies as to require us to import two-thirds of these supplies by the mid-eighties.
- As the staff correctly points out (item 10b), it does not seem sensible for us to furnish a secure oil source to our allies, while alone bearing the full cost of assuring such security. Therefore, we would want to recommend to the President that it should be a cornerstone of U.S. policy to have all countries who wish to share our oil in an emergency share also the year-to-year expense of assuring a secure supply.
- To the extent we must rely on imports for our oil supply, we see convincing security arguments for maximizing the amounts coming from Canada and Latin America. While we realize some premium may have to be paid for some of this oil, we wish to hold this to the minimum necessary to obtain a guaranteed supply from these sources.
- We are opposed to an unrestricted oil imports policy, but we would not be opposed to a drastic revision of the present policy so long as the basic national interest would be well served. We feel that the national interest might best be served by some form of combined tariff and quota arrangement. Briefly, we feel such a system would enable us to obtain the oil we need from the foreign sources we prefer at prices which would involve no or minimum premium payments above the world market price, which would insure some savings for U.S. consumers and, at the same time, would not be so disruptive of our domestic oil industry as to inhibit domestic exploration and drilling for crude oil and would not put an unacceptable burden on our trade and balance-of-payments accounts.