Nixon, Connally & Bull on Energy crisis and International trade

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John, how are you?

Oh, you want a cigarette?

How are you?

God, I'm sorry to keep you waiting.

Oh, I know.

I know.

It's lovely to have these damn burgers in here.

Look at that.

That place is all rented behind.

Oh, I'm sure that's right.

Yeah, it's awesome.

Yeah.

Actually, I'm not concerned.

You know, it's a courtesy offer that I'm doing.

How do you show that I respect one of our friends who's there?

He is our friend.

How do you think I'll get him a dinner tonight?

Oh, Christ, he looks great.

He must be seven years of age.

And he, of course, we were much better off if he was there than if I was there.

And I was a very cocky, generalistic type of sucker.

I was the old law-friendly guy in the U.S. like he should have been.

So that's why I did what I did.

We will probably face a situation, but I don't think it's going to come.

I don't want to hear it, but I think it will come.

Certainly in ten years, it could come.

Five years from now, we have major problems.

I think a major problem, not just economically, but I think the Japanese, I'm not referring to the Sakuras, but the Kanakas and people like that,

There's a new breed.

The Japanese, basically, are a charity and vicious, frustrated, dynamic group, and they cannot be ended.

And they're going to play, whoever they can, they'll play along against us.

The only thing that keeps them, at the present time, is the fact that they use so much of our language.

So that's why by that time we may want to be, we may have to play the China game a little harder than the Japanese.

So that's, that's the future for us.

One thing, I don't need too much of a picture, though, because I think, first, you've got, you have two major problems.

If I may be presumptuous enough to suggest two of the problems that you've embraced here on Broadway.

One, and you and I have talked about this many times, and I'll just mention these, and then leave it alone.

But I mentioned both of them to George Shultz this morning.

I want to tell you that he and I had breakfast this morning.

I think this energy crisis is much deeper, much broader, much more severe than anybody in this country knows.

And I think it's going to require a great deal of your personal understanding and attention.

You could well see gasoline rush into the United States this summer.

You've got fuel rising now, fuel oil.

You've got gas rising right now, really.

And it's going to be worse next year than it is this summer, this month.

We don't have a refining capacity.

And our demand increases.

And this, even in this last cold spell, universities were shut out.

The University of Texas, the University of Austin, Texas, delayed the vote, re-opened it for one week.

because of the headwinds.

The Santa Barbara State Teachers College in front of Johnsonville could not reopen.

Many industrial concerns were shut out.

The production completed because of the headwind fuel.

The gas companies are rationing their industrial customers any time there's a cold front.

Now, most of these customers can use fuel oil, like the utilities.

They can burn fuel oil to generate electricity.

but it's more expensive for them, so they like gas, plus the environment of this place, they all take a lot of fuel, so they don't like to do it.

Fuel all the time is being laid down on the East Coast for $6,000 or $6,000 a barrel.

I would not be at all surprised if crude oil was laid down in the UK on the East Coast of the United States this year at $5,000 a barrel.

The idea that the domestic crude is going to kick the lid and see what it does.

It's not going to happen.

Foreign crude is really going to happen before the price increase is going to happen for domestic crude.

Because this is one of the things that the Arab nations and the Arab nations are doing.

They are, in fact, taking over control of the oil itself and they're going to market it to the highest bidder.

And the highest bidder is going to be Japan and Germany and Italy.

So the United States is going to have to posture itself very quickly.

to get in a position where, as a nation, we can compete with other nations in buying oil and oil companies can't do it.

I would predict that in this year, if not more than 18 months, you're going to see a complete revolution of the manner of production and sale of oil and pricing of crude products around the world.

It's going to have a hell of an impact on this country.

This is just a public property.

It's also part of the overall bigger property that you're going to be in front of with your recession economy.

And that's your basic trade properties.

You're going to get a trade deal in a recession.

Whether you like it or whether you don't, I personally think you ought to really take after this trade.

I think you ought to have a good reputation on these two items on it.

You better do it in a time where we have a leader of the enormous facility market.

That's what everybody wants.

We've got to use this market.

If you selectively choose the kind of group that you want to be in, you've got to do the best you can.

You can make any kind of deal you want to do.

But you may have to be selective.

In other words, we can't just say to the world that we're going to treat you all alike.

I don't think that's a game that's ever played before.

And so if you can use your import program as a mechanism for getting into this selective treatment of producing products, it gets you to the oil we need.

But it's a major new addition to the content of the country.

Being extremely successful in your relationships with Congress

for the people as a whole that can help me buy those papers.

And if you tie that with a trade agreement, in effect, say, the Congress is giving you the authority that, under certain conditions, any time there is a massive penetration of the market by one country, such as Japan did on Radio and Television, it's giving you the authority to impose tariffs, of course, or even to totally suspend the importation of those items.

Well, there's a massive flood of the American market by any country with any commodity.

And when you give me the authority to oppose tariffs, rates, or close quarters, or total prohibition of protection of items, where there is a purchase in our dollars today, or in our trade dollars, that is pushing on the spot.

But at the same time,

Uh, it gives you, you get a, you get a conversation.

Now, truth of the matter is, you don't get a trade, because what's happened with labor, it's trading now.

It's much of a big business today on, on cash, for instance.

The laborers always want to dust off the sea version and, uh, and, uh, practice them.

I mean, yes, it's a big business.

And they're saying, wait, let's go again.

We've been demanding 50% of all of these all-American farms.

Well, they say, well, you really don't want to stop less than that.

They don't go for 10% to 15%.

If the oil companies move, which are moving together, they will pass it.

And it may not seem that the oil companies don't do it.

up to 15 to 20, 25% of all oil in the United States has to be oil in America.

Which means the price of oil in the South is going up immediately.

When you do that, there's a cost for it.

How do these work?

Yes, I think I would.

For some reason, I think we're going to run over you.

But more than that, the United States has to do it effectively on three aspects.

One of the major problems this country faces in terms of raw material, fuel is the number one raw material.

You have a tradition of countries.

You have a matter of transporting it.

You have a matter of consuming it.

We can't control the production of it anymore.

Our American companies did for a long, long time.

We can't do it anymore.

The companies can't.

But if we can control a substantial part of the ship, transportation, if we obviously have a market, if we can control it without the three ingredients, if we can protect our ships, if we can get them to the market and ship them, that's great.

And this is why El Paso made their deal with the Algerians.

They said, oh, we're done with the ships.

You'll have a big refraction plant.

But if you don't sell it to us, you can't sell it to anybody but us.

We're done with the ships.

We're done with that.

And they told them that this is what we've got to do with Russia.

We said to Russia, that's fine.

We're done with that.

But this is what we've got to do with it.

We're done with the ships.

We can't let any country go home, both for producing aspects of it and transportation, because we're ready for the university.

We're done with the university.

So it's cool.

You can't.

And let's further this.

I don't like to deal with this thing.

Look at what's happening in the face of a truly good university.

Really good in terms of the finance, inflation, economic expansion, the number of people employed, the profits of the companies.

Every index you had was good last year.

You got peace.

And the stock market goes down.

And the dollar begins in all the markets of the world.

Why?

Because you can put out a budget.

We'll see.

I'm very much here, but it's a weird life exercise, physical responsibility.

In spite of all of that, the dollar goes down.

Why?

Because you have seven million dollars like this.

Enormous.

Four billion with Japan, two billion with Canada, and a billion with the rest of the world.

You can't stand it.

If you have another year like that, you have another money question.

If you have another year like that, you sure as hell don't.

So, it seems to me that you have two great opportunities here.

Two issues that people can understand.

I haven't fully developed what I think your positions ought to be, but number one is this energy crisis.

Number two is the coal trade people.

On the energy crisis, I think I do three things.

I think I will

I would completely revamp the import program.

I'm not sure how to do it yet, because I haven't thought it all out.

But secondly, I would want an economic resource incorporation.

Or I think I would.

Which is holding on to the government.

It's like we had these corporations that bought tin and rubber and so forth.

Do you remember?

Yes, sir.

I'd want energy resources incorporation, holding on to them.

Then I would say,

public figures with the Congress that I would make a tender offer to every major American oil company that has reserves overseas that we will acquire.

We would make a tender offer to acquire 50% of your reserves at a negotiating price that would be agreeable.

I'd buy the interest from their reserves, not the reserves that we have on the table.

In terms of their profit and production,

but at least it gives you a handle on the control without oil.

Didn't even say to the Saudis, didn't say to the Libyans, didn't say to the Shia LaBeouf, you're not taking this guzzle off, you're not taking the standard off, you're taking the iron off.

Now, this is a hell of a hard game to play with.

But if you don't, Japan three weeks ago thought British Detroit had preserved an eye of Abu Dhabi, $780 million.

The man, as soon as the shot out of the house when he was going to do it, he ran.

The Japanese don't do that.

That's terrible.

And we've got to face up to the fact that I've heard companies for a long time stand against the soccer country, either in terms of additions to the law or the marketing of it or the purchasing of it.

It's just getting good.

So, this is, this is what I think, these budgets, all right, now they've got, they're, they're getting out of the office, assuming that, you know, we've got to get, we've got to get in the blue area, drink, whatever.

They're thinking about trying, well, trying to, you know, you see, here's, here's the difficult thing, unfortunately, five years ago, great, great, everybody said they were eternally deficient.

I was in the bridge control and told you two weeks ago, it was two or three years, Great Britain will be sufficient, and all it is for, as far as it's going, policy.

There's going to be a summary coming out of that.

That's right.

And we're going to be deficient.

We're going to be deficient.

I don't know why you thought this would happen.

This means that the last time I thought we'd build Camaro, we would have a lot of requirements.

I'm sure we'll be building Camaro out of that.

And I just think that this is what you're in.

You're being criticized.

You've got to be criticized.

You're this entire company for cutting out all these domestic programs and so forth.

These cars, you've got to help react to those.

I've been impacted way too much by the poor folks.

Okay, just use your one second to take a phone call.

You can take it right here.

You've got it right here.

Go right into the room on the left there.

Go right into the room.

Yes, just go right into the room on the left.

And turn to the left.

Okay.

I haven't looked at it yet so I'm not going to bother with it anyway.

Thank you.

Nixon, Connally & Bull on Energy crisis and International trade

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Nixon Library Finding Aid

Also recorded on January 31, 1973

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