Obama: Iranian oil, good. Canadian oil, bad. American oil, bad.
Iran’s participation in the nuclear negotiations that have slogged on for months, have now, ultimately, netted a deal that will allow Iran to export its oil—which is the only reason they came to the table (they surely are not interested in burnishing Obama’s legacy). International sanctions have, since 2011, cut Iran’s oil exports in half and severely damaged its economy. Iran, it is estimated, currently has more than 50 million barrels of oil in storage on 28 tankers at sea—part of a months’ long build up.
It is widely reported that, due to aging infrastructure and saturated storage, it will take Iran months to bring its production back up to pre-sanction levels. The millions of barrels of oil parked offshore are indicative of their eagerness to increase exports. Once the sanctions are lifted—if Congress approves the terms of the deal, Iran wants to be ready to move its oil. In fact, even before the sanctions have been lifted, Iran is already moving some of its “floating storage.”
On July 17, the Financial Times (FT) reported: “The departure of a giant Iranian supertanker from the flotilla of vessels storing oil off the country’s coast has triggered speculation Tehran is moving to ramp up its crude exports.” The Starla, “a 2 million barrel vessel,” set sail—moving the oil closer to customers in Asia. In April, another tanker, Happiness, sailed from Iran to China, where, since June, it has parked off the port City of Dalian.
Starla is the first vessel storing crude offshore to sail after the nuclear deal was reached—which is, according to the FT: “signaling its looming return to the oil market.” Reuters calls its departure: “a milestone following a months-long build-up of idling crude tankers.” Analysts at Macquarie Capital, apparently think the oil on Starla will not be parked, waiting for sanctions to be lifted. A research note, states: Iran is “likely assuming that either a small increase in exports will not undermine the historic accord reached or that no one will notice.” We noticed.
Already, before sanctions are lifted, global oil prices are feeling the pressure of Iran’s increased exports. Since the deal’s been announced, crude prices have lost almost all of the recent gains.
While the Obama Administration’s actions are allowing Iran, which hates America, to boost its economy by increasing its oil exports, they are hurting our closest ally but putting delay after delay in front of the Keystone pipeline—which would help Canada export its oil.
After six-and-a-half years of kicking the can down the road, and despite widespread support and positive reports, the Keystone pipeline is no closer to construction than it was on the day the application was submitted. It is obvious President Obama doesn’t like the project, which will create tens of thousands of jobs, according to his own State Department. Back in February, he vetoed the bill Congress sent him that would have authorized construction, saying that it circumvented “longstanding and proven processes for determining whether or not building and operating a cross-border pipeline serves the national interest.” At the time, Senate Majority Leader Mitch McConnell (R-KY) said: “Congress won’t stop pursuing good ideas, including this one.” But he was not able to gather enough votes to override the veto and, since then, we’ve heard nothing about the Keystone pipeline. In Washington, DC, silence on an important issue like Keystone isn’t always golden.
There is no pending legislation on Keystone, but the permit application has still not been approved or rejected. I had hoped that the unions, who want the jobs Keystone would provide, would be able to pressure enough Democrats to support the project, to push a bill over the veto-proof line. But that didn’t happen. For months, Keystone has been silently dangling. But that may be about to change.
Reliable sources tell me that Obama is prepared to, finally, announce his decision on Keystone. According to the well-sourced, and verified, rumor, he is going to say: “No”—probably just before or after the Labor Day holiday. He’ll conclude that it is not in the “national interest.” So helping our ally grow its economy and export its oil is not in our national interest but helping our sworn enemy do the same, is? It’s like the “Channeling Jeff Foxworthy” parody states: we just “might live in a country founded by geniuses and run by idiots.”
Speaking of economic growth and oil exports, what about here at home, in the good old U.S. of A.? Senator Lisa Murkowski (R-AK) questions the deal that allows Iran to export its oil, while we cannot: “As Congress begins its 60-day review of President Obama’s nuclear deal with Iran, there are plenty of reasons to be skeptical about whether it is in our nation’s—and the world’s—best interests. Not least among them are the underexplored, but potentially significant consequences the deal will hold for American energy producers.”
Most people don’t realize that the U.S. is, as Murkowski says in her op-ed, “the only advanced nation that generally prohibits oil exports.” Due to decades-old policy, born in a different energy era, American oil producers are prohibited from exporting crude oil because it was perceived to be in “short supply.” (Note: refined petroleum product, such as gasoline and diesel, can be exported and is our number one export. We are also about ready to ship our major first tanker full of natural gas headed for Europe.) Today, when it comes to crude oil, our cup runneth over. The U.S. is now the world’s largest producer or oil and gas. Rather than short supply, we have an over-supply—so much so that American crude oil (WTI) is sold at a discount over the global market (Brent). This disadvantages U.S. producers but doesn’t benefit consumers because gasoline is sold based on the higher-priced Brent.
Murkowski argues that it is time to lift the 40-year-old oil export ban. She’s introduced bipartisan legislation that would do just that, but, if he was so inclined, President Obama could reverse the policy himself—if he found it to be in the national interest. And how could it not be?
Allowing U.S. crude oil into the world market enhances global energy security, as it would be less impacted by tensions in the Middle East. Our allies in Europe and Asia would have access to supply from a friendly and reliable source—remember the Arab Oil Embargo crippled Japan’s economy because it had no domestic supply and was overly reliant on Arab sources. Lifting the oil export ban would allow U.S. crude to be sold at the true market price, not the discounted rate, which would help stem the job losses currently being felt throughout the oil patch due to the low price of oil and exacerbated by the drop in the price of crude triggered by the Iran deal.
So, the Obama Administration is lobbying Congress to lift the sanctions on Iran, a country that views America as The Great Satan. Lifting sanctions would allow Iran to resume full oil export capabilities and boost its economy—while refusing to give our allies and our own country the same benefit. Iranian oil will enter the world market, while Canadian and American oil is constrained. How is that in the “national interest?”
It appears we might just be living in a country founded by geniuses and run by idiots.