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Oil: The Great Communicator

The worlds unyielding thirst for oil may just be the force needed to end the Cuban Embargo.  A new offshore oil endeavor is proceeding forward in Cuban waters, merely 60 miles of the Florida coast. 

Estimates of the oil reserves vary.  Cuba is claiming 20 billion barrels are held within its waters, while the US Geoglogical Survey suggests a more modest number of around 9 billion barrels.  Either way this is a significant number, making Cuba a legitimate player in the regional oil market. Another aspect of this find is that it’s mostly deepwater deposits around 5000 feet.  This would require similar technology as was deployed in BP’s Macando well.

This find comes with implications for the US. Currently, the US Cuban embargo restricts Cuban drilling operations to use a maximum of %10 US technology.  While the US has traditionally lead the world in terms of oil extraction research & development, the last decade has seen an exodus of US based oil companies, relocating their headquarters abroad to exploit tax loopholes.  These newly internationalized corporations will be allowed to operate in Cuban waters while US loyal companies are excluded.  However due to the proximity of this operation to the US coastline, it is likely that the US will invest significantly in collaborative spill response plans.

The 50 year old embargo is undoubtedly outdated. It should, at the very least, be reevaluated to come in line with the massive global reorganization that has taken place since it’s conception.  The fact that they are now in possession of a resource that we so devoutly covet should be just another fact on the long list of reasons to reevaluate, especially when a change in leadership is eminent.  However the possibility of ending the half century old embargo because we need oil sets a dangerous precedent by showing very clearly that oil is the Achilles Heal of the US and that nothing is off the table when it comes to petroleum considerations.  This also continues the precedent of the US protecting oil companies.  Not only does the US provide tax incentives and subsidies for the most profitable companies of all time, but the US is also willing to reexamine everything to make sure “their” multinational corporations have access to every global reserve.

Categories: Energy Tags: , ,