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The International Energy Agency: an Interpretation and Assessment

Published online by Cambridge University Press:  27 February 2017

Mason Willrich  and
Melvin A. Conant
Mason Willrich
Affiliation:
Director for International Relations of The Rockefeller Foundation and John C. Stennis Professor of Law at the University of Virginia (on leave)
Melvin A. Conant
Affiliation:
International Energy Affairs of the U.S. Federal Energy Administration (1974-76)
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Extract

When the representatives of thirteen major OECD oil-importing countries met in Washington, D.C. in February 1974 to discuss cooperation in the energy field in order to meet the challenge posed by the OAPEC oil embargo, the outlook for successful negotiations was far from bright.

Type
Research Article
Information
American Journal of International Law , Volume 71 , Issue 2 , April 1977 , pp. 199 - 223
Copyright
Copyright © The American Society of International Law 1977

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References

1 The countries participating in the Washington Energy Conference were Belgium, Canada, Denmark, France, Federal Republic of Germany, Ireland, Italy, Japan, Luxembourg, Netherlands, Norway, United Kingdom, and United States. In addition to these thirteen countries, the membership of the Organisation for Economic Co–operation and Development (OECD), headquartered in Paris, includes Australia, Austria, Finland, Greece, Iceland, New Zealand, Portugal, Spain, Sweden, Switzerland, and Turkey.

2 The members of the Organization of Arab Petroleum Exporting Countries (OAPEC) are Algeria, Bahrain, Egypt, Iraq, Kuwait, Libya, Saudi Arabia, Syria, and the United Arab Emirates.

3 The members of the Organization of Petroleum Exporting Countries (OPEC) are Algeria, Ecuador, Gabon, Indonesia, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, the United Arab Emirates, and Venezuela. Thus Bahrain, Egypt, and Syria, which produce small quantities of oil, are members of OAPEC but not OPEC.

4 For the text of the communique issued by the Washington Energy Conference, see 70 Deft. State Bull. 220 (1974), 13 ILM 462 (1974).

5 For the text of the Agreement on an International Energy Program, see TIAS No. 8278, 14 ILM 1 (1975). For discussion, see testimony of Melvin A. Conant, Assistant Administrator for International Energy Affairs, Federal Energy Administration, in Hearing on U.S. International Energy Policy Before the Subcomm. on International Food Resources and Energy, House Comm. on International Relations, 94th Cong., 1st Sess. 81 (1975). See also McCoy, , The International Energy Program, Esso European Rev. 4 (1974)Google Scholar.

6 The sixteen original participating countries in the IEA included all of the ECG countries, except Norway, plus Austria, Spain, Sweden, Switzerland, and Turkey. New Zealand subsequently joined and Norway has special limited membership. Greece joined the IEA in 1976, bringing the current membership to nineteen. France, though not a member, maintains liaison with the IEA through the Commission of the European Community. The Commission has observer status.

Which of the various countries ostensibly involved in the IEP are legally obligated under the Agreement, and to what extent, is difficult to answer. The Agreement became binding “provisionally” for all signatories “to the extent possible not inconsistent with their legislation” as of November 18, 1974. However, many of the more important provisions regarding emergency oil sharing could not become effective in the United States, for example, without enactment of domestic implementing legislation. The signatories of the IEP Agreement were given until May 1, 1975, to obtain any necessary implementing legislation, although the IEA Governing Board may extend the time limit. In the United States necessary authorizing legislation is contained in the Energy Policy and Conservation Act, enacted in December 1975, Pub. L. No. 94–163 (1975). For discussion, see Willrich, M., Administration of Energy Shortages 163–67 (1976)Google Scholar.

7 See Kissinger, H., Energy: The Necessity of Decision, 72 Dept. State Bull. 237 (1975)Google Scholar.

8 Id.

9 Sen. Howard Metzenbaum (D., Ohio). Remarks before the Senate Comm. on Interior and Insular Affairs, 93rd Cong., 2d. Sess., Nov. 26, 1974.

10 For an elucidation of IEA goals, see Davignon, , The Aims of the International Energy Agency, in The International Energy Agency of The OECD (OECD pub., n.d.)Google Scholar.

11 See, for example, U.S. Oil Companies and the Arab Oil Embargo: The International Allocation of Constricted Supplies. Statement prepared by the Federal Energy Administration, Office of International Energy Affairs for the Senate Foreign Relations Subcommittee on Multinational Corporations, 7–29. 93rd Cong. 2d. Sess. (1975).

12 Id.

13 IEP Agreement, Art. 2.

14 IEP Agreement, Art. 3.

15 IEP Agreement, Arts. 5 and 14.

16 In the United States, the Energy Policy and Conservation Act, Pub. L. No. 94–163 (1975), contains authority to participate fully in the IEP. This includes standby authority to implement energy conservation, §202, and motor fuel rationing, §203, in a supply interruption, and authority to establish a reserve of 150,000,000 barrels by the end of 1978 and to plan for a larger strategic reserve to be implemented subsequently, §§151–166.

17 IEP Agreement, Art. 6.

18 IEP Agreement, Art. 7.

19 IEP Agreement, Art. 7.

20 IEP Agreement, Art. 8.

21 IEP Agreement, Art. 25. For the details, see Hearings, supra note 9, at 9–12.

22 Under the Energy Supply and Environmental Coordination Act, 15 U.S.C.A. §796 (Supp. 1975), and the Energy Policy and Conservation Act, Pub. L. No. 94–163, §503 (1975), the U.S. Federal Energy Administration has sweeping discretionary authority to request and collect energy information. See M. Willrich, supra note 6, at 167.

23 IEP Agreement, Arts. 12–22.

24 IEP Agreement, Arts. 13, 14, 17, 19.

25 IEP Agreement, Art. 20.

26 IEP Agreement, Arts. 20, 22.

27 IEP Agreement, Art. 61.

28 IEP Agreement, Art. 62. Greece and New Zealand have no oil consumption votes. Norway has signed a special protocol agreement regarding its rights and obligations.

29 Id.

30 Woodliffe, , A New Dimension to International Cooperation: The OECD International Energy Agreement, 24 Int. and Comp. L. Q. 535 (1975)CrossRefGoogle Scholar.

31 IEP Agreement, Art. 62.

32 IEP Agreement, Arts. 41–48. For discussion, see supra note 11, at 13–14.

33 For a discussion of the U.S. position on the MSP issue, see Dept. of State Spec. Rep. No. 16, Encouraging Investment in Domestic Energy: Minimum Safeguard Price (April 1975). See also, Enders, , OPEC and the Industrial Countries: The Next Ten Years, 53 Foreign Affairs 625–37 (1975)CrossRefGoogle Scholar.

34 OPEC is arguably not a cartel in the technical sense of an agreement to exercise monopoly power through control over output and price. As an organization, OPEC establishes prices for crude oil produced by its members but not production quotas. Consequently, an OPEC price increase can be maintained only if some of its sparsely populated members with lesser revenue requirements, such as Saudi Arabia, Kuwait, and Libya, will voluntarily restrict their output.

35 In fact, the Soviet Union is increasing its oil and gas exports to Western Europe at world market (OPEC) prices, thereby earning hard currencies. At the same time, East European countries are being required to import increasing volumes of oil from the Middle East at prices that are substantially higher than the price they have been paying for Soviet oil, though Soviet prices to Comecon members are being increased rapidly toward the OPEC price. The East European countries must, however, find OPEC producers willing to accept payment in soft currencies or else use their own scarce hard currency reserves for oil imports. Finally, it seems possible, if not probable, that the Soviet Union will enter the Middle East oil market in the future. For the Soviets, the ideal arrangement would essentially be oil swaps involving barter deals with one or more Middle East oil exporters to the Soviet Union and hard currency deals with West European countries importing increased volumes of Soviet oil.