VERSAILLES SUMMIT: PRESIDENTIAL DRAFT BRIEFING PAPERS

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP10M02313R000100750009-9
• Release Decision: RIPPUB
• Original Classification: C
• Document Page Count: 9
• Document Creation Date: December 22, 2016
• Document Release Date: February 10, 2012
• Sequence Number: 9
• Publication Date: April 26, 1982
• Content Type: MEMO

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ROUTING AND TRANSMITTAL SLIP
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OPTIONAL FORM 41 (Rev. 7-76)
Pmcribid by GSA
FPMR (41 CFR) 101-11.206
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 Declassified in Part - Sanitized Copy Approved for Release 2012/03/08: CIA-RDP1 OM02313R000100750009-9
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26 April 1982
MEMORANDUM FOR : Thomas B. Cormack
Executive Secretary
Director, Ottice'of Global Issues
STAT
SUBJECT Versailles Summit: Presidential Draft
Briefing papers
1. We have passed our comments on the attached briefing
papers directly to the Department of Energy. We had no major
substantive problems with any of the drafts, but provided the
following comments.
2. U. S. Supply Developments: The first Point-Counterpoint
under the Key Points section refers to the 1978/79 doubling of
world oil prices. These price increases actually took place in
the 1979/80 time frame.
3. Stockpiling: No comments
4. Oil Price Trends/Outlook: The second paragraph leaves
the mistaken impression that oil prices are expected to continue
their downward spiral no matter what happens to the economy. We
suggested that the second sentence in this paragraph be revised
to read something like: "The US position is that the upturn in
economic performance beginning later this year is unlikely to
generate upward price pressures." Similarly the reference to an
"essentially irreversible trend toward lower oil consumption" as
a Counterpoint left the impression that consumption will never
rise above current depressed levels. We recommended that this
phrase be struck from the text.
5. Natural Gas -- Pricing and Supplies: No comments.
6. Nuclear Energy: The first sentence under the Essential
Facts section points toward the cancellation of some 90 nuclear
reactors in the United States. Our records show only about 50
reactors have been cancelled. The first sentence in the next
paragraph points to the problems experienced by the nuclear
industry in other Western countries. We suggested it would be
worth pointing out that despite these problems, no plants have
been cancelled. Finally, we recommended the addition of another
talking point dealing with the question of nuclear waste disposal
since most OECD countries are waiting for the United States to
take the lead in this area.
STAT
STAT
CON? T15EN If t At A I -h -1-) 4,0
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'Doibnent of ftwo
Wes. D.C. 20U5
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Room
Depar
tONFIEEN1IAL
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143
sent of Treasury
Aim arson
Room 336
DeparTosnt of state
John sugh
Room $62
Depar srnt of Commerce
stove Perrar
Rom 235
now 6 eoutive office
Roger Porte r
Room 3 5
Old E ecutive Office
building
FS&C~IY{~
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9(f--fiber
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ROOM 9 2
Old a ecutive office Building
Thoea B. Cormack
Rope 7913
CIA
>r K I gorge Sr l
dlr,ctly to my staff person coordinating our contributi" (Carol I.*s
252-6383).
Principal Assistant for
Interact 1 Affairs
~gJ~CTi Vershilles Susuuiit: Clearance of Draft briefing
Papets for President's briefing Book for
June 4-6, '82
Attached for your a ncy's clearance are papers on key bqy
L*sues preps - *y 062 for the President ? s br ist i ng biaW; ior, the
Orssilles Immit, lesse, provide your oo*.snts by Noo $, April 26,
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APR 161982
U.S. SUPPLY DEVELOPI(NTS
tie positive vupossit of u s. 1Mireleura markets to the immediate itrol of oil
decision in Jiuy 1101 ttrsnply supports the free-market approb to polity advocated by this Adj nistration.
ofterv
II. Essential Pbctors
Oacostrol of oil and rmaov 1 of the Entitleralnts Pro
ram
li
i
t
g
e
m
na
ed idles for
U.S. 011 C60601110100 and o 1 sports end encouraged domestic oil oration and
Berl. ~.owor U.S. oil imports, resulting from decontrol. N to lower
for OPEC
tl
l 1 - -- -
o
sea
sl*pbrt the decontrol dec i s on.
III. XPRIEM
~Slnce daontrol in January $$1. U.S. oil drilling activity has been $tian all t'
Nigh, domestic oil prod" IN remained flat instead of declining over
tOrr
h barrels per day a previously expected and world oil prices 911 by over
$4.00 per barrel and 9asoli prices by about 14 cents per gallon.
.12k q--%* iprove t: in the U. S. of 1 market result core tram t! ? ~d$b1 isg Of
nor oil prices in 1970/79 (rather than the decontrol decision.-
tnt--TM oil
price Increases fn 1970/7 created
hi
U
a
Mot
t1111 motive
.
ac ion. Oil decontrol released potential by al warp ! 0110101
roducers t
t
l
p
o see ac
ua
prl
in -The t q"". lnistr t ion decontrol decision -only speeded -i t was al-
NW- well underway from t Carter Administration.
int--President Car r deserves a lot of credit, but the on ; rceful now to de~ofttrol oil and clearly stated eb ilw allowhg
k ~.lect~ ~tvel Of all l
arlp
s to work eliminated any doubt about the possbility of futw* 0040 cestrols
and allowed producers to Invest now in drilling and production acti ty knowing
that free-markett prices woul prevail in the future.
QQ~,~r .-manila decontrol may eve helped brTd oil prices are slowing down investmentrin U.S.? s~yntheticl fueoil ls.pr otion, lpw
~icfs coupled with our e
~~!! s~~. atlation are 101 the expected lmpro
projected costs of synthetic f l Aso
vezoo IS rule tic Rue1s i
~
n
t
'
g
s
on
paa
r ng ahead with loatd
n guaranees an prop
ams
to in~rre some synthetic fuels development so that if world oil pric 04~ rise In the
future, private Industry cane rapidly expand synthetic fuels production ,asp needed.
John Stanley-0iller/P0A1*RU_ 11
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is -I;
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bTOCKPI LINO
AN di i ;pM
minor supply disruptions.
utilising flexible 'urge stocks to reduce pressive on the market is,', '
The United 8tat" A s remained strongly opposed to any! iakmal sturiar
drawdown arrangeasn coordination, such as that propot by Ito
end Prance, to veun er the effects of minor supply dis tioas.
!hose same ~ntrie have attempted to link discussion 7of lace agl
Stock levels with se of stock use, and in the past ooated:
or dealing with future oil supply disruptions of what tar props ti i i1
strategic stocks to discretionary national use are the R best means
A
The United iltat s has emphasised on numerous octal +s that
primary reliance on market forces together with high iAels of
stock management in
sonseg note for i
all price levels.
' eel
III. Ti ikina r-o t
stook 1
?tion, where iv ?' . ~i~
-
ssM - ,
Suppport high levels of oil stocks we remain etro gly; to
it evasion which wo ld link stock levels and stock w ed
as topic for the 110 Ministerial in May. While we coat
fleeting, the United. States successfully eliminated this:
we hope to disvoura4e further stock k--uss -irittatives.-
issues to MW of th IRA subgroups for further consij
belegattcn s.UIONsfpily won IRA support for remanding,
TI. B~tsentiax Ps-ct~t:
t thl ftbft _ 16 0nttt ing of the I VA Governing soarid; i s U.s.
Me=* a The '
relionce on the mar
Stocks for disoreti
dealing with oil di
proportions. Forma
the effective opera
Said technical ' rooso
effectively in a su
Sharing system
country , and yet be below the level that would trigger: *M* 2iA
app, .eda~u.
C t gismi !u ly interruptions similar to thosh :; 1979,
Say y the c ources of private oil stocks tort.: i,nidividbtl: it
Counter ints
oh acac rlat as of
must build governme
supplies and be pre
consult closely wit
by national govern
security stocks shu
whatever action is
tively minor oil disruptions cane h -I dcamatjic i ,i
ividual countries supply positiofs,Seal tot over,;
netheless there is no system whl klldresaei,
. if
these situations.
et together with high levels of tt tgia
nary national use are the best noa Of
uptions of either sub-trigger or rgsnoy
interventionist mechanisms iatelrf with
ion of _ the market and for a varij" 0 legal
n oil supply disruption. Theref ro_#, tee
t emergency oil stocks to supplewe 4 privates
ared at the time of a supply inter ptios to
industry and other governments . .;O take
udged iecessary. However, emege Sod other
d be available for use on a di scre 4spary bass :
nts as they see fit.
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GIIL PRICE TRENDS/OUTLOOK
altesnativee r?uch4 as coal aid nuclear. In the abs of
an unexpected supply disruption, then should be lit or
no upward pressurr on real oil prices for the next Mwsal
year..
the trend, suJ g from OPEC? on past overpricing
U.B. t toward lower oil ooasumptioo
downturn in the *pomm&c performance in the industrial .sed
countries. The S. position is that the upturn , 000namic
Pori begi ing later this year is unlikely rawesae
APR 2 1*2
I . ISSUE I
' Recent dealins in world crude oil and refined predict
prices.
? The outlook ,f4 oil prices in the future.
The world oil aariket has been extremely weak in 1982. Oil
coasw*ptioa has cipntinu*d its steep decline which boom in
1079. At the time, oil exporting countries haves been
prod=&W more o than they could sell. The resultibg
over-supply hs0 t pressure on prices, forcing oil producers
either to give official and/or unofficial price cuts as most
non-OPJC and OPEC oil exporters have done, or to out
production as OP did beginning April 1, 1982.
The decline in oil prices can be attributed to both is long-
term, essential' irreversible trend toward a more efficient
utilization of a rgy and non-oil alternatives and a cyclical
III. TALKING POINTS
or decline ii oil consumption, and as a result, when the
Point: Low economic activity has been primarily resmonsibl
r re on-a
economic recovery' arrives oil consumption will incres,
renewing upward pressure on prices.
Counter into Pat overpricing of oil by OPEC and this
decontrol of crud
oil industry have
toward greater of
alternatives to o
inforcement of market forces thro
oil prices and deregulation of th+Nm+ 0,8.
been the driving forces behind the trend
iciency in energy useage and uses if
1 in the U.B. This Administration's
market-oriented policies will offer American consumes the
proper incentives' to continue to became more effi
tt in
lower oil aonsump
boost from Admini
recovery, which w
capital invests ien
perpetuating an e
their use of ener
y
y and to use alternatives to of us IL
ion.( This process will also reaei$esa
tr on policies to stimulate eaon
11 also encourage new energy-effivs nt
s.
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NATUtAL GAS - PRICING AND SUPPLIES
I[ I. ISSUE
' Deregulation
of U.S. wellhead natural gas prices.
? European dendence on Soviet gas imports.
It. EUZNTIAL FACTS
The European C nity is concerned about the U.S. osoaa.itment
to the accelera ed decontrol of domestic natural gas prices.
They fear that ontinued controls will increase U.S. demand
and reduce prod tion and force the U.S. to draw more heavily
on intsrnationa gas markets. This concern has been heightened
by the decision to defer legislation to accelerate natural gas
deregulation.
in addition to the current comeitments being made to.inorease
Soviet natural s imports, Europeans are considerthg:the
possibility, of other increment of Soviet gas in the late
1990's or early i990's. The U.S. position is to encourage the
Europeans to de top alternative sources, especially now
No
tha rwegian gas suplies. The U.S. would like to demonstrate
the seaurit provided by alternative sources outweighs
the additional ebat.
III. TALKING P?xIM
oft: The U.S.' Administration appears to have reC0*$1dered
Its dowitment to proceed with accelerated deregulation of
natural gas priors.
our ints Due to an extremely heavy legislative Calendar,
we i ro' csd tb defer introduction of legislation to modify
and Improve the manner in which the Natural Can Policy Act
achieves deregulation of the wellhead price of natural gas.
We remain firmly Committed to the principle of introducing
market forces to our energy markets, including the pricing of
natural
as
g
.
O to Natural as from the Soviet Union provides d urope with
a asonably pri "d source of energy to use in the reduction
of dependence on'Middle East oil.
Count! Dints I estimating the cost of gas, Europe must
Q io cos , in terms of their own security,, of-
depend-ence on the "vi t Union. More consideration must be given
to the developlebt of ""cure sources of gas supply such as
gas from Norway. I
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APR 2 ! k2
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NUCLEAR ENERGY !Z 2
I. issue
Strong suppppoor~t from Summit leaders of commercial nuclear
energy as an alternative to reliance on insecure oil would
help alleviate some pt the problems associated with inoteseed
Wolear energy use. One major
public concern is waste
management which could be specifically addressed in the
context of inoreasedjinternational technical cooperation.
xh ESSENTif,4 PAfTSi
The US 1+aalear Industry has experienced cancellati" of
C9~4 reactors sin 1978 and has no current prospects for
Kim domestic orders. The major US problems are: 1) reduced
rate of growth of sl ctricity demands 2) utility finanotal
problems= 3) burden owe regulations and licensing delaysl and
4) failure to adequa Sly resolve the waste management issue.
e ~ot We ern co ntri*s, with the exception of PranOs, -AE?e
ncin s '
re ions in planktd nuclear grow al-
44.
cular, all western cpuntrt*o have some degree of a public per-
geption problem assn sated with high-level waste disposal.
Most technical exper s would agree that the technology for such
disposal in a sate manner is in hand, but the political and in-
stitutional decision necessary to implement it have not been
mode. Given this si uation, nuclear energy prospects in these
countries would u btedly be enhanced and confidence renewed
if Heads of State ma a strong statement in support of Wadle-
ar Energy, and re nded some action to resolve the public
concern about waste. In the latter regard the Heads of State
could ask the OECD Nuclear Energy Agency (NEA) to assess the
feasibility of a joi$tt international waste management project.
w -w P
I-1I . TALKING 111T8
.6L 4.
Punts It is i tant that all energy sources, in lud- ? ~~
ing nuc eat ens y, utilised to their fullest potential to - A
minimize future son insecure oil and gas sources.
R!2s lranae may press for a stronger pro-nuclear
statement.
Pont: In view of widespread public concern over the nu-
clear wasts issue th OECD/NBA should be asked to assess the
feasibility of an in ernational waste management project.
Responses Sbme Eurnp' n countries may suggest that this
be omitted is fast a forte to define such a project on a
scale that would have public impact have been unsuccessful.
Poin : We support a Summit mandate to the High-Level
Monitor ng Group to devote special attention to nuclear
energy issues over t~e next two or three years.
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