Posted January 13, 2015
American is still accepting shipments of Saudi Arabia oil. Despite the rationale that the source and supply of North American oil and gas is now totally sufficient to meet the continent’s needs.
Yet a determined group of homegrown environmentalists has captured the president of the United States to stop the flow of oil from Canada to U.S. Gulf refineries.
President Barack Obama has already stated he will veto any congressional legislation that reaches his desk that approves the Keystone XL pipeline to be constructed from Alberta to Cushing, Oklahoma.
He does so in violation of the North America Free Trade Agreement (NAFTA) that created the largest trading system in the world more than 35 years ago. It has created more jobs in Canada, Mexico and the U.S., than any piece of legislation passed between the partner countries in the past 200 years.
There is no such agreement with the Saudis or the Iranians who supply millions of barrels of crude to both Canada and the U.S. Yet both these countries are despotic politically with no regard to supply and the effect on world oil prices.
The Saudi’s wellhead price per barrel is reported to be $15. Add to that the cost of shipping the crude at an estimated price of $30. In the past four and one half months, this deliberate oversupply of oil has dropped the price per barrel to $47 at the wellhead. In that short time, the price of West Texas Light crude has dropped $53 since early September.
The fallout has put North American petroleum producers and associated industries in a perilous position as their wellhead costs range from $40 to as high as $80.
Despite this, the U.S. president has allowed a well-financed and organized lobby to drive the price of oil to levels that are no longer profitable for many producers. While the public enjoys much lower gasoline prices, the fallout to the economies of the NAFTA partners is devastating.The result is losses of jobs, less research and development and losses of key employees. All these fallouts will be felt for many years.
The environmentalist lobby doesn’t care so long as it can stop oil from Canada and the fracking oil recovery programs in the U.S.
They are content to allow oil to be shipped from OPEC countries at fire sale prices. Yet the president of the United States continues to resist home grown oil and gas development on the pretense that it will affect global warming.
So it is okay to accept the flaring of natural gas in Saudi Arabia, Iraq and Iran to contribute to global warming but not in North America where most natural gas is captured and sold.
The cost of this massive sell-off of oil will be long remembered as Obama’s folly. He has betrayed the trust many oil producers had when developing oil supply to make North America self-sufficient.
He can fix this by telling the OPEC countries currently selling oil to the U.S. to reduce or cease delivery so that demand can once again match supply.
The evidence is clear that the environmentalist lobby’s target is to shut down Canadian Oil Sands production because they allege it is a major cause of global warming. It has nothing to do with stopping the Keystone XL pipeline.
It is crass interference in the right of a sovereign nation to develop its resources. Therefore, if the president vetoes the impending congressional approval of the pipeline, he is in violation of the terms and conditions of the NAFTA agreement.
He may not want that as part of his legacy.