Foreign Relations of the United States, 1969–1976, Volume XXXVI, Energy Crisis, 1969–1974

352. Briefing Paper Prepared in the Department of State¹

Washington, May 1974.

Background Paper

STATUS OF ENERGY COORDINATING GROUP ACTIVITIES AND PROSPECTS FOR PRODUCER-CONSUMER CONFERENCE

At the last ECG meeting,² broad acceptance was obtained for the US-proposed concept of an integrated emergency program (IEP) as the centerpiece of the ECG exercise. Although no country was willing to make an explicit commitment until the various elements of this approach are developed and agreed to in greater detail, all delegations accepted in principle the political desirability of an integrated package including emergency conservation measures, stocks, emergency production (where possible) and sharing. At the same time, there emerged a general sensitivity that an IEP agreement not introduce any new element of confrontation into consumer-producer relations. By the time of the next meeting, scheduled for mid-June, interim reports will be completed by OECD and ECG working groups on sharing, conservation, the petroleum market outlook and other subjects essential to the integrated approach. This will enable the ECG to have an in-depth discussion of all the issues involved with the objective of reaching inter-governmental agreement on the principles and elements of an IEP.

Problems have arisen in two areas. Major differences have emerged in the work of the group on the role of the international oil companies. The disparity between rising product prices and the major oil companies’ sharp increase in profits have made this a political issue for several ECG governments and has reinforced demands for greater “transparency” in oil company operations. Some countries also seek to deal in this ECG Working Group with the issue of access to crude supplies by the non-integrated oil companies. There is also some concern within the ECG that the announced USG decision to transfer uranium enrichment technology from the public to the private sector might delay or even block implementation of the Secretary’s offer at the Washington Energy Conference to share this technology with other ECG nations.³

At the May ECG several countries noted that their bilateral contacts with producers and discussions at the UNGA special session⁴ had revealed an absence of producer interest in an early meeting with consumers. It was generally agreed that a producer-consumer conference did not appear likely in the near future. The ECG agreed, however, that it should maintain a public posture of preparing for such a meeting.

US Position

We are committed to a constructive, cooperative and well-prepared discussion between consumers and producers. We recognize that there are significant differences among producers, and we are willing to consider suggestions—such as the Yamani proposal for a preliminary meeting of a small group of producers and consumers—that will advance our objective of laying the groundwork for better understanding with producers.

1. Source: National Archives, Nixon Presidential Materials, NSC Files, Box 937, VIP Visits, Visit of Prince Fahd. Confidential. This paper was part of the briefing material for Prince Fahd’s visit to the United States June 6–7.
2. May 2; the meeting report is telegram 2731 from Brussels, May 3. (Ibid., RG 59, Central Foreign Policy Files)
3. See Document 338.
4. The sixth UNGA Special Session, requested by Algeria, on raw materials and development met from April 9 to May 2. It adopted Resolution A9556, a Declaration on the Establishment of a New International Economic Order and a Programme of Action on the Establishment of a New International Economic Order.