Foreign Relations of the United States, 1964–1968, Volume XXXIV, Energy Diplomacy and Global Issues

248. Telegram From the Embassy in Germany to the Department of State¹

Bonn, June 23, 1967, 1205Z.

15121. TOCED. Subject: Oil Supplies and OECD.

1. I am disturbed by what appears to be a continuing tendency on our part to regard the problem of oil supplies for Europe as a European problem which does not immediately affect us and in which we need not share. The instructions to our delegation in Paris (most recently expressed in State 213850)² that we must avoid the application to the US of any apportionment measures is, I believe, evidence that we are pursuing a dangerous course which ignores the clear warnings expressed in our 15025 and 15066.³ Germany, at least, expects that American and other foreign oil companies will recognize the obligation inherent in their dominant position in the German market, and that they will continue to supply that market, even if this requires changes or dislocations in the normal production and marketing patterns in the US.⁴

2. In this context I find it completely unrealistic even to speak of the possibility of everyone going his own way, as indicated in State 214217.⁵ I am sure that the American companies involved would also regard this as unrealistic, and would in fact do everything they could to serve their customers as equitably as possible—whether or not freed from the threat of anti-trust action. Obviously they can cooperate better if freed from that threat, however, it is unrealistic to even consider the possibility that our companies could take the cream of profits from their operations in Germany in good times, and not give them their fair share of oil and shipping in time of crisis.

3. Approval of the recently announced plan of the Foreign Petroleum Supply Committee⁶ is no doubt more important and helpful for them than what we have produced so far in the OECD. Action there, and in relation thereto, has only again put us into conflict with deeply held European political concepts.

4. If the Europeans have not seen through our insistence on references to OECD documents which exempt the United States from apportionment and from sharing the discomforts of an oil shortage, we may yet have to face some uncomfortable moments when they do get wise. I do not understand how the U.S. Government can allow itself to be placed in this position.

5. It is not clear to me either, whether and why in my further discussions with the Germans here, I should be urging them to accept an OECD resolution in terms of “emergency,” which they have made clear they find distasteful. I would want to avoid a situation analogous to that with regard to the maritime declaration, where the Embassy and the Department were out of phase, i.e. the Department was telling the German Embassy that the declaration was still under consideration while we—as was obvious—were telling them it had been overtaken by events. Insofar as I understand the issues, a U.S. Government finding that an emergency situation exists with respect to the supply and transport of oil should be sufficient to meet our U.S. anti-trust problem. If this is so, we should let the companies then get on with the job, and give them every encouragement and help to meet their obligations in Europe—as they will from the standpoint of their own interests very much wish to do—without prolonging further politically divisive arguments.

McGhee

1. Source: National Archives and Records Administration, RG 59, Records of the Department of State, Central Files, 1967–69, PET 3 OECD. Confidential; Immediate. Repeated to London and Paris.
2. Dated June 21. (Ibid., PET 1 OECD)
3. Dated June 20 and 21, respectively. (Ibid., PET 3 OECD)
4. See Document 246.
5. Dated June 22. (National Archives and Records Administration, RG 59, Records of the Department of State, Central Files, 1967–69, PET 12 FR)
6. Regarding the Foreign Petroleum Supply Committee mechanism, see Document 234. The referenced plan was produced by a committee of 21 major U.S. oil companies and dealt with technical questions of supply and routing. (Telegram 15093 from Bonn, June 22; National Archives and Records Administration, RG 59, Records of the Department of State, Central Files, 1967–69, PET 3 OECD)