Did you know that the US taxpayer is obligated to guarantee Israel’s oil supply, even if it causes as domestic shortage in America?
Under a 1975 Memorandum of Understanding (MOU), the USA guaranteed all Israel’s oil needs in the event of a crisis. This Memorandum of Understanding is quietly renewed every five years.
It commits U.S. taxpayers to maintain a strategic U.S. reserve for Israel, equivalent to $3 billion in 2002 dollars. Special legislation was enacted to exempt Israel from restrictions on oil exports from the USA.
Moreover, the U.S. government agreed to divert oil from the USA, even if this causes domestic shortages. The U.S. government also guaranteed delivery of oil in U.S. tankers if commercial shippers become unable or unwilling to carry oil from the USA to Israel.
The renewed agreement, signed in 1979 (Memorandum of Agreement between the Governments of the United States of America and Israel – Oil, March 26, 1979) reads as follows:
“The oil supply arrangement of September 1, 1975, between the Governments of the United States and Israel, annexed hereto, remains in effect. A memorandum of agreement shall be agreed upon and concluded to provide an oil supply arrangement for a total of 15 years, including the 5 years provided in the September 1, 1975 arrangement.
“The memorandum of agreement, including the commencement of this arrangement and pricing provisions, will be mutually agreed upon by the parties within sixty days following the entry into force of the Treaty of Peace between Egypt and Israel.
“It is the intention of the parties that prices paid by Israel for oil provided by the United States hereunder shall be comparable to world market prices current at the time of transfer, and that in any event the United States will be reimbursed by Israel for the costs incurred by the United States in providing oil to Israel hereunder.
“Experts provided for in the September 1, 1975 arrangement will meet on request to discuss matters arising under this relationship.
“The United States administration undertakes to seek promptly additional statutory authorization that may be necessary for full implementation of this arrangement.
M. Dayan
For the Government of Israel
Cyrus R. Vance [at the time, Secretary of State]
For the Government of the United States
“ANNEX TO THE MEMORANDUM OF AGREEMENT CONCERNING 0IL
ANNEX
“Israel will make its own independent arrangements for oil supply to meet its requirements through normal procedures. In the event Israel is unable to secure its needs in this way, the United States Government, upon notification of this fact by the Government of Israel, will act as follows for five years, at the end of which period either side can terminate this arrangement on one-year’s notice.
“(a) If the oil Israel needs to meet all its normal requirements for domestic consumption is unavailable for purchase in circumstances where no quantitative restrictions exist on the ability of the United States to procure oil to meet its normal requirements, the United States Government will promptly make oil available for purchase by Israel to meet all of the aforementioned normal requirements of Israel. If Israel is unable to secure the necessary means to transport such oil to Israel, the United States Government will make every effort to help Israel secure the necessary means of transport.
“(b) If the oil Israel needs to meet all of its normal requirements for domestic consumption is unavailable for purchase in circumstances where quantitative restrictions through embargo or otherwise also prevent the United States from procuring oil to meet its normal requirements, the United States Government will promptly make oil available for purchase by Israel in accordance with the International Energy Agency conservation and allocation formula, as applied by the United States Government, in order to meet Israel’s essential requirements.
“If Israel is unable to secure the necessary means to transport such oil to Israel, the United States Government will make every effort to help Israel secure the necessary means of transport.
“Israeli and United States experts will meet annually or more frequently at the request of either party, to review Israel’s continuing oil requirement.”
