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OCR Page 1 of 101THE WHITE HOUSE
WASHINGTON
November 14, 1969
MEMORANDUM FOR
THE PRESIDENT
this
RE:
Oil Imports
Tuesday a Wednesday
1. The Cabinet Task Force on Oil Import Control is moving toward
a recommendation of increased oil imports to result in a reduction
in the current domestic oil price of $3.30 per barrel to $2.50
per barrel, and a tariff system rather than the current quota
system to control imports. (Attached at Tab A is a one-page
summary of the Task Force's work and at Tab B a nine-page summary. )
This recommendation appears to be defensible from an economic and
a national security point of view. However, it would cause a
major economic realignment, and the recommendation does not reflect
the political effect of this realignment.
2. The international oil companies could readily adjust to this
recommended change, though they would suffer a substantial loss in
the value of their domestic production. The major oil companies,
like Union Oil, would be hurt, would complain, but could adjust.
The small refineries and the independent producers would be badly
hurt -- some of them fatally. Due to their geographical concentra-
tion and wealth, this group has substantial political punch and
they would react violently to the recommendations. (This judgment
has been forcefully expressed by George Bush, who feels even as
small a reduction in price as to $3.00 would destroy his chances
of winning the Senate seat.) While a reduction in crude prices
would reduce gasoline and products costs to consumers generally,
it would also reduce tax revenues to oil-producing states.
This
would force a state like Texas to increase property and/or income
taxes, with predictable political results. The governors of these
states have met with the Task Force and are now pressing for a
meeting with the President in order to protest against any
substantive change.
In addition to the Texas race, the two other 1970 Senatorial
races in oil states which would be adversely affected by any change
are the McGee seat in Wyoming and the Montoya seat in New Mexico.
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