The PIRI Calls For An Open Public Forum Debate On Rising Oil Imports

Oil Pro ^ | 9/21/16 | Daniel Fine

[panhandle67]

Mr. Drangmeister of the New Mexico Oil and Gas Association is invited to debate us (Panhandle Import Reduction Initiative) on OPEC , free trade and the price war against in the American Southwest. Apparently, he missed our presentation at the Independent Producers Association of New Mexico (IPANM) Convention recently in Santa Fe. This OP-ED is a response to his comments in a news article in this newspaper by Maddy Hayden

It is not too late for him to learn that as a communications officer in an oil and gas trade association he should support an open forum of all ideas and proposals for the permanent prosperity of the industry, oil and gas communities and workers along with their families.

We can explain to him that “sticking to the principles of free trade” not only puts the interest of oil exploration and production in New Mexico and the Southwest in utopia (nowhere) but it asks a question: free trade with who? OPEC determines our price of oil as a cartel. A cartel itself is a rejection of the principles of free trade. For the last 43 years the world price oil has nothing do with free trade of free markets.

[panhandle67]

Another policy tool to defend New Mexico and Texas oil and gas against a OPEC price war for market share to slow or shut it down is the reduction of its exports to the United States. Mr. Drangmeister misleads himself: import quotas do not “stop” or ban imports -- they offer a measure of control in the interest of a “healthy” American petroleum industry and national security.

We ask : why are we buying Saudi Arabian light oil which is the same grade of oil we produce while thousands are out of work and drilling rigs are idle here?

[arthurus]

The availability of oil is such that the price is not going to go stratospheric again unless the US government makes it do that. Oil companies cannot make the profits they would like to make but the oil is still there and accessable in American ground. The oilcos are constantly improving extraction methods and costs. If the Sauds limit production the price will only go up a fraction of what it would have risen 25 years ago because those shut down frack wells can be reopened relatively easily. When the price reaches the level at which production is profitable production ramps up. The price of oil is not dependent on the avarice of one producer or cartel. We do not have to prop up our oilcos by limiting imports. It is strategic to import more and leave ours in the ground so long as the market determines the point at which it comes out of the ground. The market is what got the fracking boom underway. We must not ruin it by propping up prices or limiting imports. When the oilcos are guaranteed a profit, cost cutting incentive is reduced.