18. Memorandum From the President’s Assistant for International Economic Affairs (Flanigan) to President Nixon1

  • SUBJECT
    • Meeting with Members of the Cabinet Task Force on Oil Import Control
    • Thursday, November 20, 1969 4:30 P.M. (one hour)

I. Purpose

The purpose of the meeting is to provide Presidential direction to the Task Force in arriving at recommendations to be incorporated in its report.

II. Background

A.
Attending the meeting will be Secretary Shultz, Chairman of the Cabinet Task Force on Oil Import Control; Philip Areeda, Executive Director of the Task Force; Peter Flanigan.
B.
The Task Force has the announced purpose of submitting its report to the President in early December and Areeda’s personal commitments mean that he will have to substantially complete the work by the end of the year.
C.
The background information on the meeting is set forth in the memorandum to the President of November 14, attached hereto as Tab I.2 The attachments to that memorandum give, in varying degree of detail, additional information.

III. Points of Discussion

Secretary Shultz and Areeda lean toward a Task Force recommendation of major revisions of the oil import quota program. (At the time the Task Force was formed Areeda made it clear that he believed the study should not be undertaken unless the Administration was willing to make such revisions.)

Discussions with George Bush, Bryce Harlow, and briefly with John Mitchell confirm my belief that the political impact of major revisions would be severe in the oil producing States. While Secretary Shultz and Areeda are aware of these political implications, this does not alter their judgment.

Recommendation: I recommend, as set forth in the memorandum attached at Tab I, that the President request the Task Force consider the mechanisms for a change in our oil import program. Specifically, a tariff-quota system should be developed. He should further recommend that no action be taken which substantially reduces the current domestic price of oil of $3.30 per barrel. It might be suggested that any reduction be limited to the $.20 per barrel increase put into effect in February of this year.

IV. Other Points You May Wish To Raise

There is no unanimity of feeling on the Task Force at this time. Secretary Stans and Secretary Hickel are the members least enthusiastic about any major changes. Secretary Stans feels a cleaning up of the current mechanisms is all the change that is warranted now, in that the full effect of discoveries on the North Slopes of Alaska and Canada has not yet been determined. Final determination of these discoveries will be controlling as to domestic oil production in the United States.

In addition to Secretary Shultz and Areeda, Secretary Kennedy and Henry Houthakker, for the CEA, are most in favor of major revisions in the program. Houthakker feels that oil import quotas are economically indefensible, while Kennedy feels that the benefits arising from [Page 61]quota tickets should accrue to the Treasury rather than the ticket holders. However, Secretary Kennedy recognizes the broad political and economic implications of any revisions.

Peter M. Flanigan
3
  1. Source: National Archives, Nixon Presidential Materials, White House Special Files, Subject Files, Confidential Files, Box 25, [CF] FG 221–22 Oil Import Controls 1969–70. Administratively Confidential.
  2. Not attached and not printed. The memorandum transmitted the November 14 Progress Report and its one-page summary; see Document 15.
  3. Peter M. Flanigan initialed “PMF” above his typed signature.