15. Editorial Note

On October 13, 1969, the Cabinet Level Task Force on Oil Import Control held its first meeting of principal members since July to discuss the “B-series” fact papers. The B-series reflected changes to the A-series papers, based on continuing input from concerned agencies and bureaus. Executive Director Philip Areeda announced he would write a paper tying all of the fact papers together. Secretary of Labor George Shultz emphasized that there should be no leaks from the Task Force. Following this, Shultz and Secretary of Commerce Maurice Stans disagreed on how to arrive at appropriate figures to determine the balance-of-payments implications of the import program. General George Lincoln, Director of the Office of Emergency Preparedness, pointed out that the import program was originally established to protect the oil industry with a specific view to protecting the national security. Discussion followed on whether this assumption needed to be reevaluated. (Notes of meeting, October 13; National Archives, RG 220, Records of the Cabinet Task Force on Oil Import Control, Box 23, Task Force Meetings, Meetings)

The paper Areeda promised at this meeting was designated “X–1: Oil Import Issues, Pre-Policy Summary I,” October 23, and conveyed “the essence” of the fact papers, reflecting corrections or objections communicated by agency staffs and highlighting where disagreement remained. It did “not consider administrative issues, foreign relations, or possible policy variations except insofar as hypothetical policies illuminate the meaning or possible significance of a fact.” Indeed, “other papers will address those matters.” The paper focused on Present Task, Cost of Import Restrictions, Risks to Security (generally, particular interruptions, war contingencies, and hypothetical test cases), Prospective Oil Market in 1975 and 1980, Coping with a Supply Interruption, and Test Cases and the Planning Horizon, and included statistical tables to support the overall argument. (Ibid., RG 174, Records of Secretary of Labor George P. Shultz, 1969–1970, Subject Files, Box 178, Task Force on Oil Import Control)

A lengthy discussion followed the distribution of X–1 at the October 25 Task Force meeting. It was determined that each agency would [Page 54]submit revisions or additions to those portions of X–1 in which it had a particular interest. Agencies were also to submit policy alternatives at the next scheduled meeting. (Notes of Cabinet meeting, October 25; ibid., RG 220, Records of the Cabinet Task Force on Oil Import Control, Box 23, Task Force Meetings, Cabinet Meeting October 25, 1969)

The follow-up paper, “X–2: Oil Import Issues: Pre-Policy Summary I, November 4 Revision,” incorporated some of the textual revisions to X–1 suggested by the Task Force and its member agencies. It then identified additional questions and contingencies, and demarcated those textual revisions of substance. X–2 was submitted to Task Force members on November 5. The policy and administrative papers requested at the previous Cabinet meeting were not ready for submission. (Memorandum from Areeda to the Task Force, November 5; ibid., Nixon Presidential Materials, NSC Files, Box 267, Agency Files, OEP, Vol. I)

The Task Force discussed X–2 at its November 8 meeting. Secretary Shultz began with a review of the policy issues: “(1) the level or intensity of import restrictions, if any, desired for 1975 and 1980; (2) the type of system for restricting imports; (3) the degree to which some or any countries should be preferred; (4) the means of effecting a smooth transition to any revised system; and (5) the kind of management system that would supervise the transition and general operations of the program and would maintain continuous surveillance of relevant data and developments under a revised program.” Participants agreed that a tariff would be preferred over a quota if the transition problems could be surmounted and those dependent on the existing program were not seriously damaged, that national security considerations dictated a preference for Western Hemisphere sources, that the full implementation of preferences should be undertaken uni-laterally, and that Iran presented a special problem.

Finally, Task Force members also discussed production restrictions, strategic reserve issues, balance-of-payments problems resulting from increased imports, and oil to allies for civilian needs. Assistant Secretary of Defense for Installations and Logistics Barry Shillito noted that the United States had to share oil with its allies in the event of an oil emergency, lest they go to war with supplying countries. C. Fred Bergsten of the National Security Council staff thought it more likely that the United States would face political denial of oil than would Europe or Japan. Assistant Secretary of State for Economic Affairs Philip Trezise added that “there is no practical way to meet the European needs in a severe emergency unless they put some of their own resources into it.” Secretary Shultz concluded from this discussion that “we should formulate our own policy in the light of our own needs and express our willingness to respond to allies’ needs to the extent that they wish to cooperate in helping themselves. They may now simply assume that we will provide for them in an emergency. It is important to disabuse [Page 55]them of that notion. The State Department and other relevant agencies should consider raising this matter in consultations with Europeans in NATO or OECD.”

Shultz also stated his “strong conviction,” with which there was no disagreement, that a revised version of X–2 would become the basis for the final Task Force report. (Notes of Cabinet meeting, November 8; ibid., RG 220, Records of the Cabinet Task Force on Oil Import Control, Box 23, Task Force Meetings, Cabinet Meeting November 8, 1969)

The Task Force prepared a summary of X–2, entitled “Progress Report,” and a one-page précis, both of which were submitted to the President on November 14. The summary listed the tentative conclusions of the Task Force: reducing the domestic price to $2.50 per barrel over a 2 to 3 year period would allow for the transition from the quota system to a tariff system; development of a management system was in order; and preferences should be as follows: Canada, then Latin America, and eventually Iran and other Eastern Hemisphere countries. The summary concluded that the lower price would benefit the public and oil consumers but harm areas of heavy domestic production such as Texas, Louisiana, and Oklahoma. (Ibid., Nixon Presidential Materials, White House Special Files, Subject Files, Confidential Files, Box 25, [CF] FG 221–22 Oil Import Controls)