[Marxism] US faces Bay of Rigs crisis

Walter Lippmann walterlx at earthlink.net
Sat Jul 8 17:03:17 MDT 2006

US faces Bay of Rigs crisis
David Nason
July 07, 2006


Rising oil prices are reinforcing the case for the US to do oil
business with Cuba

EVERY year since 1992 the United Nations General Assembly has passed
a resolution calling on the US to end its trade embargo of Cuba.
Every year the resolution passes with an increased majority. Last
year it was 182 votes to four.

But still the embargo goes on. Started as a covert operation by
president Dwight Eisenhower in 1960, it became formal US policy under
president John F. Kennedy who banned all imports - including goods
made in other countries that contained Cuban materials - and all US
exports except for non-subsidised foods and medicines.

The blockade was expanded under the Republican regimes of presidents
Ronald Reagan and George Bush Sr, but now, after 45 years, rising oil
prices and escalating concerns about the US dependence on Middle
Eastern oil supplies is forcing a rethink.

Identical bills now before the US Senate and House of Representatives
would exempt US oil companies from the embargo, allowing them to
partner Cuban companies in exploring and developing offshore leases
on Cuba's side of the border in the highly prospective Florida

Cuba's side of the straits has been divided into 59 lease areas, and
foreign companies - including several from energy-guzzling China and
India - are pursing negotiations.

Introducing his bill in the Senate, Idaho Republican Larry Craig said
China was being left to drill for oil "within spitting distance of
our (US) shores without competition from US industries".

The bill is now before the Senate Banking Committee where it may or
may not gather dust. But its twin brother is under close
consideration in the House where it was introduced by Craig's
unfortunately named Republican ally from Arizona, Jeff Flake.

Expatriate Cubans in Congress oppose the bills (representative Mario
Diaz-Balart said it amounted to supporting terrorism) while across
party lines the Florida delegation has major concerns about drilling
near the state coastline. A year ago these issues would have been
more than enough to make an exemption for oil explorers politically
impossible, but times have much changed since then.

On Wednesday, oil hit a record closing high of $US75.19 a barrel
after reaching $US75.40, an all-time intraday record. In the Middle
East the anti-US nuclear brinkmanship of energy-rich Iran continues
and, globally, China and India keep buying oil reserves where they

So Flake's argument that the ideological divide with Cuba needs to be
put aside so the US doesn't "cripple our own energy competitiveness"
is finding a sympathetic ear, especially given that Cuba has made it
clear it would welcome US bids on its offshore lease .

Should they be allowed to proceed, many of those bids would no doubt
succeed, especially if they came with a Washington agreement to at
least consider lifting other restrictions on US-Cuban trade.

This week the case for doing oil business with Cuba was further
reinforced by a report in The Wall Street Journal showing offshore
drilling rigs are leaving US waters in the Gulf of Mexico for better
paying work in more prospective areas of the world. In 2001 there
were 148 oil rigs in the Gulf compared with 90 today. With more
expected to leave soon, it is predicted Gulf production declines will
be accelerated, putting more upward pressure on US domestic energy

The Gulf region produces 25 per cent of US oil and gas but oil
production fell alarmingly by 19 per cent between 2003 and 2005. This
when the US urgency for more reserves it can call its own has never
been greater.

The oil rig exodus is expected to be felt hardest in gas exploration.
Many of the rigs leaving are shallow water "jack-up" rigs used for
gas exploration.

This is a major problem for two reasons: Gulf gas reservoirs are
often quickly exhausted, requiring energy companies to keep drilling
to maintain production; and gas prices are tipped to rise from about
$US6 per million BTUs (British thermal units) today to $US10 by the
end of next year. So the presence of familiar US companies in Cuba's
enticing, unexplored waters may be just the lure needed to keep this
vital energy infrastructure close to home and working to find
supplies the US needs to establish greater energy self-reliance. Some
of the alternatives for the US are not all that attractive. The
world's second-largest reserves of natural gas are in Iran.

Still, a lifting of the Cuban trade embargo won't guarantee that
vital oil rigs will stay in the US orbit in the numbers needed.
Foreign oil companies are offering huge daily rates and attractive
long-term contracts for oil drillers to relocate to hot prospects off
Africa, Middle East and China.

But the US doesn't stand a chance in this race by hanging onto a
dogma that pre-dates the Bay of Pigs and by ignoring votes of

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