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Panhandle producers announce proposal to limit oil imports

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15289541AMARILLO — Texas Panhandle oil producers and a leading oil economic strategist on Monday announced for the first time a proposition to limit oil imports as an answer to falling oil prices and increase production.

“What happened at OPEC gives us today the only going strategy to deal with the oversupply (of oil),” said Daniel Fine, oil and gas economic strategist and associate director for the New Mexico Center for Energy Policy at New Mexico Tech. “We have drawn the line in the sand and said ‘you have gone too far, we will not buy your oil.’

The Panhandle Producers and Royalty Owners Association, in conjunction with local oil producer Tom Cambridge, announced the Panhandle Import Reduction Initiative at the Amarillo Club. The initiative aims to gather interested parties from Texas, New Mexico and South Dakota to propose a ban on shale oil imports from abroad.

The announcement comes on the tail of news that 18 oil-producing countries failed to reach an agreement to freeze oil production levels Sunday in Doha, Qatar. The fallout was widely blamed on Saudi Arabia and Iran, which wants to bring oil production in the country up to 3.8 million barrels a day.

“This is very appropriate, as yesterday, OPEC and Russia and various countries met and decided they weren’t going to freeze oil and in fact, OPEC said they will increase production again,” Cambridge said. “This will drive the price down to $26 (a barrel) again. This is not a good thing for our country.”

According to the U.S. Energy Information Administration, light crude oil imports into the country fell 70.5 percent from 2010 to August 2014, from 2.2 million barrels per day to 652,000 barrels per day.

On Nov. 24, 2014, the price per barrel of West Texas Intermediate crude oil was $75.78. It settled below $27 in January. On Monday, the price for a barrel of WTI had increased to $40.05 a barrel.

Fine said Saudi Arabia saw the U.S. “taking their market share” and on Thanksgiving of 2014, announced that it would not reduce their production of oil in an effort to push out U.S. producers, who have a higher cost of extraction.

“What we propose to the country and to the industry is a return to President Eisenhower in 1959, when he, by proclamation, established import quotas on foreign oil,” Fine said. “We will take care of Canada, our hemispheric ally. But OPEC, no. We’re going to rigorously put quotas on the import of oil.”

Currently, total U.S. energy production is at a record 89 quadrillion British thermal units, which covers 91 percent of total U.S. energy consumption.

U.S. crude oil imports averaged more than 7.9 million barrels per day in the first week of April, up by 686,000 barrels per day from the previous week. Over the four weeks from March 14 to April 8, crude oil imports averaged over 7.8 million barrels per day, 4.1 percent above the same four-week period last year.

“We will see some repercussions from free trade organizations and think tanks and we anticipate that,” Fine said. “OPEC is a cartel which eliminates its purity in free trade arguments. Their literature and declaration is to eliminate competition from us.”

Fine said the message is one of deterrence but that there may be repercussions.

Cambridge said that the group is a grassroots movement that has signatures from approximately 100 people in the Texas Panhandle and intends to raise $100,000 to get Fine and his plan in front of the president in 2017.

“We don’t know the presidential response yet. This is too important for the presidential campaign. But the next phase is political,” Fine said. “There has been one effort that I know if, which comes from Donald Trump to tie in Saudi Arabian oil with a demand that they put boots on the ground in Syria and Iraq and if they don’t there will be repercussions on oil.”

The group said they do not intend to bring the plan to the Obama administration because “they are very involved with global warming and doing away with fossil fuels,” but they said that the initiative has attracted all three presidential candidates on the Republican side who have “been very interested in the world oil supply.”


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