150. Memorandum From the President’s Assistant for National Security
Affairs (Brzezinski)1
Washington, May 12, 1978.
MEMORANDUM FOR
- The Secretary of State
- The Secretary of the Treasury
- The Secretary of Defense
- The Secretary of Energy
- The Director, Office of Management and Budget
- The Chairman, Council of Economic Advisers
- The Assistant to the President for Domestic Affairs and
Policy
- The Director of Central Intelligence
SUBJECT
- Long-term National Security Strategy on Oil Prices
1. The President needs a paper on long-term policy (including 1979) on
imported oil prices for PRC
consideration.
2. The paper should be prepared by an inter-agency task force, and should
address the question at Tab I, among others.
3. In preparing this paper, the task force should take into account the
contingency planning being done as to what action the Executive Branch
should take on domestic oil prices if the crude oil equalization tax is
not passed by Congress.
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4. The task force should be chaired by the Secretary of Energy and
composed of the Departments of State, Treasury, Defense, OMB, CEA,
DPS and NSC.
5. A preliminary report should be made by June 30, for consideration at a
meeting of the Policy Review Committee.
Tab I
Terms of Reference for the Inter-Agency Task Force on
Long-term Strategy on Imported Oil Prices
1. What is the best estimate of the extent to which the prices of
imported oil are likely to increase over the next ten years?
2. What problems will major countries have in adjusting over this
period to the estimated price increases (a) if these are arrived at
gradually, whether in regular preannounced steps or otherwise; (b)
if they are arrived at suddenly in one or two large leaps?
3. In light of the above and of the implications for national
security, what are the advantages and disadvantages of different
strategies with regard to the rate of increase of imported oil
prices? Among the strategies to be considered are:
—Trying to persuade the OPEC
countries to keep any oil price increases as small and as infrequent
as possible. (In appraising this alternative, the task force should
assess the risk of large, abrupt price increases following several
years of no or small increases.)
—Attempting to get OPEC agreement
to publish a ten-year schedule of small, annual price increases. (In
studying this possibility, the task force should consider the merits
and feasibility of getting a firm ten-year supply commitment.)
4. In evaluating these strategies, account should be taken of the
probable reaction of OPEC and
other countries to the possible imposition of import fees or quotas
on imported oil, and the national security implications of these
reactions.
