Friday, October 24, 2008
Cuba's Oil Windfall
A few years ago oil was discovered off the northwest coast of Cuba. Lots of it. Or maybe not. Depends on who you ask. To hear the Cubans tell it, it could amount to 20 billion barrels. To hear the United States Geological Survey's views it could be as little as 5 billion. Regardless of exactly how much is there, it's undeniable that it exists. These numbers are nothing to sneeze at and could definitely make Cuba a petro player in the Western Hemisphere. My quick math (assisted by a calculator) tells me that that is enough oil to last Cuba, at their current consumption rate, for over 350 years.
Of course, this find in their backyard has the United States licking their proverbial chops. The only problem is that pesky embargo that has been around for over 40 years. This has lead to debate in Congress as to whether or not the embargo should be loosened to exempt Big Oil from the its parameters to assist in drilling.
Many nations have stepped up to say they're willing to help. Spain has already entered into a production-sharing agreement with Cuba and will start the drilling early next year. Others mentioned in negotiations are Norway, India and Brazil. Meanwhile the United States continues to sit on the sidelines, hands tied by their own embargo. Kirby Jones, head of the US-Cuba Trade Association says this about the US position- "With that much oil, there would be the feeling that there's a real [U.S.] price to be paid for [maintaining] the embargo. It changes Cuba's economic situation drastically and makes the U.S. less relevant." Less relevant? Most likely so. We're like the kids on the playground who huff and puff, protesting a kickball game that didn't go our way- but the game continues. So maybe that wasn't my best analogy, but you get the picture.
The question is still up for debate, though. Many believe this will do nothing more than to spur the US into drilling off its own shores, an idea that is gaining support nationwide. Maybe it's because I didn't live through the Cold War, but the whole embargo seems fairly silly to me. Turning our backs to Cuba doesn't make them go away. It doesn't make them want democratic reform. And that doesn't even take humanitarian issues into consideration.
In the end, it seems like it would be in the best interest of the United States to lift, at least partially, the embargo and allow oil companies to go to Cuba and assist in drilling. This way it is done safely, effectively and we can get a slice of the pie.