137. Telegram From the Department of State to the Embassy in Saudi Arabia1

265882. Subject: President’s Energy Speech and Oil Price Freeze.

1. The President will make a nationwide address on energy on Tuesday, November 8.2 After you receive text, you should convey to King Khalid a copy of the speech and make the oral presentation below. We leave it to you whether this can best be done in audience with King or conveyed, for example, through Prince Fahd.

2. Begin oral presentation. The President has asked me to deliver to you a copy of his recent speech on energy, as well as to express once again his regret that he was unable to visit the Kingdom as planned because of the need to complete passage of the energy legislation. Secretary Blumenthal has told the President of the detailed and useful nature of the talks on energy and other subjects which the Secretary had with Your Majesty, Crown Prince Fahd and others in the Kingdom.

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3. The President is especially grateful for the reception given to Secretary Blumenthal, who told the President of the extraordinary hospitality accorded him.

4. The President is greatly encouraged at the common view shared by the USG and SAG on energy problems. He had looked forward to discussing these questions, among others, personally with His Majesty and with Crown Prince Fahd during his visit to the Kingdom. Since that opportunity has unfortunately been delayed, the President has asked Ambassador West to convey the views he would have conveyed personally.

5. The President strongly agrees that energy conservation is the first order of business for the industrialized world, especially the United States. He is telling Congress and the American people that the energy question is a two-way street. The United States must take tough measures to curb its consumption if it is to expect a freeze on oil prices. And oil producers should, as the SAG has so clearly indicated, act on prices and production with an understanding of the interrelationship between the prosperity of the developed world, the non-oil developing world, and that of the producers themselves.

6. On the forthcoming OPEC price decision, the President appreciates the Saudi commitment, as expressed to Secretary Blumenthal, to work for a price freeze through 1978 and is confident that this goal can be obtained. He believes that the Iranians share our understanding of the fragile nature of the world economic recovery and that they, with the encouragement of other consuming nations as well as the USG and the SAG, could support a freeze. He would appreciate the SAG’s assistance and advice on the best way to accomplish this goal.

7. The President suggested the importance of stating our shared objective of a 1978 price freeze explicitly and publicly to avoid confusion arising from the numerous newspaper reports on the forthcoming price decision. End oral presentation.3

  1. Source: National Archives, RG 59, Central Foreign Policy Files, P840072–1958. Secret; Immediate; Nodis. Drafted by Leonard Ross, Cooper’s Special Assistant; cleared by Blumenthal, Owen, Atherton, and Katz; and approved by Cooper. The telegram was repeated to the White House for Brzezinski on November 6. (Ibid.)
  2. In his speech, Carter announced that Congressional conference committees were in the process of resolving the differences between the House and Senate energy bills, which were based on the administration’s National Energy Plan (see footnote 2, Document 122). He stated that “we simply use too much and waste too much energy” and that “unless we act quickly, imports will continue to go up” and existing problems would “grow even worse.” The purpose of the energy legislation, he said, was to “cut back on consumption,” “shift away from oil and gas to other sources of energy,” and “encourage production of energy here in the United States.” He also said: “We must face an unpleasant fact about energy prices. They are going up, whether we pass an energy program or not, as fuel becomes more scarce and more expensive to produce.” For the full text of the speech, delivered on nationwide television and radio, see Public Papers of the Presidents of the United States: Jimmy Carter, 1977, pp. 1981–1987.
  3. West delivered the text of Carter’s speech and made the oral presentation to Prince Saud on November 9. Repeating an argument previously used by Yamani, Saud said that a “rational economic basis” for a price freeze was “difficult to justify, especially to those countries having little interest in political aspects of decision.” In his report to the Department, West commented: “Any indication of support for price freeze from other countries should be passed on to Saudis without delay to strengthen their resolve. Impression now loud and clear is that Saudi opposition to a price increase is not sufficiently strong to hold the line against pressures from other OPEC members and Saudis are not prepared to break ranks again with other OPEC member states. An increase of five to seven percent would be minimum we would expect barring new developments between now and Caracas meeting.” (Telegram 7733 from Jidda, November 9; National Archives, RG 59, Central Foreign Policy Files, P840072–1969)