EDITOR: In Mr. Larry Parker’s letter, dated March 12, “Second Point” discusses the Keystone XL pipeline in terms that it’s likely much of the Gulf Coast products will be exported. Others have made similar points.
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But this need not be the case. The Gulf Coast refineries would also be in a position to serve the East Coast, but can’t due to the 1920 Jones Act. This legislation requires all goods transported between U.S. ports be carried in ships built, owned, operated and manned by Americans. Many of these ships are tied up in long-term leases. Congress needs to enact a bill to modify the Jones Act to meet the needs of the Northeast petroleum market.
Gulf Coast refineries are in a good position to serve growing markets in Latin America, South America, et al. The U.S. would have a price advantage over competitors, due to our low cost natural gas and oil costs, thereby increasing market share.
Keep in mind the No. 1 oil supplier to the U.S. is Canada, followed by Mexico, Saudi Arabia and Venezuela. The two huge sources of heavy crude in the world are: the Canadian tar sands and Venezuela’s Orinoco field. Currently Venezuela ships to Gulf Coast refineries approximately one million barrels per day (b/d) of heavy crude oil (EIA). Gulf Coast and Caribbean oil refineries have already adapted to processing Venezuela’s heavy crude oil.
When the Keystone XL pipeline is in operation, it will no longer be necessary to purchase Venezuela’s heavy crude oil. Two Caribbean refineries that process Venezuela’s oil are being shutdown; thus our adversary, Chavez, will feel his revenues curtailed and hard pressed to ship his crude oil elsewhere.
Mr. Robert Petrusak has an interesting historical perspective. During the 30s and during World War II, the Gulf of Mexico-Caribbean Basin region was the world’s premier oil and high octane gasoline producer. This national resource was a major factor in winning the war. But after WWII, a major geopolitical shift occurred when the Persian Gulf became the world’s premier oil producer.
But the U.S.’s shale oil revolution (Dakota’s Bakken, et. al) has the potential of another geopolitical shift back to the U.S. The estimated 400 billion barrels of recoverable oil will restore our energy independence. The Gulf Coast has over 50 refineries; it is unique in that no other country can even come close to this capability. With our newly found domestic oil supply, we can again become the world’s premier oil and gasoline producer. Developing these resources is the best way to revive the U.S. economy and bring down gas prices. Secondly, we put behind us our dependency on reactionary Islamist societies that seek our destruction. An aside: The U.S.’s oil potential is greater than the estimated 300 billion barrels of recoverable reserves in Saudi Arabia.