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An energy lesson from
Cuba
by Ben Lieberman
Friday
June 2nd, 2006
The Heritage Foundation
An unlikely political figure is willing to fight for lower gas prices. His name:
Fidel Castro.
He’s working with foreign investors, including China, to find oil off the Cuban
coast, close to American waters.
In contrast, American companies aren’t looking for oil off the Florida coast,
because it’s part of the 85 percent of the nation’s offshore areas where
drilling’s not allowed. In addition to the eastern Gulf of Mexico and Atlantic
coast, much of the Pacific and offshore Alaska is also restricted. Only the
central and western Gulf, off Louisiana and Texas, has a green light to produce
oil.
These federal restrictions were imposed many years ago when oil was cheap and
the need for additional drilling was considered insignificant. Fears of
environmental damage have kept them in place, though technological improvements
have greatly reduced those risks. All new drilling would have to comply with
strict safeguards and wouldn’t even cause aesthetic harm, as it would occur too
far offshore to be seen from land.
Florida and California lawmakers have done the most to obstruct any pro-drilling
measures -- which is unfortunate, since they are two states with tremendous
offshore energy resources.
At a time of high prices and geopolitical uncertainty, it seems like a
no-brainer for America to make full use of the oil right here at home. But
instead, these vast areas remain off-limits. Florida legislators have actually
introduced a bill that seeks to expand the no-drill zone around their state.
This is where Fidel comes in. The closest parts of Cuba and Florida are only 90
miles apart, and a 1977 agreement splits control over those waters down the
middle. We’re not allowed to drill on our side, but Cuba’s dictator wants to
drill on his, and preliminary data suggest there is oil in the area. The Cuban
government is working with foreign-based companies that have sufficient offshore
drilling expertise, including the Chinese state oil company. American companies
can’t participate in Cuban drilling because of the trade embargo.
Thus, two communist regimes could end up drilling as close as 45 miles away for
oil that Americans are not allowed to touch. And if they do, it likely will be
with technology far less environmentally safe than what American companies would
use.
The irony of Cuba and China having more energy freedom than America was too much
for Sen. Larry Craig (R-Idaho) and Rep. Jeff Flake (R-Ariz.) to leave alone.
Both have introduced bills that would waive the Cuban embargo and allow U.S.
companies to enter into joint ventures with Cuba to drill in its waters. If
drilling is going to occur so close to America’s shores, they argue, we might as
well get some direct economic benefit from it.
Of course, there are big risks to working with Cuba, especially now that
expropriation of energy assets is all the rage in Venezuela and Bolivia. Nor is
it clear how much oil lies off Cuba -- previous attempts at drilling proved
disappointing.
Whether or not these oil wells ever get built, the real value of Cuba’s efforts,
as well as the Craig/Flake bills, is that they highlight the absurdity of our
own outdated offshore drilling policy, which contributes to today’s high prices.
Several members of Congress want to open up the restricted offshore areas around
the country. If Castro’s pro-drilling policy serves as a wake-up call that helps
that happen, then he will have done America a rare favor.
Ben Lieberman is a Senior Policy Analyst in the Roe Institute for Economic
Policy Studies at The Heritage Foundation (heritage.org).
Distributed nationally on the Knight-Ridder Tribune wire
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