Office of the Historian

152. Summary of Conclusions of Special Coordination Committee Meeting1

Washington, June 6, 1978, 4–5:15 p.m.

SUBJECT

  • Petroleum Supply Vulnerability Assessment

PARTICIPANTS

  • State
  • Richard Cooper Under Secretary for Economic Affairs
  • William Crawford Ambassador at Large
  • Defense
  • Lynn Davis Deputy Assistant Secretary/ISA
  • JCS
  • Lt. Gen. William Y. Smith Assistant to the Chairman
  • CIA
  • Robert Bowie Director, National Foreign Intelligence Assessment Center
  • Hans Heymann National Intelligence Officer for Political and Economic Resources
  • Treasury
  • Helen Junz Deputy Assistant Secretary for Commodities and Natural Resources
  • Energy
  • Dale Meyers Under Secretary for Energy
  • OMB
  • Eliot Cutler Associate Director for Natural Resources, Energy, and Science
  • CEA
  • William D. Nordhaus Member, CEA
  • NSC
  • Samuel P. Huntington
  • Sam Westbrook
  • Gary Sick
  • White House
  • David Aaron
[Page 486]

SUMMARY OF CONCLUSIONS

Following the instructions he received after the 24 March, 1978, SCC meeting on the Petroleum Supply Vulnerability Assessment,2 Ambassador West discussed with Crown Prince Fahd the idea of U.S. assistance in strengthening the security of Saudi Arabian oil facilities against terrorism.3 Fahd said the Saudis shared U.S. concerns about these problems. There is an overlapping of not fewer than five Saudi ministries’ areas of responsibility in security arrangements, however, and it is a most sensitive internal political issue. The Prince thanked Ambassador West for the USG’s offer and insisted the Saudis would not hesitate to ask for assistance if they felt they needed it. Ambassador Sullivan (Tehran) felt the Iranians would consider a U.S. offer of assistance very self-serving and would probably seek some quid in return for Iranian acceptance of aid. Both Ambassadors counseled against pressing the assistance initiatives further at this time.

The arms transfer decisions4 have created a more favorable environment in which to approach the Saudis again, but this should not be done for six months. Ambassador West will monitor the situation. An offer to Iran would be reconsidered if the Saudis were to accept USG assistance at some future date. In the meantime, the interagency PSVA working group will de-sensitize the Saudi Arabian anti-terrorist initiatives package, and State will offer the USG views on Saudi oil field vulnerability to ARAMCO for their information and use should the opportunity arise. (ARAMCO has expressed concern about oil field security in Saudi Arabia but is no longer in a position to control outlays for security measures. They could conceivably be asked their views on the matter, however, and it was felt that the background material thus might help get US views aired informally.)

The Department of Energy is considering ways to increase temporarily over the next year the amount of oil that would be available through the Strategic Petroleum Reserve (SPR) to offset an oil supply [Page 487] interruption.5 Floating storage (using idled or laid-up tankers) and above ground storage in Rotterdam, the Netherlands, could each add about 30 million barrels (mmb) of oil to the reserves at a time when the permanent storage facilities had 100–125 mmb in place. The cost of temporary storage is estimated to average about $1 per barrel (Rotterdam is less, tankers more).

The main arguments for temporary storage are: (1) the additional oil would increase by at least 50% US capability to deal with oil supply interruptions in the short term; and (2) if current storage cost estimates prove correct, a 10% oil price increase in 1979—which some predict—would make an early buy attractive from an economic standpoint. Arguments against temporary storage include: (1) adding management of the temporary storage program to an already overloaded SPR staff could delay the regular program even further; (2) the amount of oil in temporary storage would not add a significant amount of protection in case of an interruption (about 12 days with a total supply interruption and the International Energy Plan for sharing in effect); (3) Environmental Impact Statement requirements and other delays could preclude timely acquisition of temporary storage; (4) costs of storage and predictions of oil price increases are very uncertain and could change the economic analysis drastically; and (5) there might be problems getting the 30 mmb out of Europe despite informal Dutch assurances on this matter. DOE is going to continue their analysis, get firmer cost data, and report back to the SCC by 1 July, 1978.

The JCS provided a status report6 on the analysis it has done on two topics: (1) the capability of current U.S. military forces to deal with oil-related contingencies in the Persian Gulf; and (2) an assessment of the utility of air and naval bases in the Persian Gulf, Middle East, and Horn of Africa from which U.S. forces might have to operate. The first study outlined deployment times, composition, etc. for small, medium, and large force packages which could be sent to the area. This analysis will be subsumed in the larger PD–187 follow-on contingency requirements study underway in DOD. The second analysis stressed the large distances involved in moving from one area in the Middle East to an [Page 488] other and the difficulty of trying to support operations in one region from a base located in another. This initial technical study will be used by a small working group developing a broader politico-military assessment of this set of issues.

  1. Source: Carter Library, National Security Council, Institutional Files, Box 95, SCC 83: Oil Supply-Vulnerability Assessment, 6/6/78. Secret. The meeting was held in the White House Situation Room.↩
  2. See Document 145.↩
  3. West reported the details of this discussion in telegram 3124 from Jidda, April 25. (National Archives, RG 59, Central Foreign Policy Files, P850033–0113) Brzezinski received a summary of the conversation from the Department of State on May 16. (Carter Library, National Security Council, Institutional Files, Box 95, SCC 83: Oil Supply-Vulnerability Assessment, 6/6/78)↩
  4. On May 1, Carter sent a message to King Khalid informing him that he had submitted to Congress for review a contract to provide 60 F–15 aircraft to Saudi Arabia. (Telegram 110151 to Jidda; National Archives, RG 59, Central Foreign Policy Files, P850071–2556) On May 15, the Senate voted against a move to block the sale. On June 4, West reported on the “initial euphoric reaction” to the contract’s approval. (Telegram 4138 from Jidda; ibid., D780233–0995)↩
  5. On May 23, the Assistant Secretary of Energy for Resource Applications prepared for Schlesinger a draft action memorandum asking whether the Department of Energy should “contract for significant quantities of temporary aboveground and/or floating storage as a means of obtaining additional protection and flexibility for the Strategic Petroleum Reserve?” He recommended option 3: “Decide now to store up to 30 million barrels of crude in aboveground conventional storage both in the U.S. and overseas for a period of up to one year” and charter four VLCCs to transport oil, “with an option for their use as floating storage.” (Carter Library, National Security Council, Institutional Files, Box 95, SCC 83, Oil Supply-Vulnerability Assessment, 6/6/78)↩
  6. Not found.↩
  7. PD 18, August 24, 1977, is entitled “U.S. National Strategy.”↩