63. Memorandum From the Acting Executive Director of the Council on International Economic Policy (Dunn) to the President’s Deputy Assistant for National Security Affairs (Scowcroft)1
- United States Preparedness to Withstand an Oil Embargo
Our staffs have discussed several issues that deserve examination relating to our preparedness to handle another oil embargo. These issues include:
a. a review of international petroleum allocation mechanisms that would be available in the event of either the absence or failure of IEA allocation mechanisms;
b. an assessment of the likelihood of OAPEC using the “financial weapon” to augment any oil supply disruption, and measures we might employ to counter;
c. a review of the current drawdown of worldwide petroleum stocks—causes, implications and policy options available to encourage supranormal stock levels if deemed necessary or desirable;
d. a review of the current military fuel stock situation.
Normal peacetime military stocks are said to be more than four million barrels short now. This review should be joined with estimates of military offtake from available national petroleum supplies in the event of an embargo.
I recommend that NSC establish an adhoc group to examine generally United States preparedness to withstand another embargo including the items outlined above. We feel that such a group should include representatives from DOD, FEA, Treasury, State, CIA and CIEP.2