“When you look at their actions, there’s no doubt what the (Saudis’) target is
and that’s worldwide shale,” said Rep. Steve Pearce, R-New Mexico, who made his
living in the oil and gas industry and whose congressional district includes New
Mexico’s Oil Patch that makes up the western portion of the energy-rich Permian
Basin.
“I think they’re afraid Europe is going to start developing shale,” Pearce told
Watchdog.org in an interview. “Some of the New Mexico (and) Texas companies are
over there trying to do fracking in Spain recently and that’s what they’re
frightened of, that those countries will do it.”
Saudi Arabia is the dominant figure in the Organization of Petroleum Exporting
Countries and was the driving force behind the organization’s decision last
November to block calls for cuts in oil production. That caused already
declining oil prices to accelerate, which has translated into falling prices at
gas pumps and a crash in global crude prices.
Many energy analysts think the main reason Saudi Arabia made its decision was to
put the squeeze on North American shale producers, who have seen an exponential
jump in oil production in recent years through improved technology, such as
hydraulic fracturing and horizontal drilling. OPEC officials deny that.
Others have theorized the Saudis have maintained OPEC production as a way to
hurt its rival in the region, Iran, as well as Russia. While not a member of
OPEC, Russia has cozied up to the Iranian government and has joined Iran in
supporting Syrian leader Bashar al-Assad in Syria’s civil war. The Saudi
government backs the Syrian rebels.
Regardless of possible political motivations, U.S. producers have pulled back
since the OPEC announcement in November, laying off workers and dropping their
rig counts.
Photo from U.S. House of Representatives
Photo from U.S. House of Representatives
“DEFRAY THE COSTS”: Rep. Steve Pearce, R-New Mexico, accuses Saudi Arabia of
“absolutely trying to shut down” the shale oil industry in North America.
Pearce thinks the U.S. government should charge Saudi Arabia and “any of the
countries that are engaged in the overproduction” a fee for using sea lanes to
transport their oil.
“Tankers travel the oceans pretty much without fear of piracy and that stability
comes from the U.S. fleets,” Pearce said. “That’s a very expensive thing and if
Saudi Arabia is just kind of working along with us and everything’s going fine
and they’ve got a market share and we’ve got a market share and our products can
compete with theirs on the open market, fine.
“But when they try to drive the price and manipulate an outcome, that’s when I
would get more involved and say, look, we as the U.S. government are going to
start requiring that you help defray the cost of securing the oceans.”
[to top of second column] |
Watchdog.org sent an email to the Saudi
Arabian embassy in Washington asking for reaction to Pearce’s
comments, but did not receive a response.
Bernard “Bud” Weinstein, assistant director at the Maguire Energy
Institute at Southern Methodist University, has doubts about
Pearce’s proposal.
“Congressman Pearce makes the valid point that the U.S. bears
most of the burden for protecting shipping in the Persian Gulf
region,” Weinstein told Watchdog.org in an email. “But this is the
result of long-standing agreements between the U.S. and members of
the Gulf Cooperation Council, including Saudi Arabia. We must also
keep in mind that the Saudis are allies in the fight against ISIS,
so proposing a ‘fee’ for helping to secure Gulf shipping would be
politically unwise at this time.”
Weinstein also disagreed with Pearce about shale’s potential in
Europe.
“The most promising fields are in countries with fracking bans, and
the difficulties securing licenses are so onerous that, in terms of
shale plays, the (major oil companies) have retrenched all over
Europe with the possible exception of the United Kingdom,” Weinstein
said.
But Peace is not alone.
Just last week, economist and columnist for the Sunday Times of
London Irwin Stelzer, “with considerable reluctance,” called for the
United States to impose a protective tariff on Saudi Arabian oil in
an article in the conservative political magazine, The Weekly
Standard.
The tariff Stelzer suggested would vary according to the global oil
price — “low enough to encourage continued improvement in the
efficiency of the American industry, high enough to allow its
survival in the face of Saudi cuts below that level.”
“The Saudis would hate it,” Stelzer wrote. “And we are told that we
need their help with security operations and other matters. But
encircled as they are by Iran and its proxies, they need us even
more than we need them.”
Pearce did not offer specifics on how his call for charging fees
would work.
“There are a lot of ways we can go without import taxes,” he said
Tuesday after he delivered a speech to New Mexico lawmakers during
their current 60-day session in Santa Fe.
“I don’t think we should stand by while people are struggling right
now and act like it’s not occurring and the government can do
nothing.”
[This
article courtesy of
Watchdog.]
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