Editorials-> Our View: Limiting oil imports would help to protect American producers
When the price of oil drops, so does the cost of gasoline. But while people are enjoying paying lower prices at gasoline pumps, plunges in oil prices can cause economic damage in Texas.
And it can put American oil producers out of business when the price of foreign oil imports gets cheaper than the costs of extracting oil from the ground in the U.S.
Oil producers in the Panhandle recently announced the Panhandle Import Reduction Initiative. Their hope is to limit the amount of oil that can be imported from other countries.
We wish them success in getting sympathetic ears to hear their initiative and gathering like-minded people to help further it.
They are right that a limitation should be set on the amount of oil imports from the Organization of Petroleum Exporting Countries.
Representatives of OPEC’s 18 nations recently met in Doha, Qatar. Among their topics of discussion was whether to freeze oil production levels.
The nations didn’t reach an agreement on the subject.
“OPEC and Russia and various countries met and decided they weren’t going to freeze oil and, in fact, OPEC said they will increase production again. This will drive the price down to $26 (a barrel) again,” said oil producer Tom Cambridge.
The U.S. currently is enjoying a record level of energy production. Between 2008 and 2015, oil production in the U.S. increased by nearly 4.5 million barrels a day.
The increased production had a predictable effect on imports. Light crude oil imports to the U.S. declined from 2.2 billion barrels a day in 2010 to 625,000 barrels a day in 2014.
It’s easy to see why OPEC countries didn’t reach an agreement on freezing oil production. They want plenty of oil to be available on the international market to bring down oil prices.
When the prices get low enough, it hurts American oil producers and hinders domestic production of oil.
This isn’t the first time OPEC has played this manipulative game and engineered economic havoc in Texas — and elsewhere in the U.S.
In the past, after they have lowered our production levels, the OPEC countries haven’t had any difficulty reaching an agreement to freeze production.
At that point, they will want to increase oil prices by lowering the supply of it.
It’s time to stop this tactic, and the Panhandle Producers and Royalty Owners Association have the right idea.
If oil imports to the U.S. are limited, it means more companies will be buying the oil that’s produced here.
Many American producers have taken economic risks to be part of the record energy production in the U.S. They shouldn’t have to suffer at the hands of greedy foreign oil interests.
Could the Panhandle Import Reduction Initiative be successful? We don’t know, but the Panhandle oil producers are doing the right thing to try. There should be a market for the oil that’s being produced in the U.S.
http://lubbockonline.com/filed-online/2016-04-28/our-view-limiting-...
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Replies to This Discussion
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Permalink Reply by Bluflame on -
Here is a prospective example of "retribution" on the part of Saudi Arabia if we would enact a tariff on oil shipped from SA to the US.
1. All commercial activity is SA is controlled by the ruling family (House of Saud).
2. A 30 Yr old family member was recently elevated to COO as defined by the Monarchy. This represents a very large deviation from past practice. The young guy has re-organized his staff in his own mold including getting rid of the long-time oil minister.
3. So, he has put himself in the hot seat and will be anxious to save face.
4. If I were in his shoes and was faced with the expensive tariff at a time when the Saudi economy is suffering greatly due to low oil prices, I would look for retaliatory economic measures.
5. For instance, assuming there were a large order for Boeing airplanes in process, either civilian or military, I would cancel the order and switch to AirBus or Soviet military craft. This is just an example, but you get the idea. It may be oil & gas equipment/services, computer hardware or software and the list goes on.
6. Obviously, he'd look where he could exert the most economic damage quickest. This is the law of unintended consequences.
BTW , sorry for the rambling response, but a tariff is not something we should undertake lightly. The ramifications extend far beyond the O&G industry.
BluFlame
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Permalink Reply by Joseph-Ohio on
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BluFlame,
Maybe I'm wrong here but I'm thinking SA is already buddied up with the OPEC, Russia and China.
That bunch has the most to gain by our mis-fortune seems to me.
I say okay then - we don't need their comeraderie / business / oil.
If / when Russia / China moves into the House of Saud's palaces maybe he'll be sorry who he chose to buddy up with ? ! ?
So also, there will be more Boeing Aircraft for us to use to defend ourselves with should things heat up even more - we may need them.
Don't get me wrong however - I'm no hawk / war monger - but by the same token I don't think we should come off looking weak by alowing them to walk all over us / use us for a door mat.
And, I agree things like Tariffs shouldn't be applied willy- nilly / taken lightly as it's all very serious business.
Just expressing my take-away here.
Best Regards,
J-O
P.S. : What's a COO ?
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Permalink Reply by Magnetron12 on
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Okay so we impose Tariffs and Sanctions on Countries that Dump their excess steel on us but do nothing when others dump their excess crude... M12
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Permalink Reply by Barry D on
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Magnetron,
Our country does not unilaterally impose "tarriffs and sanctions" . With regard to steel, our country has trade agreements in place dealing with this issue. "Dumping" is dealt with under the terms of those agreements.
There are no such agreements with regard to oil imports (in general).
Your comparison is incorrect.
BTW, this is why the TPP proposed by Barak Obama and supported by Hillary Clinton should be opposed.
Further, the tarriffs of 1929 and 1930 caused the recession that FDR turned into the Great Depression.
Any tarrif/sanction will be met with an opposing reaction by the other country and it's allies, the result will be a negative for our country. Tarriffs and sanctions are reactionary and detrimental.
Finally, the imports of oil from other countries is not the reason for the depression of domestic production. Imports are a straw dog meant to stir up the uninformed.
Instead, concentrate on regulations from our own government that stifle domestic oil and gas production. Plus, the lack of refinery capacity and flexibility of refineries caused by over reaching regulations from our government.
All of these unnecessary regulations are supported by Hillary Clinton.
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Permalink Reply by Joseph-Ohio on
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As things are currently, I'm for an outright embargo on ME Oil myself.
Skip the Tariff part altogether.
We don't need their 'stinkin' oil'.
I think trade agreements with vetted allied country's only is the way to go.
Have you read that China is building a huge military base at the south end of the Red Sea ? What does that mean to oil flow internationally do you think ?
Kiss the ME oil goodbye.
Defend the Suez Canal and the Mediteranian for trade with ME oil among vetted allies (Israel) as China seems to have a lock on ME oil leaving the south end of the Red Sea. Unless we can rid ourselves and allied countries of that Chinese base and the control it will command somehow. How I wonder ?
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Permalink Reply by Joseph-Ohio on
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That Chinese Military Base is being built in a place named Djibouti as I the news reported. It's at the south end of the Red Sea where it connects to the Gulf of Aden.
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Permalink Reply by Bluflame on
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Chief Operating Officer. That is not his official title, but a US corporate comparative equal of his role. Basically, #2 or #3 man in the pecking order.
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Permalink Reply by Joseph-Ohio on
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Thanks Blu'.
At first thought it was some special SA Kingdom only acronym / Title.
Threw me a bit of a curve there.
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Permalink Reply by Bob Perkins on
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Our research indicates that the US Department of Defense budget allocates $50-$70 per barrel for every barrel we import from the Middle East. We are putting US military folks at risk to protect the borders and water ways for this oil to come from OPEC countries. Why are we doing this when we could be producing our own oil? The PIRI calls for a presidential proclamation to limit imports of this foreign oil, which will encourage domestic exploration and production. For more on PIRI and our research see our Face Book page -> https://www.facebook.com/PanhandleImportReductionInitiative/
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Permalink Reply by Bluflame on
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Bob,
Quite simply, many of the gulf coast refineries are geared to use Mideast grade oil. Switching to the lighter WTI oil is a major, time-consuming endeavor. I would advocate letting economic market forces determine switch overs. Again, we are inviting retribution of some sort via government interference with oil supply. At this point, we are negotiating from strength thanks to shale operations. Let market forces prevail!
BluFlame
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