155. Memorandum From Harold H. Saunders of the National Security Council Staff to the President’s Assistant for National Security Affairs (Kissinger)1

  • SUBJECT
    • Briefing on Middle East Oil Situation in Relation to US Energy Requirements—Briefing in Roosevelt Room, 11:00 a.m., January 30

As I understand it, Mr. Ehrlichman has set this briefing up for you, Secretary Shultz and himself as a quick exposure to the nature of the energy problem.2 During the briefing [Page 392]

  • Jim Akins, the State Department expert on oil now working with Peter Flanigan on the President’s energy message, will describe the supply-demand situation.
  • Jim Critchfield, Dick Helms’ senior man following this problem, will discuss the Middle Eastern political framework.

An outline of the subjects to be touched on is attached.3 In addition, it may be useful for you to keep in mind the following as one formulation of the main issues:

1.
Policy on oil imports. The US has traditionally sought to avoid “overdependence” on foreign supplies of oil in the belief that national security required virtual self-sufficiency in energy. As we now face the prospect of declining US reserves of oil and gas and high costs for alternative sources of energy, we cannot avoid some absolute increase in the quantity of imported oil. Our interests will be in price and stability of supply arrangements. The choice is not between developing our own self-sufficiency and importing. The issue is where our emphasis will fall. A strong case can be made for harboring our scarce reserves for use in future national emergencies, while importing substantially larger quantities of low-cost Middle East oil. At the same time, there will be an argument for further development of our own resources in order to reduce our dependence on foreign supplies. How we balance this choice between costly efforts at self-sufficiency and a liberalized and diversified import strategy will be of fundamental importance.
2.
The relationship between the Arab-Israeli conflict and oil supply. Efforts by producing countries to use oil as a political weapon have occurred on several occasions, but have so far not had much impact. Increasingly, however, it is apparent that the Arab oil-rich countries will command a growing influence over the international oil market and will possess vast reserves of hard currencies that will allow them to withhold oil for political purposes. The US could suffer some shortages and loss of investment if blackmailed by the Arab countries because of our support of Israel, but our European allies are much more vulnerable. While the relationship between the Arab-Israeli conflict and future oil supplies cannot be measured precisely, a settlement of the Arab-Israeli problem would make it [Page 393]much easier for the US and its allies to work out a coherent energy policy that would help guarantee stable supply relationships. For one thing, our allies may feel they cannot concert policy with us if that might expose them to Arab threats of withholding oil on political grounds.
3.
US energy policy and our NATO and Japanese allies. A strong argument can be made that unless we develop a common energy policy with our major allies, we may face the prospect that divergent approaches to energy matters will become a contentious issue in our relations, placing great strains on traditional friendships. A weak front among consuming countries will also leave virtually all power over prices and terms of supply in the hands of the OPEC countries. If the US decides to forego an increase in oil imports as a way of dealing with our energy problems, we should try to turn this to political advantage in our relations with Europe and Japan.

In short, our import policy will affect the cooperative relationship with our allies and the degree to which this cooperation will be important to us. In any event, there is a strong case for a concerted energy policy. If we want close cooperation on energy matters with our allies, what happens on the Arab-Israeli problem will have some effect on the degree to which that is feasible.

Phil Odeen has sent you more extensive briefing material.4 The purpose of this memo is mainly to put the attached outline in your hands before tomorrow’s briefing.

  1. Source: National Archives, Nixon Presidential Materials, NSC Files, Box 250, Agency Files, National Energy Office, Vol. I, March 1972–February 1973. Limited Official Use. Sent for information.
  2. The meeting occurred without Kissinger on February 6. See Document 160.
  3. The suggested agenda, attached but not printed, entitled “Middle East Oil in Relation to the US Energy Problem” included an Introduction and sections on oil supply and implications and on the Middle East political framework. According to an attached January 29 memorandum from Saunders to Kissinger, Flanigan additionally wanted to discuss U.S. policy toward the present situation in Iran. The briefing material on Iran is Document 157. Two meetings took place on February 6: a general meeting based loosely on this agenda, the notes of which are Document 159, and one on Iran, as described in paragraph 2 of Document 161.
  4. In a January 29 memorandum to Kissinger, Odeen summarized the national energy problem, its foreign policy implications, and the policy alternatives facing the United States. He argued that the primary cause of the energy crisis was a shift toward greater dependence on Middle Eastern oil and a failure of domestic fuel supplies to keep pace with the overall growth in demand. He concluded that the result was a “growing gap between domestic supply and total demand that is made up by imports of both natural gas and crude oil—particularly oil.” (National Archives, Nixon Presidential Materials, NSC Files, Box 250, Agency Files, National Energy Office, Vol. I, March 1972–February 1973)