BLOG: Saudi Arabia Says Trump Vow to Cut Oil Imports Risks US Economy

BLOG: Saudi Arabia Says Trump Vow to Cut Oil Imports Risks US Economy
Saudi Aramco CEO tells financial press free trade is healthy for a global, interconnected oil and gas industry.

President-elect Donald Trump’s road to American energy independence may have hit a bump as Saudi Arabia fires back that his plans could risk the U.S. economy.

Deon Daugherty
Deon Daugherty, Senior Editor, Rigzone
Senior Editor, Rigzone

In an interview with the Financial Times, chairman of state-owned oil behemoth Saudi Aramco Khalid al-Falih said Trump’s campaign pledge to end oil imports would undermine global free trade – including the benefits the United States enjoys as a major exporter of goods.

“The U.S. continues to be a very important part of a global industry that is interconnected, that is dealing with a fungible commodity which is crude oil,” al-Falih told FT during Marrakesh climate negotiations. “So having equalization through free trade is very healthy for oil.”

But most of the 7 to 8 million barrels of crude imported each day into the United States actually comes from its closest ally, Canada. And while crude oil has escaped trade quotas for 40 years, the United States has imposed many others.

From the labor market to cigars and oranges, the federal government limits items brought into the United States and usurping the homeland’s market share. The key issue that has stopped oil from joining the list in the past is consumers’ fear of escalating gas prices and the subsequent politicians’ fear of losing elections, Ed Hirs, economics fellow at the University of Houston, said.

But academics and producers alike have petitioned the U.S. government for years to revisit restrictions on oil and gas. And a group of West Texas producers intend to take the issue to the new president in 2017. Based on Trump’s campaign promises, they could gain a powerful advocate.

An award-winning journalist, Deon has reported on energy, business and politics for almost 20 years. Email Deon at deon.daugherty@rigzone.com

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Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.
Marc Rauch | Nov. 17, 2016
There is no reason or value to continue importing foreign petroleum oil. There is very, very little reason to expand petroleum oil production in the U.S. We dont need it. We dont need any new drilling or fracking, and we dont need more natural gas, we already have a surplus. Ethanol can fill all of our requirements for gasoline and diesel fuel. And in the future, when and if electric and hydrogen can be economically counted on to power vehicles and stationary machines, then ethanol can be cut back.

Craig Dennis | Nov. 17, 2016
Hello, I believe that these Arab countries have thought that the United States was over an oil barrel. But, they are wrong. Now, the biggest oil producing countries want to pressure us to keep taking their oil imports. We just might, but we should demand that the dollar is the only currency used to buy and sell oil. And, we should renegotiate our place in the Arab block. Just in case some of the Arab countries have forgotten...

michael mclaughlin | Nov. 17, 2016
The USA can try and cut the cord on energy, but it wont work. Get bloody real. We are in a WORLD ECONOMY and protectionism will not work. Burning more coal is as stupid and not the way. I guess if you dont mind more pollution, coal is the way. Coal is dead, lets not pretend it will rise from the dead and become king again.

Charles Fairchild | Nov. 17, 2016
The recent shale discoverys here are a direct result of the rise of oil prices in the last ten years by the Saudis to over 100 per bbl. They rolled a 1/2 and we rolled double 6. Tough, but the game continues.

J.john | Nov. 17, 2016
If this happens the US petrodollar may lose its reserve currency status !

ottovs | Nov. 17, 2016
DT should prohibit all import of oil from the musulman countries, no if or buts.

Joe Goldstein | Nov. 17, 2016
Twice in my lifetime the Domestic Energy sector has been plundered to appease Globalist ambitions abroad. As a tool of economic warfare against Russia, the US govt. has colluded with Saudi Arabia to flood oil markets and drive down prices. The instability caused by these actions have produced Boom to Bust cycles within the Domestic Energy business, unfairly affecting small businesses with capital investment exposure unable to predict long term payouts and rates of return. Without price stability free of Globalist government manipulation, Domestic Energy will remain unpredictable and confined in growth to those ventures which only offer short-term pay-outs.

Jose Insurriaga | Nov. 16, 2016
It is true that the majority of the Oil imported comes from Canada, but I am sure that WE could easily incorporate Canada into the Energy Independence equation, and they would be understanding of our position. As far as Saudi arabia is concerned, they are purely speaking from a position of power, where we should have been way before the 80s, the only commodity that Saudi makes is Oil, and with our production we can easily choke them as they have choked the world in several ways.

Rocky Duplichan | Nov. 16, 2016
OPEC has held us over the oil barrel for far too long. Point 1. How do they feed their population? Kinda hard to grow all that food in a desert, dont you think? Point 2. Most of their food import comes from you know where! Losing some of the global oil market means a loss in revenue. A loss in revenue means they have to find some way to pay for their food import. Kinda time the tables are turned. Are you old enough to remember what they did to us in the 70s? What goes around, comes around. Sooner or later. And that is a fact of life!!

Bill Flaherty | Nov. 16, 2016
Mr. Trump is about to put North American crude oil back on the map. I would not be surprised if protectionist regulations (taxes, import bans and deregulation) are put in place to increase North American crude production and prices and jobs and make OPEC irrelevant to U.S. markets. The cure for U.S. oil and natural gas investors, drillers, and producers is a 20 year North American Oil Production Agreement which removes the Middle East component from North American markets.

Brian Sweeney | Nov. 16, 2016
I think its about time to have energy independence in the USA. Sure prices will increase but those who want to work will be able to afford it. Like president elect Donald Trump said Lets Make America Great Again I am certainly no scholar , but I want to see the rig count back up and everyone affiliated in oil and gas working again. Way to much politics in OPEC, I feel its time to cut the cord with those people.


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