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May 9, 2006
Cuba Giving China And India Access To Caribbean Oil

The US and Cuba have had a pact in place for almost thirty years dividing the Florida Straits between the two nations for ownership of the oil and natural gas underneath the ocean. Up to now, Cuba has been unable to drill for the resources, and the US has been unwilling to do so. Now, with energy prices skyrocketing due to rising demand, Cuba has leased its field to China and India. Both will begin drilling within sight of the US, giving Cuba much-needed hard currency while demonstrating the lack of US resolve in mustering its own resources:

With only modest energy needs and no ability of its own to drill, Cuba has negotiated lease agreements with China and other energy-hungry countries to extract resources for themselves and for Cuba.

Cuba's drilling plans have been in place for several years, but now that China, India and others are involved and fuel prices are unusually high, a growing number of lawmakers and business leaders in the United States are starting to complain. They argue that the United States' decades-old ban against drilling in coastal waters is driving up domestic energy costs and, in this case, is giving two of America's chief economic competitors access to energy at the United States' expense.

"This is the irony of ironies," Charles T. Drevna, executive vice president of the National Petrochemical and Refiners Association, said of Cuba's collaboration with China and India. "We have chosen to lock up our resources and stand by to be spectators while these two come in and benefit from things right in our own backyard."

Inaction on the part of the US on our side of the straits may result in a loss of our reserves. No one knows whether the Cuban fields have a connection to our own, and the Chinese and Indian drilling could wind up depleting our own oil and natural gas. That would allow the Chinese and the Indians to get a strategic advantage in energy supply, and in the case of the former allow yet another potentially hostile player control world oil sales along with the kleptocracies in the Middle East. It also puts a few bucks into Castro's pocket, helping his grip on power, but there's little to be done about that.

We can do something about the potential encroachment on our oil fields by lifting the bans on off-shore drilling and increasing the domestic production of oil and natural gas. The Times notes that we could become self-sufficient for energy for the next generation just on the known oil and gas reserves off our shores, and that does not count the ANWR preserve. The commodities market for oil would deflate with the US running on its own energy production, greatly reducing the revenue to potentially dangerous regimes. At the least, we can shed our trade with Venezuela and the Middle East, focusing on imports from Canada and Mexico instead, and extending the life of our reserves in the process. That would send a message that we have the will to reach self-sufficiency as well as remind some regimes how much they rely on American petrodollars and the inflated price of oil for survival.

Congress needs to create a real energy plan that supports vastly increased domestic production in the short term. That will provide the only means to alleviate market shock from the exponential increases in demand from the two most populous nations in the world. If properly staged, we can use the savings on energy costs to fund the architecture of a new energy delivery system -- perhaps hydrogen, or a switch to nuclear-generated electricity for all transportation needs. That would take a generation to establish, and we have at least that much reserve to get the nation to that goal.

Instead, we will probably continue to dream up conspiracy theories about greedy oil companies which have few investment choices, given the restrictions on drilling and refining that the US has imposed on the domestic industry. And while we travel through the fascination of paranoia, we will allow our economic and military rivals to steal our reserves out from underneath us -- literally -- and pretend that their drilling somehow doesn't carry the same environmental problems as our drilling would.

Sphere It Digg! View blog reactions
Posted by Ed Morrissey at May 9, 2006 5:53 AM

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