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ADDRESS OF THE HONORABLE FARRIS BRYANT
DIRECTOR, OFFICE OF EMERGENCY PLANNING, TO THE
NATIONAL PETROLEUM REFUNERS ASSOCIATION BOARD OF DIRECTORS
Mayower Hotel, Washington, D. C.
September 19, I967
9
2. About one-third of the free
world's supply was obtained from the
Middle East.
3. Although the United States used
only about 400,000 barrels per day from
the area, most Middle Eastern oil was
refined in Western Europe and Japan.
Even if no cut-off of oil was imposed,
closure of the Suez Canal and Middle East
pipelines to the Mediterranean could
create critical transportation problems
as was the case ten years ago. Clearly,
the movement of vast additional quantities
of oil around the Cape of Good Hope
could strain the world's supply of
tankers. Clearly, denial of oil to our
allies in Western Europe and Asia would
jeopardize our total security structure.
10
These were the basic findings. They
did not indicate immediate damage to our
national security, but certainly the need
for a posture of readiness was clear and
compelling. Should the emergency occur,
we had to be in a position to move swiftly
and surely.
On June 5, war broke out. The Suez
Canal was closed to all shipping. Pipe-
lines to the Mediterranean were cut off
and embargoes by Arab countries were
imposed upon the United States, Great
Britain and certain other Western
European nations. The question ceased to
be academic or conjectural. We could not
immediately assess the impact of these
events, but concluded that the machinery
must be ready to function without delay,
if needed.
11
Thus I turned to the authority for a
Voluntary Agreement Relating to Foreign
Petroleum supply authorized under Section
708 of the Defense Production Act. This
permits the Government to form a committee
of persons and companies engaged in foreign
petroleum operations to work together
when shortages threaten to, or actually
affect adversely, the national security.
Essentially, it provides immunity from
anti-trust laws and Federal Trade Com-
mission Act regulations to private parties
so engaged.
On June 9, I advised the Secretary
of the Interior that the emergency
threatened to affect adversely the national
security of the United States and I
suggested that a Plan of Action be
prepared.
12
That decision triggered immediate
action. The next day Secretary Udall
determined the emergency existed and
invoked the Voluntary Agreement. He
called upon the Foreign Petroleum Supply
Committee to prepare the Plan. The
determination of an emergency was endorsed
by the Departments of State and Defense.
A subcommittee immediately got down
to work. Four days later, on June 13,
their Plan of Action was ready for the full
committee where it was modified and
endorsed.
On June 27 the Department of Interior
gave its approval and submitted the Plan
to OEP. Two days later, following con-
sultation with the Federal Trade Commission,
we recommended that the Attorney General
13
approve the Plan and the companies'
participation in it. This is a require-
ment of the Defense Production Act.
The next day the Attorney General
wrote me that he had approved the Plan of
Action and our request for the companies
to participate in it. He asked that
great care be taken "to minimize any
adverse effects which might follow from
operations under the Plan, including
unwarranted increases in prices."
This sentiment was shared by the
Chairman of the Federal Trade Commission.
On the same day that we received
approval from the Attorney General, the
Secretary of the Interior was advised,
and letters were dispatched to all
companies involved inviting their
participation.
H
Under the Plan an Emergency Petroleum
Supply Committee of 25 companies, supervised
and directed by the Government, is surveying,
analyzing, and making recommendations on
existing or potential shortages. If neces-
sary, it will prepare schedules for the
most efficient movement of oil throughout
the free world. Such schedules are subject
to review by the Attorney General, the
Chairman of the Federal Trade Commission
and the Director of OEP at least 48 hours
prior to issuance. I would point out that
this review authority was not contained
in the Plan of Action used in 1956.
Equally innovative and of greatest
importance is the arrangement made by OEP
to enable other interested Federal agencies
to participate in all meetings which
concern them.
15
l have insisted that government-
wide coordination be maintained at all
times. On June 22, I sent a copy of the
Plan of Action and an explanatory memorandum
to the Bureau of the Budget, the Council of
Economic Advisers, the Departments of
Treasury, Labor, Transportation, and the
Maritime Administration. They all
endorsed the Plan and welcomed our
initiative in keeping them informed.
Other precautions have also been
taken. The Department of Defense has made
standby or contingency contracts for the
delivery of petroleum products in the
event normal supplies are disrupted.
This authority is under the Defense
Production Act, a Presidential Executive
Order and an existing Defense Mobiliz-
ation Order. The Department of the
l6
Interior has issued a priority regulation
for orders under these contingency contracts.
There is a message in these events.
It is not so much in the substance of
the Plan of Action, but in the procedures
developed and used successfully.
In three weeks we moved across the
entire spectrum of Government, secured
the wholehearted cooperation of industry,
and created a structure which could become
the springboard for an immediate response
-- a response which must be both wise and
swift.
In this Government, in this free
society, we labor under certain handicaps
which are part of our guarantee of freedom.
There are Constitutional, statutory,
regulatory restraints upon our actions in
17
time of peace which make it extremely
difficult to match the ability to respond
of other, less free, societies. Indeed,
in much of the free world, the kind of
action that we took in response to the
Middle East oil crisis could have been
taken by much simpler executive fiat.
What saves us is the good faith which
the government has in the willingness of
industry to put National requirements
above its own immediate desires; and the
good faith which industry has in the purpose
of government to prepare for threats to the
National security with a minimum of
disruption of private industry.
But then, faith in others is the
bedrock of Democracy. If our people do
not believe that our laws are just, and
/?
those who administer them seek justice;
if our government does not believe in the
purpose of its people to do justice;
Democracy could not, in any event, survive.
If there is anything I will shortly
take back with me to private life, it is
the conviction that our society is not
lacking in the qualities of trust and good
faith, that our free system is only
beginning to flex its muscles, that we
are a match for any challenge that I can
foresee; that we are a society capable of
perpetuating the priceless heritage of
freedom which is ours.
Q Q i
I welcome this opportunity to speak .
to the 80ard of Directors of the National
Petroleum Refiners Association.
It is a particular pleasure to be here
for two reasons:
First, because your organization covers
a hroad range of%opinion and interest within
the petroleum industry; and
Second, because my responsibilities
as Director of the Office of Emergency .
Planning require that I make decisions
affecting your industry, and call upon the
oil industry crucially in the performance
of planning activities.
As regards the latter, let me take
this occasion to praise the industry widely
and fully for the services it has rendered
in emergency planning. The Government is
not in the petroleum business. OEP sets
2
national security objectives; we frame
emergency structures in conjunction with
the Department of the Interior; we make
certain these plans dovetail withour total
mobilization structure.
The "doing" and "delivery" is in the
hands of the industry. And the oil industry
has been preeminent in helping us to estab-
lish a battle-ready capability for whatever
might befall us.
As regards those decisions which I
am charged to make, you must be the impar-
tial judge. When the late Robert Benchley
was a student at Harvard, he found himself
ill-prepared for an examination. The test
required that he discuss an international
fisheries dispute from the point of view
of the two countries involved. Lacking
information, he answered: "I know nothing
3
about the point of view of either country .
so I shall discuss the queion from the point
of view of the fish."
It is my purpose to discuss oil from
the point of view of national security. That
is the ohjective overriding every considera-
tion I give to the difficult questions which
often confront me.
Two matters of interest to you currentg
engage the Office of Emergency Planning.
The first is a study begun early this
Spring, to determine the effects on national
security of imports of asphalt and asphalt
produced from imported oils. Our previous
investigation relating to asphalt was com-
pleted in March 1964.
These studies have their roots in a
Presidential Proclamation (3279) issued in .
March 1959 after it was determined that oil
4
was being imported in quantities and circum-
stances which threatened to impair the national
Security. They are part of our general and
full surveillance responsibility spelled out
in the Proclamation.
It is worth noting that more than 35
such import cases have been investigated by
OEP under Section 232 of the Trade EXpansion
'Act. In no other instance were import
restrictions recommended.
Later studies on residual fuel oil have
led to a substantial relaxation of these
quotas. .
In mid-1966 the availability of asphalt
on the East Coast became a source of concern
to consumers, suppliers and distributors of
this important road-building product. Follow-
ing reports of existing or imminent shortages,
5
we asked the Departments of Interior and
Commerce and other appropriate agencies
to gather and furnish us with available
information on the prospects for the
supply of, and demand for, asphalt.
This review indicates that the national
security would not be impaired by liber-
alization of controls on finished products.
We so advised the President and he amended.
Presidential Proclamation 3279, to provide
the Secretary of the Interior with a dis
cretionary authority which, in effect,
would permit more finished asphalt to
enter the country under the control pro-
gram.
On August 23 the Secretary of Interior
announced proposed regulations to imple-
ment the change in the oil import Proclama-
6
tion. Industry comments will be received
through September 22, following which they
will be reviewed.
l earlier announced a full-scale, public
national security investigation of imports of
asphalt and asphalt produced from imported
oils. This study began on April 17 and is
still going on. The scope is sweeping and
the substance is complex. I do, however,
reiterate the one criterion which motivates
our work--a fair and objective determination
within the framework of national security
requirements.
The same standard was observed in our
recent response to the Middle East crisis and
to the possible threat to our national security
Obviously, the question of oil from the Middle
East to the Free World is far from resolved
7
It
is useful, however, to review the sequence
on a permanent or predictable basis.
of events following the Arab-Israel war,
OEP's response during this very critical
period, and the status of the structure
now in readiness for whatever might happen.
At the outset, let me say that this
is a chapter of recent history for which
the oil industry and responsible govern-
ment agencies can take great pride. I
know of no joint action which better
exemplified the spirit of partnership which
is tte hallmark of President Johnson's
Administration.
All the best qualities of our
system of free enterprise and free gov-
ernment asserted themselves: coolness
8
in crisis, wisdom under deadline pressure,
and that indispensable but often difficult
to define trait called "enlightened self-
interest" was everywhere felt and observed.
Our actions began toward the end of
May when both sides of the Middle East con-
flict were mobilizing. The facts which
dictated concern were evident:
1. Persian Gulf refineries supplied
nearly 60% of our military needs in the
Pacific.
PAGE 1
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PAGE 2
2. About one-third of the free world's supply was obtained from the Middle East. 3. Although the United States used only about 400,000 barrels per day from the area, most Middle Eastern oil was refined in Western Europe and Japan. Even if no cut-off of oil was imposed, closure of the Suez Canal and Middle East pipelines to the Mediterranean could create critical transportation problems as was the case ten years ago. Clearly, the movement of vast additional quantities of oil around the Cape of Good Hope could strain the world's supply of tankers. Clearly, denial of oil to our allies in Western Europe and Asia would jeopardize our total security structure.
PAGE 3
10 These were the basic findings. They did not indicate immediate damage to our national security, but certainly the need for a posture of readiness was clear and compelling. Should the emergency occur, we had to be in a position to move swiftly and surely. On June 5, war broke out. The Suez Canal was closed to all shipping. Pipelines to the Mediterranean were cut off and embargoes by Arab countries were imposed upon the United States, Great Britain and certain other Western European nations. The question ceased to be academic or conjectural. We could not immediately assess the impact of these events, but concluded that the machinery must be ready to function without delay, if needed.
PAGE 4
11 Thus I turned to the authority for a Voluntary Agreement Relating to Foreign Petroleum supply authorized under Section 708 of the Defense Production Act. This permits the Government to form a committee of persons and companies engaged in foreign petroleum operations to work together when shortages threaten to, or actually affect adversely, the national security. Essentially, it provides immunity from anti-trust laws and Federal Trade Commission Act regulations to private parties so engaged. On June 9, I advised the Secretary of the Inter Por that the emergency threatened to affect adversely the national security of the United States and I suggested that a Plan of Action be prepared.
PAGE 5
12 That decision triggered immediate action. The next day Secretary Udall determined the emergency existed and invoked the Voluntary Agreement. He called upon the Foreign Petroleum Supply Committee to prepare the Plan. The determination of an emergency was endorsed by the Departments of State and Defense. A subcommittee immediately got down to work. Four days later, on June 13, their Plan of Action was ready for the full committee where it was modified and endorsed. On June 27 the Department of Interior gave its approval and submitted the Plan to OEP. Two days later, following consultation with the Federal Trade Commission, we recommended that the Attorney General
PAGE 6
13 approve the Plan and the companies' participation in it. This is a requirement of the Defense Production Act. The next day the Attorney General wrote me that he had approved the Plan of Action and our request for the companies to participate in it. He asked that great care be taken "to minimize any adverse effects which might follow from operations under the Plan, including unwarranted increases in prices." This sentiment was shared by the Chairman of the Federal Trade Commission. On the same day that we received approval from the Attorney General, the Secretary of the Interior was advised, and letters were dispatched to all companies involved inviting their participation.
PAGE 7
Under the Plan an Emergency Petroleum Supply Committee of 25 companies, supervised and directed by the Government, is surveying analyzing, and making recommendations on existing or potential shortages. If necessary, it will prepare schedules for the most efficient movement of oil throughout the free world. Such schedules are subject to review by the Attorney General, the Chairman of the Federal Trade Commission and the Director of OEP at least 48 hours prior to issuance. I would point out that this review authority was not contained in the Plan of Action used in 1956. Equally innovative and of greatest importance is the arrangement made by CEP to enable other interested Federal agencies to participate in all meetings which concern them.
PAGE 8
15 I have insisted that governmentwide coordination be maintained at all times. On June 22, I sent a copy of the Plan of Action and an explanatory memorandum to the Bureau of the Budget, the Council of Economic Advisers, the Departments of Treasury, Labor, Transportation, and the Maritime Administration. They all endorsed the Plan and welcomed our initiative in keeping them informed. Other precautions have also been taken. The Department of Defense has made standby or contingency contracts for the delivery of petroleum products in the event normal supplies are disrupted. This authority is under the Defense Production Act, a Presidential Executive Order and an existing Jefense Mobilization Order. The Department of the
PAGE 9
Interior has issued a priority regulation for orders under these contingency contracts There is a message in these events. it is not so much in the substance of the Plan of Action, but in the procedures developed and used successfully. In three weeks we moved across the entire spectrum of Government, secured the wholehearted cooperation of industry, and created a structure which could become the springboard for an immediate response -a response which must be both wise and swift. In this Government, in this free society, we labor under certain handicaps which are part of our guarantee of freedom. There are Constitutional, statutory, regulatory restraints upon our actions in
PAGE 10
17 time of peace which make it extremely difficult to match the ability to respond of other, less free, societies. Indeed, in much of the free world, the kind of action that we took in response to the Middle East oil crisis could have been taken by much simpler executive fiat. What saves us is the good faith which the government has in the willingness of industry to put National requirements above its own immediate desires; and the good faith which industry has in the purpose of government to prepare for threats to the National security with a minimum of disruption of private industry. But then, faith in others is the bedrock of Democracy. If our people do not believe that our laws are just, and
PAGE 11
those who administer them seek justice; if our government does not believe in the purpose of its people to do justice; Oemocracy could not, in any event, survive. If there is anything I will shortly take back with me to private life, it is the conviction that our society is not lacking in the qualities of trust and good faith, that our free system is only beginning to flex its muscles, that we are a match for any challenge that I can foresee; that we are a society capable of perpetuating the priceless heritage of freedom which is ours.
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