At the direction of the President the enclosed letter from the Acting
Secretary of Defense on the subject has been referred to the Director
[Page 490]
of Defense Mobilization to develop
a national petroleum program leading to the complete supply of Allied
requirements, for consideration by the National Security Council.
[Annex 1]
The Acting Secretary of Defense (Lovett) to the Executive Secretary of the National Security
Council (Lay)
top secret
Washington, December 27,
1950.
Dear Mr. Lay: In December 1948, the Secretary
of Defense submitted a proposed National Petroleum Program to the
National Security Resources Board (NSRB) requesting that the program, as proposed by the National
Military Establishment, be considered by the NSRB and that appropriate action be taken with other
government departments and agencies to implement a national oil policy.
The immediate need for the formulation and implementation of a
coordinated petroleum program was recognized by several departments of
the government. The Foreign Petroleum Policy was under consideration by
the State Department, and a National Gil Policy for the U.S. was under
consideration by the National Petroleum Council, advisers to the
Secretary of the Interior. These were in addition to the National
Petroleum Program which had been coordinated and approved by the
Military Establishment.
The National Security Resources Board advised the National Military
Establishment that it would prepare a program incorporating the programs
and policy recommendations of the State Department, Interior Department,
and the National Military Establishment. This action was taken and
submitted to the Interdepartmental Staff Group (ISG) for approval prior
to submission to the NSRB. In June,
1949, the Secretary of Defense was advised by the Acting Chairman of
NSRB that negotiations by the
various departments in the ISG did not result in mutual agreement among
the agencies concerned as to the necessity for a petroleum policy. It
was further determined that no recommendation to the President on
petroleum policy or the coordination thereof was necessary at that time,
however, the representatives of the National Military Establishment did
not agree to this determination. It had been determined, however, by the
ISG that certain reference papers concerning the coordination of the
U.S. Petroleum Policy which had been submitted, should be made available
for reference purposes to the petroleum staffs of the various interested
departments and agencies.
In the event of a major war in the future, there would be imminent danger
that the Middle East sources of petroleum would be lost
[Page 491]
to the United States and its Allies. The
military and economic costs of regaining even a portion of these
resources, should that become essential, would be enormous. The military
and diplomatic measures needed to hold that area, should its oil be
vital to the entire war effort, would be most difficult to implement and
uncertain to succeed.
The Department of Defense appreciates that measures necessary to insure
independence of Middle East oil present difficult political, diplomatic,
and economic problems and will become increasingly costly in future
years. These measures, therefore, must be studied thoroughly,
coordinated carefully, and justified completely. Such action would
result in a National Petroleum Program.
Subsequent to the ISG determination (December 1949), discussions were
held between the Under Secretary of Defense Stephen Early, Secretary of
the Interior Oscar Chapman, Under Secretary of State James E. Webb, and
Assistant Secretary of Commerce Thomas C. Blaisdell, Jr. It was agreed
then that Secretary Chapman be made Chairman of a Working Group which
would report to the National Security Council in the development of a
National Petroleum Policy. However, no further meetings were called by
the Dept. of Interior to discuss this policy.
Based on preliminary guidance as to the requirements of the U.S., Allied
and Associated Powers provided by the Joint Chiefs of Staff for a war
commencing in 1954, it appears that, in the geographic areas which would
be available to such powers, an overall shortage in refining capacity of
approximately 1 million barrels per day and in crude production of ½
Million barrels per day will exist at the outbreak of a major war.
The Joint Chiefs of Staff have consistently stated that a National
Petroleum Program is necessary. Further, the present international
situation has become increasingly acute, and at the same time, increased
requirements of the Western Powers have made the problem even more
immediate than it appeared when discussions on this program began in
1948.
The Department of Defense believes that a National Petroleum Program
should be developed after careful analysis which should include, among
other things, the relative economic costs of insuring adequacy of
petroleum in the continental United States, now, in time of future
emergency, and in a postwar period, as against the military costs of
insuring its availability in the Middle East. This analysis and program
will provide the Department of Defense with guidance it requires for
strategic planning and development of military forces and budget. It is
understood that the effects of implementing any particular phase of the
program must be weighed against the strategic requirements before
decision is made which might have a significant economic or
[Page 492]
other influence. In view of
the foregoing, it is requested that an agenda item be prepared for
discussion at the next meeting of the National Security Council in order
to determine the necessity for a National Petroleum Program.
It is further requested that after discussion of this problem by the
National Security Council, that the Petroleum Administrator for Defense
be requested to take action to develop a program leading to the complete
supply of Allied requirements. The attached draft of a letter to the
Petroleum Administrator is submitted for your consideration.
Sincerely yours,
[Subannex]
Draft Letter From the Executive Secretary of the
National Security Council (Lay) to the
Secretary of the Interior (Chapman)
top secret
[Washington, December 28, 1950.]
Dear Mr. Secretary: During the past two years,
the international situation has become increasingly acute. At the same
time, increased petroleum requirements of the Western Powers have made
the early development of a National Petroleum Program a vital necessity
to our national security.
The Department of Defense recently advised the National Security Council
of a Joint Outline War Plan, currently under study, for a war assumed to
commence on 1 July 1954. Preliminary estimates of the petroleum
requirements of the U.S., Allied, and Associated Powers indicate that in
the geographic areas which would be available to such powers, a deficit
in refining capacity of 1½ million barrels per day, as well as ½ million
barrels per day of crude production, will exist at the outbreak of
war.
In view of the foregoing, the National Security Council requests that for
its approval, you propose the necessary action to develop a program
leading to the complete supply of Allied petroleum requirements. Such a
program should be developed following the general procedures you
discussed with the Under Secretary of Defense, Under Secretary of State,
Assistant Secretary of Commerce, and others on 28 December 1949.
Sincerely yours,
