Trade War Looms? New Push for Cuts on US Crude Imports

Trade War Looms? New Push for Cuts on US Crude Imports
Producers, communities would have to overcome political perceptions of pain at the pump to see implementation of Eisenhower-era crude import restrictions.

What’s more, Cambridge said, the money the United States spends to purchase the foreign oil – often from hostile nations – could better be used to create domestic jobs and boost the U.S. economy.

Bring Back Ike’s Plan

Cambridge, Yates and others across New Mexico and West Texas have come together with Dr. Daniel Fine, project leader for energy policy with the state of New Mexico and assistant director at the Center for Energy Policy at New Mexico Tech, to revisit the idea of oil import restrictions.

Fine looks to the Eisenhower approach – studied at length by economics professor Ed Hirs at the University of Houston – as a way to stymie OPEC’s stranglehold on the oil industry, he said. His plan of action: along with PIRI, gather communities’ support and petition the new president in 2017.

 

“PIRI is interested in supporting self-sufficiency in North American oil. We have self-sufficiency in natural gas, and we have the capability of self-sufficiency in oil. And the current situation is that OPEC and Saudi Arabia understood that and have challenged it by way of a price war and market share,” he said. “We all agree in PIRI the country would be much better off strategically, economically and the employment of a workforce if we were self-sufficient.”

Fine noted that in Farmington, NM – the heart of the San Juan Basin – has lost 12,000 jobs to the industry downturn. That’s almost one-third of the town’s total population of 42,871 in July 2015, according to the U.S. Census Bureau.

If the U.S. implemented restrictions on oil imported from non-North American countries, all of those workers would be called back to the field, Fine told Rigzone.

“But it would be difficult because, particularly in the San Juan basin and others like it, the Eagle Ford … it’s going to be difficult to re-assemble the workforce. In many communities of bust conditions, they’re gone. They’ve taken other jobs, they’ve taken their families and they’ve moved away,” he said.

How Would It Work? Imports, OPEC and Shale Basins

At the University of Houston, Hirs and his colleagues have research and indeed, advocated, for restriction on foreign imports of crude oil for more than a decade.

In 2003, when Hirs initially tackled the subject, however, the chief concern was stabilizing the national economy – not just the one in the oilfield.

“Our primary concern was a geopolitical event in the Middle East driving up the price of oil above $400 per barrel, which from our starting point of $100 per barrel, it really could have done,” he told Rigzone.

The path to energy security in the United States is found by limiting crude imports from the Middle East and Venezuela, Hirs explained. Those restrictions – through import bans or tariffs – wouldn’t apply to U.S. neighbors Canada and Mexico.

Hirs notes that the United States has had no qualms about implementing import bans on a variety of products from across the world, including tobacco, drugs and beef.

“A lot of oil people in the oil patch [say], ‘We’re free market people’ … Guys, you’re not,” he said, highlighting movement in Washington that routinely alters capacity rates on pipelines.


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WHAT DO YOU THINK?


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.

Capt. James Burke  |  September 04, 2016
Mr. Cambridge is correct; Americas need for imported Middle Eastern crude has passed. It is counter productive to American industry to export American resources while simultaneously importing crude oil from corrupt foreign entities, many of whom are state sponsors of terror. American dollars, through the Middle Eastern governments, are directly supporting the groups who are killing American overseas and advocating for the end of western civilization. America needs to keep our oil and gas at home and only import oil in a quantity sufficient to make up any shortfalls from shale and deepwater drilling. Capt J. Burke
Bill Flaherty  |  September 01, 2016
Completely agreeable to this type of thinking so long as we are not exporting at the same time. Crude is a strategic resource. As soon as America began exporting the price absolutely tanked. Exporting crude from the U.S. is a mistake. We have enough demand in our own country, that the exporting should have never been accepted, or approved. Most Americans support border sourced crude, and at the same time do not support importing from foreign sources. With Mexico opening up to American companies, we can begin a mutually beneficial relationship with Mexico, as we have had with Canada for a century.


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