LETTER TO THE HONORABLE BILL GUNTER FROM W. E. COLBY

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP80B01495R000100160012-4
• Release Decision: RIPPUB
• Original Classification: K
• Document Page Count: 7
• Document Creation Date: January 4, 2017
• Document Release Date: June 30, 2005
• Sequence Number: 12
• Publication Date: March 8, 1974
• Content Type: LETTER

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INTELLIGENCE AGENCY
WASHINGTON, D.G. 20,505
The Honorable Bill Gunter
House of Representatives
Washington, D. C. 20515
Dear Mr. Gunter:
I want to be as responsive to your letter of 25 February
as I can, but the answers to most of your questions are beyond
our capabilities and responsibilities. As you know, this
problem is largely the province of the Federal Energy Office
and its Administrator, Mr. Simon.
We agree with Mr. Simon that the Shah of Iran was in-
correct in asserting that the volume of oil consigned by the
world's oil producers to the American market this year is at
the same level as last year. No Arab oil is now directly con-
signed to the U. S. because this would violate the rules of the
embargo, as the Shah knows. The Shah might have meant that
the same amount of Iranian oil is now consigned to the United
States as last year. Last year our imports of crude oil from
Iran were about 200, 000 barrels per day. During the first two
months of this year, our daily imports from Iran have been
running 37% higher than during the same period of 1973.
While Arab countries have enjoined the international
oil companies from shipping Arab oil directly to the U. S.,
statistics on U. S. imports since the embargo began last
October suggest that shipments from non-Arab countries have
increased.
I am aware of press reporting that some firms have been
diverting crude oil supplies away from our shores in recent
weeks because of the allocation program. Since we do not col-
lect intelligence on the activities of American firms abroad,
we cannot document this alleged diversion. I suggest that the
oil companies themselves or FEO would be the proper source
of such information.
Sincerely,
W. E. Colby
Director
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 Approved For Rele 2005/07/22 : CIA7RDP80B01495R000100160012-4
Subject: Director's response to Congressman Bill Gunter
re questions concerning our foreign oil supplies
CONCUR:
MAR 1974
Ac.?,n+ Deputy Director for Intelligence
Date
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MEMORANDUM FOR:
Subject: Congressman Gunter
I suggest that our response to Congress-
man Gunter' s letter of 25 February on oil be
handled orally. If you do not agree, I have
attached a draft letter which I think would be
an adequate response without our saying any-
more than we have to.
Eau Walsh
ADDI
Attachment
(DATE)
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 19ILL GUNTER
WASHINGTON OFFICE,
b 7n n! :I'7:ICT, FLORIDA
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"App (902)..25-2175
AGRICULTUR
FORES-r3 SV'3COMMRTEE
LIVESTOCK AND GRAINS SUBCOMMITTEB
SCIENCE ANO ASTRONAUTICS
ENSRGY SUBCOMMITTEE
MANNED SPACE FLIGHT SUBCOMMITTEE
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Ul" f tt1n, -~'3. Z . 20515
DISTRICT OFFICTB,
1600 WEST COLONIAL DRIVE
Y.O. Box US
ORLANDO, FLORIDA 32802
(305) 843_2030
PASCO COUNTY COURTHCUSE ANNEX
P.O. Box 1175
N-.w PORT RICHEY, FLORIDA 33552
[phone]
February 25, 1974
The Honorable William E. Colby
Director of Central Intelligence
Central Intelligence Agency
Washington, D. C. 20505
Dear Director Colby:
I am requesting that you investigate and report to the
Congress in whatever manner you deem appropriate the apparent
mysterious disappearance of huge volumes of foreign oil in-
tended for the United States which has never arrived.
The reports are now too numerous of American oil customers
and businessmen being approached with offers of all the oil
they want, if they will simply meet a big enough price, to
ignore the implications.
The Shah of Iran last night was reported as indicating
that the volume of oil consigned to the American market this
year was at the same level as last year. The Shah suggested
that if the oil is not reaching the United States.,- we might
be interested in finding out why. As one Congressman, at
least, I am so interested.
It is time to find out who is holding up or.otherwise
diverting oil that leaves the Middle East bound for the United -
States but which, after being juggled from ship. to. ship --
sometimes as many as four times, according to.the Shah --
disappears, while at the same time huge volumes of oil are
offered to us if we will simply meet the international black-
market price.
I am particularly interested in any information bearing
on any involvement by American firms overseas, either oil
companies or shipping companies, acting in collusion with
foreign countries or suppliers, or cooperating in any way to
withhold oil supplies from this country and diverting U. S..
bound supplies to an international black market instead.
The statement today by Federal Energy Administrator Simon
ridiculing the Shah's assertions and asserting his own agency's
omniscience in determining the actual oil supplies arriving
in this country by virtue of boarding ships and "examining
manifests," is totally inadequate in my judgment. Mr. Simon
apparently either, believes there is no black market or that
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THIS STATIONERY PRINTED ON PAPER MADE WITH RECYCLED FIBERS
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if there are blackmarketeers, they are of the variety keep scrupulously accurate and honest manifests for the benefit
of customs officers charged with examining them and catching
smugglers.
.Your agency, perhaps alone among those in the Executive
Department, has the capability and experience to determine the
true facts with respect to what is happening to this oil from
the time it leaves the Mideast to the time it reaches U. S.
waters, and to account for the apparent diminution of volume
inbetween; to determine the truth or falsity of rumors that
Rotterdam, for example, is a key point at which U.S.-bound
oil becomes lost through mysterious transfers of oil from
ship to ship; to discern from aerial photographs the true
volume of oil carried in tankers from one point to the next;
to determine whether falsifications of manifests are taking
place in large numbers; and in general to determine the extent,
nature, and type of blackmarket operations internationally may
be depriving our country of supplies i
t
n
ended for us, and
the extent of the collusive activity on the part of persons
and companies handling oil transfers that would be required
order to accomplish diversions of huge volumes of oil.
in
The Governor of Maryland indicated at a press conference
last weekend that Maryland had been offered 25 million'gallons
of gasoline, at. prices between 43 and 46 cents a gallon, from,
to quqte the news report, unidentified "oil brokers" who ap-
parently have access to large amounts of gasoline.
News reports in recent weeks have carried a variety of
sporadic and incidental but disturbing references, often
quoting responsible businessmen in this country, that large -
volumes of oil were available from sources outside this country
if?they were but willing to meet the price.
The discrepancy between the amount of oil the Shah reports
.leaves the Mideast bound for this country and the volume o:
oil Mr. Simon insists is actually arriving is too great to
ignore without a responsible agency of our government having
g
the capability to determine what is transpiring in midocean or
in foreign ports actually doing so.
I am hopeful that your agency can report to the Congress
a full and factual determination with respect to the situation
as it is alleged to-exist, and I would appreciate the earliest
responsible preliminary response based on information you may
already have accumulated.
Sincerely yours,
B G/rndg
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ILL GUNTER, M.C.
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