US Independents Call For Crude Import Ban To Restart Shale Boom

by Ship & Bunker News Team

A grassroots movement is planning to go national later this year.

If you can't beat them, ban them: that is the sentiment of U.S. independent oil producers who want to counter measures by Saudi Arabia and other Organization of the Petroleum Exporting Countries (OPEC) members to quash shale production by curtailing crude imports.

The Panhandle Import Reduction Initiative, formed by producers in New Mexico and West Texas, are planning meetings and rallies to turn their idea of banning crude imports from overseas into a national movement; to date they have the support of about 600 producers, according to local media reports.

Daniel Fine, associate director of the New Mexico Center for Energy Policy, is kicking off the proceedings in September with a presentation at the Southeastern New Mexico Energy Summit in Carlsbad; this will be followed by meetings in the Bakken oil basin in Montana and the Dakotas and Eagle Ford basins in South Texas.

Fine explained, "This is a grassroots effort in the basins where the oil bust has taken place."

“ We can be completely self-sufficient, so let's cut off oversupply of cheap imported oil Daniel Fine, New Mexico Center for Energy Policy

He went on to argue, "Why are we buying imports from the mid-east when OPEC has launched an offensive to basically shut down our industry?

"It's the same oil we're producing in our shale basins where we have great supplies to meet market need; we can be completely self-sufficient, so let's cut off oversupply of cheap imported oil."

The ban proposal will be presented to whoever wins the U.S. presidency in November, along with a request for executive authority to be taken that would, in the new year, first ban imports of the type of light crude abundant in U.S. shale formations, and then phase in quotas on heavier oil; imports from Canada and Mexico would be unaffected by the ban.

While the plan may seem farfetched to some critics, it comes at a time when American nationalism has resurfaced and neither the Republican nor Democratic presidential candidate is overly enthusiastic about foreign policies (including free trade agreements) that are viewed as putting the country at an economic disadvantage.

Donald Trump is especially sensitive about foreign production impacting U.S. prosperity and has publicly stated that if elected in November he will strongly consider halting purchases from the Saudis and other Arab allies.

Moreover, the ban has a precedent: a 1959 proclamation by then-president Dwight Eisenhower quashed oil imports for national security reasons and was only rescinded in 1973 by Richard Nixon as the U.S. entered the energy crisis.

Predictably, the initiative has already caused shale players to be split into two factions: Alex Mills, president of the Texas Alliance of Energy Producers, which represents over 3,000 independent producers, told media: "limiting oil imports is good energy policy and good economic policy and good national security policy."

However, the Texas Oil & Gas Association and four other trade groups oppose the Panhandle Import Reduction Initiative because it "violates our principles of promoting free trade and would certainly lead to unidentified and unmanageable unintended consequences."

Moreover, as optimistic as many shale producers may be about accommodating energy needs without overseas support, Tom Ward, co-founder of Chesapeake Energy, doesn't think recent oil prices of $50 per barrel are enough to drive a shale comeback; in May he said oil has to reach about $75 per barrel for drillers to ramp up production - and as most analysts agree, that price isn't coming anytime soon.