Treasury Secretary G. William Miller said yesterday that he will pledge to Saudi Arabia and other major oil producers that the United States "is willing to make sacrifices" in energy consumption to encourage them to maintain at least current levels of oil production.
He leaves tonight for a 6-day visit to Saudi Arabia, Kuwait and the United Arab Emirates, a trip which "circumstances make very important at this point," he said in an interview.
The revolution in Iran, which has led to a cut-off of that oil source for the United States, "is just the tip of the iceberg, because the aftermath of revolution in Iran hasn't run its course yet," he said.
Miller spoke harshly of the current Iranian regime, which he said "has no system of justice . . . you have a flagrant violation of international law in many ways, and it's fraught with the possibilities of adventures that you don't know. We cannot yet see the end of the game, how this comes to some sort of stable, continuing system."
The secretary, who is also President Carter's chief economic policy-maker and spokesman, said that he will have a chance to talk face to face with key leaders in the three countries on oil prices, supplies "and mutual interest we have in orderly processes and stable conditions."
Miller acknowledged that oil prices inevitably will be increased by the Organization of Petroleum Exporting Countries at its Dec. 17 meeting in Caracas, and that the purpose of his trip is not to try to keep that increase to any specific number.
Miller said that he hopes that oil cartel countries will continue to price oil, as well as taking payment for it, in dollars. But for the first time any administration officials has said so, he offered the opinion that a switch to "a basket of currencies such as SDRs would not be a monumental thing."
SDRs are the international unit created by the International Monetary Fund, which is calculated on the basis of a mix of currencies, including the dollar. Some OPEC countries have urged the use of the SDR as a way to price oil, which would yeild them more income at a time the dollar is low.
But Miller said the important thing is the continued use of the dollar for actual payment. And even if oil had been priced in SDRs last year, "it would actually have helped the dollar, because the dollar was higher against the other currencies in the basket," he said.
He said he has no indication that major OPEC countries intend to shift to the SDR pricing system, and rejected a suggestion that if they do, it might be a psychological blow to the dollar. "Any talk of a psychological blow is because of ignorance," he said. "It wouldn't create a larger demand for other currencies that would force major liquidation of dollars," he said.
Miller's goal for the sessions in the next few days is to seek agreement on a strategy that will be the mutual advantage of consuming and producing countries alike.
"There are two overriding issues, he said. "First, we should bring consumption down more vigorously, with more control and curtailment. And second, there should be an adequate balance in production, so we can come back to an orderly market without the (volatility) of the spot market."
Miller said that the Saudis were entitled to great credit and appreciation "for the responsibility and great dignity" with which they have kept to their posted prices -- far below recent market levels -- "despite temptation."
In general, he indicated he will appeal for price moderation, pointing out that erratic jumps in oil "will fuel an enormous inflation, cause a more serious recession" and lead to all kinds of negative economic reactions, including a drift into protectionism.
He indicated there could be no logical resistance to the Saudis moving their prices up to the levels charged by other producers -- and noted the Saudis say this can be done without an effect on final prices to oil consumers.
Increases beyond that, Miller said, "will cause another fiscal drain in the world." He would not cite an OPEC-wide price increase that this country would consider manageable. Other Washington officials have said that hikes in the 15-to-20 percent area could be absorbed without too much trouble.That would be less of a disturbance than the 60-to-70 percent increases so far this year.
Another part of Miller's strategy, he indicated, will be to promise the three Arab countries that in addition to unilateral American moves to cut consumption, the major countries Administration will move through the International Energy to cut import quotas in 1980 beyond what has already been pledged.
Miller said that at a meeting Dec. 10, one week before OPEC meets in Caracus, the IEA will come up with "an accelerated program" to cut imports. c"We're really serious about this," Miller said, "and by the time OPEC goes to Caracus, we will have a mechanism in place to absorb shortfalls (in supplies)." Without elaborating, he said that this will involve "a polished up" sharing program.
In a number of ways, Miller reiterated that he was "not just going to ask the Saudis to make up for the U.S. oil supplies that formely came from Iran, but that the United States was willing to do its part by curbing oil use and making a serious effort to develop substitutes.
Miller said that the Carter administration was not planning any new effort to put mandatory rationing in effect, although he thought it would be wise for Congress to waive the legislature limitations that are now placed on the president's ability to invoke rationing.
He said that much more could be done on a voluntary basis, and that the American people "are resilient enough to do it. I have no doubt that we could (voluntarily) cut gasoline consumption 10 to 15 percent if we wanted to."