Sunday, August 03, 2008

Big Oil Could Fuel End To Embargo On Cuba

Since the days the Kennedy Administration in 1961, the U.S. has declared an embargo on trade with the Communist regime of Fidel Castro in Cuba. Now the discovery of a huge new oil reserve in Cuba could spur big American oil companies to seek an end to that embargo to exploit those oil assets.

One of the biggest problems for the Castro regime has always been that this Communist government has had few good material assets to sell on the world market to improve it's economy which remains in the slumps, decade after decade. Even the old Soviet Union long ago basically abandoned Cuba because it had little in the way of a few bananas or sugar cane to offer the Soviets. Now the new Russia is back again, along with China and Canada, as these nations vie to develop the oil recently found in the North Cuban Basin by an U.S. Geological Survey that may contain as much as 9.3 billion barrels of crude oil, and as much as 21.8 trillion cubic feet of natural gas. Since Cuba is too poor economically to exploit this oil and natural gas as a nation, it has partitioned the area into 59 exploration blocks and is seeking international partners to capture the oil and natural gas and share the profits with Cuba. Suddenly one of the poorest nations in the Western Hemisphere may become a major player in the world oil market, and U.S. oil companies will no doubt seek to change the embargo rules so that they can get involved in all the huge profits to be made by exploiting this oil, not wanting to allow just Russia, China and Canada to reap all the benefits solely.

Interestingly, it is disgraced U.S. Senator Larry Craig(R-Idaho) and Rep. Jeff Flake(R-AZ) that have already introduced some legislation to exempt oil from the U.S. embargo rules with Cuba. While many in the Republican Party take a hard line against the Communist regime of Fidel Castro, Craig takes an opposite tone and argues that the embargo with the Communist regime has achieved "zero" in results. And Craig argues that China already has at least one fully functional oil drilling rig that is operational in the area. Anyone can clearly see that big oil is working through members in Congress like Craig to relax the embargo with Cuba so that big American oil can move in and start drilling as well. Just yesterday, the official Russian news service of the Putin dominated Russian government announced a new trade deal with Cuba to exploit this oil and natural gas. The window for the U.S. to claim it's share of territory to start exploration and drilling for itself is rapidly closing as more and more key international oil companies become involved and pen agreements with Cuba to share any profits.

But there is also the serious environmental downside that any Cuban oil drilling leak accidents could ruin the everglades in Florida or ruin some of Florida's finest beaches. Florida Democratic Senator Bill Nelson and Florida Democratic Congressman Jim Davis have bills written that would deny travel visas into the U.S. of any foreign businessman who are involved in oil drilling in Cuban waters. But it might be a case of too little, too late as big oil may be lining up enough allies among the influential Republicans in Congress to ease the embargo rules and the fact that the U.S. and Cuba may be doing billions of dollars of business in the near future may be a difficult thing to stop. Things like this are like runaway trains. Once they are loose, they cannot be easily stopped.

It will be interesting to see if Republicans will push for changes in the embargo rules with Cuba before the November elections or not because it will no doubt hurt them among Cuban voters in Florida and could tip both this state and the election to Obama which might be far less inclined than John McCain to allow American oil drilling in the Cuban area because of the the possibility of oil leak accidents causing extensive environmental damage to the American coastline, only a few miles away.


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