David R. Henderson  

My 1984 CEA Memo on Alaskan Oil Exports

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Earlier this week, I posted a 1983 memo that I wrote to my boss at the Council of Economic Advisers, Martin Feldstein, about a meeting to discuss relaxing the limits on exports of Alaskan oil. Below is a follow-up memo on the same issue, written a few months later to Bill Niskanen at the Council. Everything in square brackets is added by me now to explain things that otherwise might not be clear.

Notice how "political" I was.

February 14, 1984
TO: Bill Niskanen
FROH: David Henderson
SUBJECT: Feb. 15 IG Meeting on Alaskan Oil

Murkowski [U.S. Senator from Alaska] recently sent a letter to Marty asking him to support an Amendment to the Export Administration Act to allow exports of up to 200,000 barrels of Alaskan. oil. That sounds good, but unfortunately, the oil would have to be carried on U.S. ships. This would be an extension of the Jones Act to foreign nations and would thus set a dangerous precedent. There is no such requirement for privately owned goods so far, and a bill that would have required some U.S. oil imports to be shipped on U.S. ships was defeated during Carter's Administration. Geoff [Carliner] and I both think that it would be better to keep the export ban than to extend the Jones Act.

I found out that this will be discussed at tomorrow's IG meeting. Glozer of OMB is advocating opposition because of the Jones Act precedent. He thinks that NSC and Commerce will favor it because they badly want the Export Administration Act. DOT is hard to predict. Their constituent, the maritime union "firmly and unequivocably" opposes the Amendment. (See attached NY Times article). Glozer felt sure that Charles Schotta of Treasury would oppose this, but because Schotta is out of the country, it's not clear who will represent Treasury. I'm not sure how State stands.

One thing I am sure of is that VP Bush did not, as the NY Times piece says, tell Senator Murkowski that the amendment should be acceptable to the union. Boyden Gray told me that Bush just listened and made no comment. Gray told me that Bush's only concern is to keep a campaign commitment to sell some Navy ships to private owners so that union members can replace sailors. However, Gray didn't think this would get far because Bush has tried unsuccessfully to get Weinberger and Lehman on board (pardon the pun). The Navy does not want to give up the ships because this would reduce their billets and thus screw up their promotion system. Gray also said that if the Murkowski amendment were really a serious effort, then Stevens, the senior Alaska senator, would have been its

The one cloud in all this is that Gray quoted Jim Baker [Reagan's chief of staff] as saying to the VP that the amendment would be a good idea because it would reduce the trade deficit with Japan.

I will be away the rest of the week in Monterey. I have talked about these issues with Geoff. Will Milberg has access to my Alaskan oil files.

Attached is a copy of the Murkowski letter and proposed amendment.

cc: MF [Marty Feldstein], BP [William Poole], GC [Geoff Carliner], WM [Will Milberg], AW [Alice Williams]

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