Here is the text of White House adviser Stuart Eizenstat's memo to President Carter: June 28, 1979

MEMORANDUM FOR:

THE PRESIDENT FROM:

STU EIZENSTAT SUBJECT:

Energy

Since you left for Japan, the domestic energy problem has continued to worsen:

The actions taken to help the truckers have not yet broken the back of the strike. Jack and I are continuing to review the problem. As you know, the vice president will today announce a series of actions to help improve the situation.

Gas lines are growing throughout the northeast and are spreading to the Mideast.

Sporadic violence over gasoline continues to occur. A recent incident in Pennsylvania injured 40.

Gasoline station operators are threatening a nationwide strike unless DOE grants an emergency profit margin increase.

The latest CPI figures have demonstrated how substantially energy is affecting inflation -- gasoline prices have risen 55% since January.

Congress is growing more nervous by the day over the energy problem.The Moorhead bill was pushed through the House yesterday, so members could go home for the recess claiming to have done something about the problem. It is fair to say that in normal times, a bill as significant as Moorhead's would have been considered much more carefully. Despite that vote, and the forthcoming vote on Thursday on the windfall tax, members are literally afraid to go home over the recess, for fear of having to deal with very angry constituents. That fear was expressed to the vice president and me yesterday when we briefed members on the Tokyo summit. They were almost completely uninterested in the summit, and spent all of two hours talking about gasoline and related problems.

Press accounts are starting to appear about the administration's inability to deliver on the commitment to have 240 million barrels of distillate in stock by October. The Northeast will soon be pressuring us to clarify whether we still believe 240 is possible.

The continuing problem of conflicting signals and numbers from DOE persists. The DOE gasoline allocation formulas are now coming under prticularly heavy attack. Yesterday, the state of Maryland sued Doe for misallocating gasoline. Other states can be expected to shortly follow that politically popular route.

In sum, we have a worsening shortterm domestic energy crisis, and I do not expect to see [with the possible exception of a break in the truckers' strike] any improvement by the time you return.

I do not need to detail for you the political damage we are suffering from all of this. It is perhaps sufficient to say that nothing which has occurred in the administration to date -- not the Soviet agreement on the Middle East, not the Lance matter, not the Panama Canal treaties, not the defeat of several major domestic legislative proposals, not the sparring with Kennedy, and not even double-digit inflation -- have added so much water to our ship. Nothing else has so frustrated, confused, angered the American people -- or so targeted their distress at you personally, as opposed to your advisers, or Congress or outside interests. Mayor Koch indicated to me [during a meeting the vice president and I had with the New York congressional delegation on their gas problems] he had not witnessed anything comparable to the current emotion in American political life since Vietnam.

while the Vietnam analogy is a strained one in many ways, it is one which this week press accounts are beginning to make. The similarities between problems of credibility and political opposition from the left are real, though clearly undeserved. We can expect to see repetition in coming weeks of the analogy, which was prevalent at the ADA convention I addressed over the weekend.

All of this is occurring at a particularly inopportune time. Inflation is higher than ever. A recession is clearly facing us. [indeed, when our July budget forecast comes out with a zero GNP estimate we should not attempt to avoid the obvious, as Ford tried to do, but we should be honest and admit a recession is likely.] OPEC is raising prices once again. The polls are lower than they have ever been. [The latest Harris poll shows something never before seen -- a Republican opponent, Reggan, leading you by several points.] Kennedy's popularity appears at a peak. And the Congress seems completely beyond anyone's control.

In many respects, this would appear to be the worst of times. But I honestly believe we can change this to a time of opportunity. We have a better opportunity than ever before to assert leadership over an apparently insolvable problem, to shift the cause for inflation and energy problems to OPEC, to gain credibility with the American people, to offer hope of an eventual solution, to regain our political losses. We should seize this opportunity now and with all our skill. If we fail to do so, the late hour may foreclose a similar oportunity again coming our way.

My recommendations for how to do this, many of which I have discussed previoulsy with you and separately with Ham and Jody, are as follows:

[1] Use the OPEC price increase as the occasion to mark the beginning of our new approach to energy. It must be said by You -- and by us -- time and again publicy to be a watershed event. We must turn the increase to our advantage by clearly pointing out its devastating economic impact and as the justification for our efforts against the OPEC cartel and for increased domestic production of all types. We have provided you with a tough statement that will accomplish those ends, and buy us a week or so before the public will expect more specifics. I urge you to use that statement and to keep it as strong as possible. A statement which goes light on OPEC or a commitment to synthetics and other domestic initiatives will not convince the public that anything is different, that we are embarking on a new effort, or that there is hope that the energy problem will be solved, or that he will ever stand up to OPEC [which Americans want even more than cheap gasoline].

[2] Your decision to eliminate or cut short your "hawaii stop vividly demonstrates your commitment to dig into this problem without delay.

[3] When you return, and before you go to Camp David, you should at least hold one full day pf meetings at the White House to consult with your advisers about the various energy problems, to assess the summit, to report to those congressional leaders in town, and to determine how and when you should report to the public. A full day's work on energy with your advisers would be helpful to us to get our signals and orders straight, but also to demonstrate your continuing commitment to solving this problem.

[4] That one day or so of energy events cannot be allowed to pass without repeated follow-on events when you return from Camp David. Every day you need to be dealing with -- and publicly be seen as dealing with -- the major energy problems now facing us. Unless the attention to energy is almost total during the two-three weeks after your return, we will not turn the course of events around, and certainly we will not convince the American people that we have a firmer grasp on the problem than they now perceive. Your enormous success in the Middle East peace process was due, to a very large degree, to your personal, constant involvement over a sustained period of time. The energy situation is different in many ways than the Middle East, but the need for you to stay the course, to demand answers, to convince others of the need to act and to compromise, and to control the competing forces within the government is very similar. With that type of involvement, we can regain the initiative and rise above much of the confusion and bureaucratic tangling now occuring. We can arrange a schedule of events that are meaningful and worthwhile during this period.

[5] You must address the enormous credibility and management problems of DOE which equal in public perception those which State or Defense had during Vietnam [whether fairly or not]. We can discuss this in detail upon your return.

[6] Shortly after you return, we will have a memorandum for you to decide how to propose spending the funds raised by the windfall tax. The memorandum will include the results of a comprehensive interagency review now under way to examine the synfuels issue and develop a significant proposals for you to announce. Once you decide the direction you want these new production initatives to take, you might consider a major address to the nation. That address could review the energy situation, explain the causes of current problems, and announce our new initiatives. The address would be around the third week of July.

[7] In addition to the synfuels and energy production announcement, I believe we should announce separately the creation of a National Energy Mobilization Board. Such a board would be designated to select energy projects -- like pipelines, port facilities or research and development facilities -- which are to be built in the national interest, eliminating all of the normal regulatory tangle that slows such projects down. During the World War ii, we had such board to get war-related projects expedited. This board would be modeled after the World War ii example. I have asked DOE to staff this out and have explored the idea quietly within the administration and on the Hill and have found an enormous receptivity. Your announcing the creation of this board would confirm your intention to treat this matter as one of the highest national security.

[8] You have a variety of speeches scheduled after your return -- the governors, NACO, Operation PUSH, CWA. Each of those occasions should be used to talk about energy. That is the only subject the public wants to hear about and we should use those opportunities to get our message across repeatedly. The windfall tax campaign was successful because of your repeatedly. The windfall tax campaign was successful because of your repeated discussion of its during a short period of time. That success can be repeated through these speech opportunities.

With strong steps we can mobilize the nation around a real crisis and with a clear enemy -- OPEC. CAPTION: Picture, Eizenstat: His memo warns that energy problems are becoming the Carter White House's Vietnam war. By Margaret Thomas -- The Washington Post