More Attention Should Be Paid to Making the U.S. Less Vulnerable to Foreign Oil Price and Supply Decisions
EMD-78-24: Published: Jan 3, 1978. Publicly Released: Jan 3, 1978.
- Full Report:
In response to a congressional request, the relationship between oil companies and the Organization of Petroleum Exporting Countries (OPEC) was reviewed.
Control of oil supplies and prices lies mainly with the governments of OPEC rather than with private oil companies. The companies seek to protect access to crude oil supplies by entering into long-term agreements with producing countries. These agreements help to stabilize the sales of individual OPEC countries, counteracting tendencies toward disunity. Strengths possessed by the United States which can influence oil supply and prices are: the United States is the home country of five of the seven multinational major oil companies; the U.S. market for foreign oil represents about 20% of OPEC exports; the United States is a leader in technology and management; it offers opportunities for capital investments; it is in a leading position for loans, aid, and security; its market is important to the export sales of other countries; and it is a leader in international political relationships. Links should be established between these strengths and U.S. international energy policy. The policy of keeping hands off company negotiations is not justified because of political implications. Government guidance and oversight in these negotiations would allow for the inclusion of public interest considerations.
Matter for Congressional Consideration
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Matter: The Departments of State and Energy, in consultation with other departments, should report to Congress on inititatives for reducing U.S. reliance on foreign oil supplies and obtaining more reasonable prices by: encouraging modification of terms of agreements which allow oil producing countries to adjust terms at will; exploring bilateral relationships with particular oil producing countries, along with appropriate incentives and disincentives; and exploring multilateral consumer nation actions, including an evaluation of the International Energy Agency. Congress should follow through with the Secretaries of State, Energy, and Treasury, and the Attorney General to make sure that recommendations are completed expeditiously, and after completion, should schedule appropriate hearings on the adequacy of the plans.