From the Amarillo Globe-News

The Panhandle Import Reduction Initiative group recently sent a letter to the White House calling on President Donald Trump and his administration to recognize and correct what it says are unfair trade policies impacting the U.S. oil and gas industry.

Spurred by a presidential memo for Secretary of Commerce Wilbur Ross to use the Trade Expansion Act of 1962 to investigate “core industries such as steel, aluminum, vehicles, aircraft, shipbuilding, and semiconductors…critical elements of our manufacturing and defense industrial bases,” the members of PIRI want the oil and gas industry to be recognized as a core industry.

“It’s a core industry in that it reduces poverty and it increases the standard of living for people,” said Tom Cambridge, PIRI facilitator and petroleum geologist at Amarillo’s Cambridge Production Inc. “We think that having a stable oil supply in this country that is not threatened by Saudi Arabia and OPEC is good for national security.”

Cambridge says there are several hundred members in PIRI, most of whom are producers and royalty owners — “Mainly those that are out of work or have been financially hurt by what’s going on when oil prices dropped,” he said.

Cambridge — along with Daniel Fine, Harold Courson and John Yates Jr. — formed PIRI in 2014 after they say then-Saudi oil minister Ali Al-Naimi convinced Organization of the Petroleum Exporting Countries (OPEC) members to allow Saudi Arabia to overproduce oil to drive down prices.

Al-Naimi was dismissed in his role as oil minister in May 2016 and replaced by Khalid Al-Falih, chairman of Saudi Arabian Oil Co.

Cambridge acknowledged the negative impact to producers and employees in the oil and gas industry may not be felt by consumers who cheer declining barrel prices because of the result at the pump.

“We think the price of oil should depend on the cost to produce it,” he said. “In the whole country, I personally believe that it would take $65 to $70 a barrel, which would yield $3 (a gallon) gasoline.”

According to Haynes and Boone LLP, 123 oil and gas producers have filed for bankruptcy since the beginning of 2015, and 55 of those were in Texas.

Per the U.S. Energy Information Administration, foreign countries supplied about 25 percent of petroleum to the U.S. in 2016, after hitting a low unseen since 1970 of 24 percent in 2015.

In 2016, the EIA reports the U.S. imported 10.1 million barrels of petroleum per day from 70 countries, with the top five being Canada, Saudi Arabia, Venezuela, Mexico and Columbia.

“Right now, the price of oil … is controlled by Saudi Arabia and commodities traders in New York and Chicago,” Cambridge said. “Producers … don’t set the price — we just drill for oil. Well, you can’t drill for oil commercially in the United States at $24 a barrel. Our production fell way off. That defeats our purpose of trying to be self-sufficient, protect our national security and our national economy.”

In 2014, per-barrel oil prices peaked at $107.49 only to close the year at $54.14. In February 2016, the price of oil dropped to $26.21, and the barrel price has been making moderate gains since.

On Friday, the price of oil closed at $49.87 per barrel.

“We have $277 billion (worth of) barrels of oil, we’re No. 1 in the world now with our new shale technology. Why should we depend on the Middle East?” pondered economist Daniel Fine.

“American shale oil producers are making a comeback. We’re up to about 9.3 million barrels a day from a low of about 8-plus million in 2015, mainly because American producers in the southwest have higher prices. The incentive is more drilling and more rigs because the price is high.”

The EIA reports the U.S. had been the top producer of petroleum and natural gas hydrocarbon during the second term of the Obama administration.

“We think that President Trump offers the latest and best chance to be the first president in 70 years to make America self-sufficient in oil,” Fine said. “His outlook on ‘America First’ is consistent with our position. We say American oil and gas first.”

 


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