U.S. International Energy Policy

This afternoon we will be considering U.S. international energy policy. The primary purpose of today's hearing is to analyze the direction of that policy, particularly in the aftermath of the failure of the recent preliminary conference in Paris to produce agreement among consuming countries, producers, and non-oil-producing countries on the agenda for a major international conference later this year.

The specific areas of focus today include the Paris conference--an analysis of issues discussed, the United States and opposing positions, and the reasons for the failure; the International Energy Agency, its future viability following the Paris talks; and related legislation; namely, H.R. 2650, a bill introduced by our distinguished House Minority Leader from Arizona, Mr. Rhodes, setting forth the proposals of the administration for congressional authorities to carry out the terms of the agreement on an International Energy Agency. And we are particularly interested in the many implications of section 1306 of that bill, authorizing the President to control the prices of petroleum and, in section 1313, providing immunity from antitrust laws.

It is also hoped that today's hearing will provide an opportunity for further consideration of the implications for U.S. policy of major related developments and activities of the past few months on both the international and national levels.

Internationally, we have seen the November 19, 1974, agreement of 16 of the 24 members of the Organization of Economic Cooperation and Development (OECD) to establish an International Energy Agency which would carry out the provisions of an international energy program through promoting cooperation among the major oilconsuming nations, the industrial countries of the West, plus Japan. Now, this cooperation is to occur in such areas as energy sharing, energy conservation, research and development, international oil allocation, nuclear enrichment, and developing an emergency self-sufficiency in oil supplies.

In March, the members of the Organization of Petroleum Exporting Countries met and agreed to meet with oil consuming and developing nations in April to discuss such issues as the stabilization of oil prices,

aid to and the problems of developing nations, linking the price of oil to global inflation and to the price of manufactured goods, monetary reform, the protection of oil producer's investments in the West, and measures to counter threats against oilfields.1

However, the April preparatory meeting in Paris of representatives of producers, consumers and developing countries reportedly broke down over the failure to obtain agreement on the agenda of the proposed international conference, with consuming countries supporting confining such a conference to energy questions, and oil producers and developing countries supporting the expansion of such a conference to consider other raw materials and other forms of development assistance to the lesser developed countries. However, we are looking forward to these hearings to a fuller analysis today of all the factors contributing to the breakdown of the conference.

In addition, we are hoping to receive some insight into the followup to Attorney General Levi's March 28 opinion, responding to a Presidential request under section 708 of the Defense Production Act, for approval of immunity from antitrust laws and the Federal TradeCommission Act with respect to acts by participants-the petroleum industry-in the voluntary agreement and their designated affiliates, which are undertaken in order to implement the terms of the agreement on the international energy program.

Our witnesses today are: Hon. Charles W. Robinson, Under Secretary for Economic Affairs, Department of State; Hon. Melvin A. Conant, Assistant Administrator for International Energy Affairs, Federal Energy Administration, and Martin Lobel, an attorney with the firm of Lobel. Novins and Lamont.

Our leadoff witness is Hon. Charles W. Robinson, who headed the U.S. delegation to the recent Paris talks.

Mr. Diggs. Mr. Robinson, you have a prepared statement, and you may proceed.

STATEMENT OF HON. CHARLES W. ROBINSON, UNDER SECRETARY

FOR ECONOMIC AFFAIRS, DEPARTMENT OF STATE

Charles W. Robinson of San Francisco, California, was sworn in as Under Secretary of State for Economic Affairs on Jan. 3, 1975.

Since 1965, Mr. Robinson has served as President and Manager of Marcona Corporation of San Francisco, California. In 1961, he became President and Managing Director of the Marcona Mining Company after having served as Executive Vice President and General Manager since 1959.

From 1952 to 1960 he was with the Utah Construction Company, serving as Assistant Treasurer, Assistant Secretary and Vice President. In 1951 he was named Manager of the Monterey Trading Company in Panama. From 1950 to 1951 he was an Associate with the management consulting firm of McKinsey & Company, Inc. In 1947 he was Assistant to Production Services Manager for the Golden State Dairy Products Company, serving until 1950.

Mr. Robinson was born on September 7, 1919, in Long Beach, California. IIe received his A.B. (cum laude) in 1941 from the University of California. He received his M.B.A. in 1947 from Stanford University Graduate School of Business Administration. He served with the United States Navy from 1941 to 1946. From 1941 to 1942 he attended the United States Naval Academy Post Graduate School. From 1942 to 1943 he was an Engineering Instructor at the United States Naval Academy Post Graduate School and from 1943 to 1946 he was an Engineering Officer (Lieutenant) at sea.

He is married to the former Tamara Lindovna and they have three children.

1 See Declaration of OPEC meeting in appendix at p. 51.

2 See letter in appendix at p. 100.

Mr. ROBINSON. Thank you very much. Mr. Chairman.

I am pleased to have this opportunity to appear before your subcommittee to provide testimony on the recently concluded preparatory meeting between the oil producing and consuming nations and to discuss in broad terms the relationship of this meeting with our overall energy policy.

I would like to digress for a moment to confirm, as you stated, Mr. Chairman, that I did serve as chairman of the U.S. delegation at that meeting, which extended over a 10-day period, and I assumed reponsibility for the performance of the U.S. delegation at that conference.

At the Washington Energy Conference in February 1974, the United States and 12 other industrialized nations agreed that, at the appropriate time, they should meet with developing consumer states and producing countries to explore possibilities for mutually acceptable solutions to the energy problem. The International Energy Agency (IEA), created 9 months later, has as one of its goals the institution of contacts and dialog with the producing nations.

We realized, however, that meaningful discussions could take place only after consuming nations had proved that they would not remain helpless over time to the arbitrary manipulation of the world oil market by the OPEC states. Before we could negotiate effectively, or even gain the necessary respect for serious discussions, we had to undertake unified actions in the energy field that would demonstrate strength and consistency of purpose.

Consequently, our international energy efforts since the Washington Energy Conference have concentrated on the creation of a framework of close, consumer country cooperation. Through this effort, we seek to reduce and eventually eliminate our vulnerability to manipulation of our oil supply and oil prices.

Substantial progress has been made in building consumer solidarity over the past 14 months. In the IEA, we have agreed on emergency provisions that will enable a unified and coordinated response to any future embargo. Along with other OECD countries, we have agreed to create within the OECD a $25 billion support fund to act as a lender of last resort to industrialized countries suffering severe balance of payments costs because of high oil prices.

These efforts, basically short-term insurance policies, are complemented by essential longer term programs to reduce IEA members collective dependence on imported oil. We have established as a conservation target the reduction of IEA oil imports by 2 million barrels a day by the end of 1975, and similar objectives will be established for later years. We have agreement in principle on a series of interrelated measures to accelerate the development of indigenous energy supplies: it is anticipated that implementation programs will be developed and approved by July 1.

The Paris Preparatory Meeting of April 7-15, or "Prepcon," took place as a result of a French initiative. Last fall, the French President proposed a meeting of a small number of industrialized, developing, and producing countries to meet in Paris to plan a multilateral conference on energy; invitations to such a meeting were issued in March. The French proposal was similar to one made earlier by Saudi Arabian Oil Minister Yamani, and the French invited the same coun

tries to the Prepcon that Minister Yamani had originally proposed. The Shah of Iran had also shown interest in a producer/consumer conference.

In December at Martinique, President Ford conditioned the participation of the United States in a producer/consumer conference on a sequential four-stage approach, which the IEA subsequently endorsed.

In the first stage, consumer cooperation would be strengthened in the financial, conservation and accelerated-development-of-energy areas. As I mentioned earlier, concrete programs in these areas have been agreed to. The second stage was to be the Prepcon. Stage three would involve intensified consumer cooperation and the development of common consumer positions. Stage four would be the holding of the conference. In the light of progress made toward consumer solidarity, we agreed, in late March, to proceed with the preparatory meeting.

PREPCON

The task of the Prepcon was to agree on the procedures and participants for the energy conferences to be held later this year. The 10 participants included representatives from the industrialized countries United States, Japan, and the nine members of the European Community, represented through a single spokesman-the developing consumer countries-Brazil, India, and Zaire-and the OPEC nations-Saudi Arabia, Iran, Venezuela, and Algeria. As host, France, which has declined to join the IEA, provided the "technical chairman;" the French were also represented in the EC delegation.

We went to Paris determined to be cooperative and constructive. We believed that the conference should be one in which rhetoric was minimized and real work toward concrete solutions was maximized. Therefore, it was essential, in our view, to have an agenda for the conference that was manageable in size and which offered the promise of real progress.

Despite 9 days of intense and grueling negotiations, the 10 delegations at the Prepcon could not reach agreement on the procedural issues for the conference. The talks failed to resolve the fundamental question of what type of conference it would be. The United States, European Community, and Japan, unanimously supported by other members of the IEA, maintained that the conference should focus on energy and energy-related matters as proposed in the French invitation. The OPEC and LDC representatives were willing for the conference to discuss energy, but only if equal status were given to a wide range of problems relating to the economic relations between developing countries and the rest of the world. Specifically, they insisted that the conference treat raw materials, monetary reform, and assistance to most seriously affected countries on the same basis as energy.

The industrialized countries demonstrated considerable flexibility in the negotiations, offering to interpret quite broadly the topics that could be considered under the general energy rubric. We offered, in addition, to treat all nonenergy related subjects in other appropriate fora where work on them was already underway. We were not willing, however, to agree, as the OPEC and LDC representatives seemed to want, to create another unproductive forum to discuss the new international economic order.

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U.S. International Energy Policy: Hearing Before the Subcommittee on ...