Oil DA - MichiganClassic 2013

8/12/2019 Oil DA - MichiganClassic 2013

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***OIL DA


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UNIQUENESS


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mexico


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uq mexican crude exports falling

exican crude exports to t!e U"S" !a#e fallen to multi$%ear lo&sEIA' () + /13, (USEIA, Mexico Week: Lower Mexican oil production contri ute! to lowercrude oil export! to U"S"#, $/1%/&'13, U"S" Ener ) In*or+ation Ad+ini!tration,

ttp://www"eia" o-/toda)inener )/detail"c*+.id 11&$1, 0 a n2rude oil export! anc or t e ener ) trade etween Mexico and t e United State! " In &'1& Mexico wa!

t e world4! nint lar e!t oil producer" 5 e -alue o* crude oil export! *ro+ Mexico to t e United State! reac ed 63$"7 illion in &'1&,a-in +ore t an dou led !ince &''%" 8owe-er, Mexico4! crude oil production and export! to t e United

State! a-e ot *allen , wit export! down to '"97 +illion arrel! per da) ( l/d2 in &'1& *ro+ 1"% +illion l/d in &''%"La!t )ear wa! t e *ir!t ti+e !ince 199% t at annual export! o* Mexican crude oil to t e United State! *ell elow 1 +illion l/d"Mexico4! ! are o* total U"S" crude oil i+port! *ell to 11; in &'1& , down *ro+ 1e+ex !aid it expected u Maloo @aap4! output to old !tead) at

$',''' arrel! per da) ( pd2 t rou &'17" Since t en , >e+ex E E+ilio LoJo)a a! repeatedl) declared t atMexico , t e world4! !e-ent ?lar e!t oil producer, i! +akin a co+e ack " B>roduction i! not declinin " It i! actuall) e innin to rall),B e !aid recentl), re*errin to total national output" B5 i! i! i new! *or our countr), and !o+et in t at i! not

nece!!aril) known to t e pu lic"B Cut +an) anal)!t! Fue!tion t at !cenario" A clo!er look at u Maloo @aap elp!explain w )" In a pre!entation at Dice Uni-er!it) in 8ou!ton, 5exa!, earl) la!t )ear, LoJo)a4! predece!!or, 0uan 0o!e SuareJ

oppel, e!ti+ated production at t e iant o**! ore oil*ield, w o!e Ma)a na+e +ean! B ood ne!t o* coal!,B will *all


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cau t world oil +arket! o** uard" B >roduction i! oin to *all and t ere4! not in o -iou! t at willreplace it,B !aid Ka-e >ur!ell, an oil anal)!t wit 8ou!ton? a!ed ener ) de-elop+ent ank 5udor >ickerin 8olt, w o worked onre!er-oir !tudie! in Mexico in t e 199'!" BI* a pu lic co+pan) in t e U"S" told +e t at, t e !tock would e a ! ort,B e added" B ou4d!ell it"B 5 e Mexican o-ern+ent ope! a land+ark ener ) re*or+ ai+ed at lurin pri-ate oil +a or in-e!t+ent will elp oo!toutput" =ext +ont , >e+ex will auction !ix lock! in Mexico4! icontepec a!in, o+e to t e countr)4! lar e!t )drocar onre!er-e, in a +ore i++ediate pu! *or additional capital"

exican crude oil exports are lo& no&,suppl% and demandEIA' () () / (U"S" Ener ) In*or+ation Ad+ini!tration, BMexico Week: rude oil +o-innort , product! +o-in !out c aracteriJe! U"S"?Mexico tradeB,

www"eia" o-/toda)inener )/detail"c*+.id 11&71 //kd 25 e United State! and Mexico conduct a !i ni*icant a+ount o* trade in crude oil and petroleu+ product!, wit t e United State!

pri+aril) i+portin crude oil *ro+ Mexico and exportin re*ined petroleu+ product! to Mexico" In &'1&, t e U nited S tate!i+ported nearl) one +illion arrel! per da) ( l/d2 o* crude oil *ro+ Mexico, w ile exportin " Mor an4! AKD, Olo al =ew! P o++entar), BMexico Ma) 5rade Ke*icit

o+e! In =ear Expectation! at 6%7' MillionB,ttp!://www"adr"co+/Market!/Olo al=ew!Stor).docIK 1?K=&'13'


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exported an a-era e o* 1"'&9 +illion arrel! o* crude oil at an a-era e price o* 697"7$ per arrelin Ma), co+pared wit )ear?earlier oil export! o* 1"19 +illion arrel! a da) at an a-era e price u!ta o-e 61'& per arrel"


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uq crude petroleum distinction

2!eir e#idence is citing petroleum' not crude oil &!ic! is t!e true controller ofprices &e0ll insert t!is picture into t!e de4ateEIA' () / /13, (Mexico Week: U"S" i! MexicoN! pri+ar) ener ) trade partner a+id ! i*tintrade d)na+ic!#, $/13/&'13, Untied State! Ener ) In*or+ation Ad+ini!tration,

ttp://www"eia" o-/toda)inener )/detail"c*+.id 11&31 , 0 a n2
http://www.eia.gov/todayinenergy/detail.cfm?id=11231http://www.eia.gov/todayinenergy/detail.cfm?id=11231


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#ene5uela


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uq #ene5uelan production up

It0s increasing Iranian sanctions and ne& capacit% 6ox .) + /13 (ReneJuela Cu+p! Up il Export! 5 ank! 5o Sanction! n Iran#, Hox =ew!,etr leo! de ReneJuela (>KRSA2 !aid la!t )ear t at it a! to i+port *uel and co+ponent! *ro+ t e United State! inorder to *ul*ill contractual a ree+ent! and *or con!u+ption" W ile t e export! to ina and India +a) elp alle-iate !o+e o*MaduroN! worrie!, it could o**!et t e political tie! etween ReneJuela and Iran !o+eti+e in t e *uture" Hor now t e two nation! !ee+to e on !olid ter+!, wit araca! o**erin 5e ran political and econo+ic !upport in t e wake o* t e wide!pread !anction!" 5 i! ledt e U"S" 5rea!ur) la!t +ont to i+ple+ent !anction! on t e Iranian ReneJuelan Ci?=ational Cank, a *inancial co+pan) ori inall)e!ta li! ed a! a ilateral oint -enture"


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uq #ene5uelan prices rising

7ene5uelan oil prices are on t!e rise6ocus .) /13, (Hocu!Econo+ic!, citin t e ReneJuelan Mini!tr) o* >etroleu+ and Minin ,ReneJuelan oil price! re ound in Ma)#,


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uq #ene5uelan exports falling

Oil imports are s!ifting a&a% from 7ene5uelaeac!am' +) /13 ( arl, director o* t e SIS A+erica! >ro ra+, *or+er t e Senate Horei n

Delation! o++ittee +e+ er, M"A" de ree! *ro+ A+erican Uni-er!it) and olu+ iaUni-er!it), C"A" *ro+ t e Uni-er!it) at Al an), State Uni-er!it) o* =ew ork, ReneJuelaN!>re!idential Election: 8ow Si ni*icant i! t e utco+e *or t e United State!.#, %/11/13, SIS,director o* t e SIS A+erica! >ro ra+, *or+er t e Senate Horei n Delation! o++ittee+e+ er, M"A" de ree! *ro+ A+erican Uni-er!it) and olu+ ia Uni-er!it), C"A" *ro+ t eUni-er!it) at Al an), State Uni-er!it) o* =ew ork, 0 a n2V1: 8ow i! t e ener ) relation! ip etween t e United State! and ReneJuela e-ol-in . A1: Muc a! een !aid a out t e interdependence o* t e two countrie!, ut recent *i ure! ! ow t i! i! eco+in le!! and le!! !o" ReneJuela, t rou t e !tate?owned oil co+pan) >KRSA, i! t e *ourt lar e!t oil pro-ider to t e United State!,trailin onl) anada, Saudi Ara ia, and Mexico" At t e end o* &'11, ReneJuela repre!ented 11 percent o* i+port! *ort e United State! t e worldN! lar e!t oil con!u+er" 5o e !ure, 11 percent re+ain! a !i ni*icant ! are o* t e U"S" +arket, ut ReneJuelaN! ! are continue! to decline" A! recentl) a! &''7, U"S" i+port! o* ReneJuelan oil !tood at 1"% +illion arrel! per da) ( pd2G ) &'1&, t i! nu+ er !tood at 79,''' pd, accordin to preli+inar) *i ure! relea!ed ) t e U"S" Kepart+ent o* Ener )N! Ener )In*or+ation Ad+ini!tration" Meanw ile, t e United State! continue! to ad-ance on it! pat o* increa!in ener ) independence a!production o* ! ale a! and ti t oil row!" Hinal appro-al o* t e &,''' +ile e)!tone pipeline, w ic would rin 7'',''' pd o*oil *ro+ anada to re*inerie! in 8ou!ton and t e Oul* o* Mexico, would increa!in l) delink t e United State! *ro+ ReneJuelanexport!" =ot to +ention t e po!!i ilit) o* increa!in deep?water exploration in Mexico a! it e in! toenact re*or+! o* it! ener ) !ector " Hor ReneJuela, t e U"S" +arket will re+ain t e nu+ er one de!tination o* oil export!, wit rou l) %' percent o* it! oil oin to t e United State!, *ollowed ) t e ari ean and ina" 5 e oil !ector account! *or &$percent o* ReneJuelan OK> and ' percent o* export!" Le!! de+and *ro+ t e U"S" +arket would it t e ReneJuelan econo+) witcon!idera le *orce" 5 e United State! +i t !ee ad-er!e e**ect! *ro+ rapidl) decrea!in ReneJuelan !upplie!, !uc a! i er *uelprice!, and rowt would !low, ut t e!e e**ect! would likel) e tran!itor)" W at i! +ore likel) in t e +idter+ i! a re alancin o* t eU"S" ener ) a!ket" 5 i! i! likel) to include le!! dependence on ReneJuelan oil ecau!e o* t e c an in ener ) !cenario de!cri eda o-e" I* current trend! continue, t e ReneJuelan econo+) i! likel) to experience di**icult)" Ke!pite ti t lo al !upplie! o* oil, ReneJuela +a) !tru le to *ind new u)er! and to reorient in*ra!tructure u!ed to re*ine it! oil to reac ot er +arket!, includin A!ia,!ince toda) onl) t e United State! i! well?eFuipped to re*ine ReneJuelaN! ea-), low?Fualit) oil"

7ene5uelan imports are at /9$%ear lo&s62' 3 (0a-ier Cia!, de ree *ro+ 5 e Uni-er!it) o* S e**ield, o++oditie! orre!pondent atHinancial 5i+e! US net i+port! o* ReneJuelan oil it 3'?)ear low#, 1&/13/&'13,

ttp://www"*t"co+/intl/c+!/!/'/$e*9e'*a?%%* ?11e&? $ *?''1%%*ea dc'" t+l axJJ&QS!-@cW3, 0 a n2=ot !o lon a o, 8u o T-eJ, t e le*ti!t ReneJuelan leader, al+o!t e-er) +ont would t reatent e US t at e would ! ut down i! countr)N! oil export! " Eac ti+e, Wa! in ton took t e t reat!!eriou!l) ecau!e o* t e i+portance o* araca! *or US ener ) !upplie!" =ot an) lon er" 5 e USdependence o* ReneJuelan net crude and oil product! export! (includin t e US Rir in I!land!,

w ic lar el) re*ined ReneJuelan crude to export into t e US2 a! dropped to le-el! la!t !eennearl) 3' )ear! a o" 5 e ! arp drop i! due to t ree *actor!" -erall US oil i+port! are down ont e ack o* t e ! ale oo+" In addition, t e clo!ure o* a lar e re*iner) in t e US Rir in I!land!co?owned ) >etr leo! de ReneJuela (>d-!a2 a! *urt er reduced i+port! o* ReneJuelan?ori inoil product!" And +ore recentl), ReneJuela a! !tarted to i+port lar e a+ount! o* US?+ade

a!oline to o**!et a local ! orta e " 5 e reduction in US i+port! o* ReneJuelan?ori in crude and oil product! a! eenoin on *or t e la!t *i-e )ear!" 5 e new *actor i! t e !ur e in US export! o* oil product! into ReneJuela" In Septe+ er, US

re*iner! ! ipped a record o* 19ara uana De*inin enter t e worldN! !econdlar e!t a*ter t e 0a+na ar re*iner) in India !u**ered an explo!ion and *ire in Au u!t t at killed nearl) $' people and in ured +oret an 1$'" Alt ou araca! a! !aid !e-eral ti+e! t e re*iner) i! returnin to *ull production, t e !ur e in oil product! *ro+ t e US!u e!t! t e contrar)" 5 e u+p in US a!oline export! to ReneJuela +ean! t at *or eac 1' arrel! o* crude t at araca! ! ip! tot e US, two return to ReneJuela a! product!" 5 e US oil product export! accounted in Septe+ er *or rou l) &' per cent o* ReneJuelan do+e!tic oil con!u+ption o* a out 1+ /d" 5 e co+ ination o* lower ReneJuelan oil export! ot *ro+ t e countr)it!el* and t e US Rir in I!land! and i er US a!oline export! reduced in 0une US net i+port! o* ReneJuelan?ori in oil to


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< $,''' arrel! a da), t e lowe!t !ince Marc 19 %, accordin to Hinancial 5i+e!N e!ti+ate! a!ed on data *ro+ t e US Ener )In*or+ation Ad+ini!tration" US net i+port! o* ReneJuelan?ori in oil reco-ered a it in Septe+ er t e la!t data a-aila le ,reac in 39,''' /d" Mr T-eJ, w o i! under oin cancer treat+ent in u a, +a) t reaten an oil e+ ar o in t e *uture, a! e diddurin t e recent pre!idential election!" Cut i! +enace will no lon er worr) Wa! in ton"

S:I62IN; 2O


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uq sanctions reduce exports

Sanctions &ill incline 7ene5uela to reduce exports-2' +)3/ /13, (D5 =ew!, citin a!!i!tant Secretar) o* State 0aco !on and ReneJuelan Horei nMini!ter 0aua, ReneJuela t reaten! oil, trade in continuin election !pat wit US#, D5 =ew!,%/&3/&'13, ttp://rt"co+/new!/-eneJuela?t reaten!?u!?oil?&3 /, 0 a n2In re!pon!e to re+ark! *ro+ US A!!i!tant Secretar) o* State Do erta 0aco !on, ReneJuelan Horei n Mini!terElia! 0aua warned t at an) !anction! i+po!ed ) t e US *or it! April 1% pre!idential allot

would e +et wit puniti-e oil and trade +ea!ure! " -er t e weekend 0aco !on co++ented on == en E!panol,!tatin t at t e ReneJuelan !tate +o-ed too Fuickl) in proclai+in =icolT! Maduro it! new pre!ident in li t o* ti t electoralre!ult!, and t at al* o* t e countr)N! pu lic re ected t e re!ult!" W en 0aco !on wa! a!ked w et er t e US would o !o *ar a! toi+po!e !anction! i* ReneJuela re*u!ed to recount poll re!ult!, ! e could not con*ir+ or den) t e po!!i ilit)" In re!pon!e to0aco !onN! re+ark!, Horei n Mini!ter 0aua !aid t at i! countr) eld t e US re!pon!i le *or t e -iolence t at *ollowed t e electionand a! !o *ar le*t ei t people dead" 8e added t at ReneJuela would re!pond in kind to an) US !anction! " B oucan e certain t at in t e *ace o* !anction! o* an) kind we will re!pond wit econo+ic, political, diplo+atic action! to de*end t e!acred ri t o* t e will o* t e ReneJuelan people,B 0aua noted in an inter-iew wit roadca!ter 5ele!ur" Maduro wa! !worn in a!pre!ident la!t Hrida) at a cere+on) widel) attended ) Sout A+erican leader!, includin CraJilian >re!ident Kil+a Dou!!e** andt e pre!ident! o* Ar entina and u a" =o US diplo+at attended t e cere+on)" Since t e election re!ult! were tallied t e US StateKepart+ent a! !upported t e idea o* a recount, w ic a! een a de+and o* oppo!ition candidate 8enriFue aprile! and i!0u!tice Hir!t part)" 5 e notion o* a *ull or partial recount a! een t e !u ect o* +uc ack?and?*ort de ate, t ou la!t 5 ur!da)t e countr)N! electoral oard ( on!e o =acional Electoral2 indicated t at it would !upport an audit" Since t en, owe-er, t eelectoral od) !ee+! to a-e retracted it! !upport *or an audit" 5 e oardN! pre!ident, 5i i!a) Lucena, criticiJed a! an all) o* t eincu+ ent part), told do+e!tic +edia t at no one ! ould a-e *al!e expectation!# re ardin t e re!ult! o* a potential audit, andreiterated t at a! *ar a! t e oard wa! concerned t e -oteN! re!ult! were *inal and irre-er!i le" **iciall), t e US a! )et to accept t ere!ult! o* ReneJuelaN! pre!idential election, w ere Maduro wa! reported to old $1 per cent o* t e -ote to aprile!N %9 per cent"

Sanctions t!reats reduced exportsannion +)33 /13, (0i+, reporter *or AH>, raduate, olu+ ia Oraduate Sc ool o*

0ournali!+, Uni-er!it) o* >enn!)l-ania ReneJuela t reaten! oil trade in row wit US#, A>=ew!wire, %/&&/&'13,

ttp://www" oo le"co+/ o!tednew!/a*p/article/ALeFM$ Hp0K @-& l'*51Rx9w)K ! 8w.docId =O"e*1'a $&17d*''ee7$&**dc$&** 9 $1"1 1, 0 a n2

ADA AS ReneJuela !tepped up attack! on t e United State!, t reatenin retaliator) +ea!ure!

a**ectin trade and ener ) i* Wa! in ton re!ort! to !anction! in a row o-er t e countr)4!di!puted pre!idential election " Rowin not to o ack on t e late 8u o a-eJ4! re-olution, >re!ident =icola! Maduro!aid at a !wearin ?in cere+on) *or i! new ca inet, B5 ere will e no pact ere o* an) kind wit t e our eoi!ie" Make no +i!take"8e accu!ed t e United State! o* t reatenin ReneJuela, and !poke wit appro-al o* t e warnin to Wa! in ton le-eled earlier in t eda) ) Horei n Mini!ter Elia! 0aua in Oua)aFuil, Ecuador" BI* t e United State! take! recour!e to econo+ic !anction!, or !anction! o*an) ot er kind, we will take +ea!ure! o* a co++ercial, ener ), econo+ic and political order t at we con!ider nece!!ar),B 0aua !aidin a tele-i!ion inter-iew" It ca+e a*ter a !enior State Kepart+ent o**icial wa! Fuoted a! ur in ReneJuela to recount t e -ote! in t e April 1% election to i-e t e pu lic con*idence in t e re!ult" 5 e United State! a! !o *ar wit eld reco nition o* t e o**icial electionre!ult!, w ic a-e Maduro a narrow -ictor) o-er oppo!ition candidate 8enriFue aprile!, !ettin o** -iolent prote!t! t at le*t ei tdead" An audit o* t e -ote i! !uppo!ed to e in a! earl) a! t i! week, ut t e =ational Electoral ouncil4! -ice pre!ident !aid Saturda)it would not o-erturn Maduro4! -ictor)" US A!!i!tant Secretar) o* State Do erta 0aco !on wa! reported o-er t e weekend to a-e!aid t at t e election council acted too Fuickl) in proclai+in Maduro t e winner, and t at al* o* ReneJuelan! do not a-econ*idence in t e re!ult" A!ked i* t e United State! would i+po!e !anction! i* ReneJuela re*u!ed to recount t e -ote!, 0aco !on !aid! e could not !a) one wa) or anot er, accordin to == en E!panol" 5 e United State! i+port! !o+e 9'','''

arrel! o* oil a da) *ro+ ReneJuela, w ic produce! etween &"3 +illion and t ree +illion

arrel! a da)" ReneJuela, w ic depend! on oil !ale! *or 9' percent o* it! re-enue!, !it! atop t e world4! lar e!t pro-en crude oil re!er-e! " Maduro, +eanw ile, +et wit i! ca inet, w ic include! new *inance andinterior +ini!ter! ut i! +o!tl) +ade up o* oldo-er!, particularl) in t e ke) *orei n, de*en!e and ener ) port*olio!" a-eJ4! !on?in?law 0or e ArreaJa wa! rati*ied a! -ice pre!ident" 5 e c an e! +ade it clear Maduro wanted new approac e! to two +a or !ource! o*pu lic di!content ?? an in*lation?ra-a ed econo+) and !oarin -iolent cri+e" BWe a-e to control in*lation,B Maduro !aid inannouncin i! !o?called B o-ern+ent o* t e !treet!B late Sunda)" 8e !plit t e +ini!tr) o* plannin and *inance in two, na+incentral ank c ie* =el!on Merente! t e new *inance +ini!ter to replace 0or e Oiordani, w o wa! le*t in c ar e o* t e !eparateplannin +ini!tr)" Oiordani wa! t e arc itect o* a !)!te+ o* !trict *orei n currenc) control! t at critic! !a) a-e contri uted to! orta e!, a ! arp decline in in-e!t+ent and Latin A+erica4! i e!t in*lation rate, at +ore t an &' percent" Maduro prai!edOiordani a! Bone o* t e +o!t lo)al +en a-eJ ad,B ut !aid Merente! would rin new idea! on ow to control !peculation andin*lation" 8e al!o na+ed i! intelli ence c ie*, Mi uel Dodri ueJ 5orre!, a! +ini!ter o* t e interior and u!tice Bto protect and uildt e *oundation! o* peaceB in a countr) wit one o* t e world4! i e!t +urder rate!" 5 e re i ed ca inet co+e! a! Maduro rapple!


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wit t e i+plication! o* a near lo!! at t e poll!" An e!ti+ated 7'',''' -oter! !wun to aprile! *ollowin i! 11?point lo!! to a-eJin cto er pre!idential election!" Maduro wa! proclai+ed t e winner wit a 1" percenta e point +ar in" Kurin i! !peec Monda)ni t, Maduro !aid e wanted a dialo ue wit t e w ole deepl) polariJed countr), ut e!peciall) wit ReneJuelan! oppo!ed to t eBre-olutionar) pro ect"B BW at rea!on! do t e) a-e *or oppo!in t i! de+ocratic re-olution o* t e &1!t centur).""" W at rea!on! dot e) a-e *or *eelin ani+o!it) toward u!.B =ational A!!e+ l) !peaker Kio!dado a ello, t e !econd +o!t power*ul a-i!ta *i urea*ter Maduro, !aid Sunda) e ad ordered an internal re-iew wit in t e rulin part) to tr) to under!tand w at appened" 8e !aidt e !pirit o* !el*?critici!+ ! ould al!o extend to t e o-ern+ent"

2!reats are real t!e election &as a turning point A6= +)33 /13 (ReneJuela t reaten! oil, trade +ea!ure! in -ote row wit US#, %/&&/&'13,

ttp://www" lo alpo!t"co+/di!patc /new!/a*p/13'%&&/-eneJuela?t reaten!?oil?trade?+ea!ure!?-ote?row?u!?', 0 a n2

ReneJuela t reatened Monda) to take +ea!ure! a**ectin ener ) and trade i* t e United State!re!ort! to !anction! in a row o-er t e di!puted pre!idential election in araca! earlier t i!+ont " BI* t e United State! take! recour!e to econo+ic !anction!, or !anction! o* an) ot er kind, we will take +ea!ure! o* aco++ercial, ener ), econo+ic and political order t at we con!ider nece!!ar),B Horei n Mini!ter Elia! 0aua warned in a tele-i!ioninter-iew" 5 e warnin ca+e a+id a political cri!i! in ReneJuela o-er oppo!ition de+and! *or a recount o* April 1% election return!t at a-e >re!ident =icola! Maduro a narrow win to replace t e late 8u o a-eJ" US A!!i!tant Secretar) o* State Do erta 0aco !on wa! reported o-er t e weekend to a-e ur ed a recount in order to i-e t e pu lic con*idence in t e outco+e, w ic a! eenc allen ed ) oppo!ition candidate 8enriFue aprile!" A!ked w et er t e United State! would i+po!e !anction! i* ReneJuelare*u!ed to recount t e -ote!, 0aco !on !aid ! e could not !a) one wa) or anot er, accordin to == en E!panol" In t e inter-iew*ro+ Vuito, Ecuador wit 5ele!ur, a !tate?*inanced re ional tele-i!ion network, 0aua !aid ReneJuela eld t e United State!

re!pon!i le *or po!t?election -iolence t at le*t ei t people dead" B ou can e certain t at in t e *ace o* !anction! o* an) kind we willre!pond wit econo+ic , political, diplo+atic action! to de*end t e !acred ri t o* t e will o* t e ReneJuelan people,B e !aid" 5 eUnited State! i+port! !o+e 9'',''' arrel! o* oil a da) *ro+ ReneJuela, w ic produce!

etween &"3 +illion and t ree +illion arrel! a da)" ReneJuela !it! atop t e world4! lar e!tpro-en crude oil re!er-e!"


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uq c!a#e5 transition > in#estment

2!e% !a#e it 4ac8&ards t!e

ttp://www"c!+onitor"co+/En-iron+ent/Late!t?=ew!?Wire!/&'13/'3're!ident8u o a-eJ4! deat i! not likel) to re!ult in near?ter+ c an e! to t e ReneJuelan oil indu!tr) or lo al ener ) land!cape, utit could ulti+atel) re!ult in political c an e t at would reopen t e countr)4! ener ) indu!tr) to*orei n in-e!t+ent " A! new! o* a-eJ4! deat !wept t rou I8S EDAWeek, t e world4! lar e!t con*erence *or ener )executi-e!, in 8ou!ton on 5ue!da) a*ternoon, participant! *locked to tele-i!ion!, lookin *or new! on t e political *uture o* a countr)t at a! t e !econd lar e!t oil re!er-e! in t e world" BIt4! too !oon to !a) w at 8u o a-eJ4! deat +ean! *or oil price!,B !aid I8S Rice air Kaniel er in" BCut it i! certainl) true t at oil price! are w at +ade 8u o a-eJ po!!i le,B a! t e collap!e o* oil price! int e late 199'! B a-e i+ t e openin to eco+e pre!identB and ri!in oil price! !ince &''' B a-e i+ t e *inancial re!ource! tocon!olidate power"B Anal)!t! and attendee! at t e 8ou!ton ener ) con*erence !aid it wa! unclear w at would appen a*ter t ecountr) old! an election *or a new pre!ident" Hor now, ReneJuela4! Rice >re!ident =icola! Maduro i! in c ar e and t e countr)4!ar+) c ie*! are reported to e !upportin i+" BWit out ( a-eJ4!2 c ari!+a and *orce o* c aracter, it i! not all clear ow i!!ucce!!or! will +aintain t e !)!te+ e created,B er in !aid" (Dead More: 5rader! Deact: W at a-eJ Keat Mean! *or il Market2 A+on t e +a or inte rated oil co+panie!, onoco> illip! and ExxonMo il could !tand to ene*it reatl)*ro+ re i+e c an e in ReneJuela, i* t e new leader! ip allow! o-er!ea! oil co+panie! to return ,anal)!t! !aid" 5 e nationaliJation o* ReneJuela4! oil indu!tr) in &''7 re!ulted in t e exit o* t o!e two co+panie! w o were una le toreac a new a ree+ent wit t e !tate?owned oil co+pan) >KRSA" 5oo Earl) to 5ell BIt4! too earl) to tell ow t e new leader will

andle it, ut onoco> illip! could ene*it t e +o!t,B !aid Hadel O eit, !enior oil anal)!t at ppen ei+er P o" onoco> illip! wa!t e i e!t *orei n !take older in ReneJuela at t e ti+e o* nationaliJation and could ene*it reatl) *ro+ re ainin it! *or+er a!!et!,O eit !aid, addin : B5 e ook -alue o* a!!et! t at were con*i!cated wa! 6%"$ illion (at t e ti+e"2 5 e +arket -alue i! now 6&' to63' illion""" onoco> illip! could e-entuall) !ee a net ain o* 61' illion"B Cut t at a!!u+e! onoco> illip! would want to return tot e countr)" ReneJuela4! econo+ic pro le+! extend e)ond t e oil u!ine!!" BIt reall) +uc depend! on w at kind o* o-ern+ent will *ollow a-eJ,B !aid EnriFue Sira, I8S !enior re!earc director *or Latin A+erica" B5 e onl) t in *or !ure i! t e *act t at t eindu!tr) i! in -er) poor condition ?? up!trea+, down!trea+, power, and di!tri ution" Electricit) a! to e rationed" It a! a a!de*icit t at4! een runnin *or )ear! and t e countr) doe!n4t produce an)w ere near w at it could produce,B Sira !aid" (Dead More: ReneJuela Rote, >o!t? a-eJ, =ext Di!k *or il2 onoco> illip! E D)an Lance, w o !poke 5ue!da) +ornin at t e 8ou!ton

ener ) con*erence prior to new! o* a-eJ4! deat , noted ow t e lo al ener ) land!cape a! c an ed dra+aticall)" B 5 e newland!cape i! like !o+eone picked up t e ener ) world and tilted it, B e !aid, a! countrie! wit reatde+and *or ener ) and t o!e wit a+ple !upplie! a! c an ed " 5 e U"S" i! now exportin +ore o* it! naturalre!ource! t an e-er e*ore, e !aid" 5 o!e export! include ! ippin record !upplie! o* US a!oline to ReneJuela" Meanw ile ReneJuela oil export! to t e U"S" are on t e decline" Sira !aid ReneJuela could produce a! +uc a! < to 9 +illion arrel! o* oil a da) ut now it4! pro a l) le!! t an &"$ +illion arrel!" 8e !aid oil production peaked in t e earl) )ear at 3"3+illion arrel!" (Dead More: W ) ReneJuela4! World?Ceatin il De!er-e! Are 4Irrele-ant42

ReneJuela ranked *ourt in oil i+port! to t e U"S" la!t )ear at 9'


16/254

cu4a


17/254

uq cu4an production lo&

iYon, an oil?indu!tr) anal)!t at t eUni-er!it) o* 5exa! w o con!ult! witU"S" and u an o**icial! a! well a! ener ) co+panie!" BI don4t *ore!ee an) ti+e in t e *uture exploration in u a4! deep?waternort coa!t" It i!, *or all practical purpo!e!, o-er"B Ke!pite t e!e *ru!tration!, u a4! need *or oil wealt and ener ) independence

a! onl) inten!i*ied" ReneJuela w ic old! a pre!idential election Sunda) +a) Fuit !endin 63"$ illion wort o* oil to u aeac )ear under a arter arran e+ent initiated ) t e late ReneJuelan >re!ident 8u o T-eJ, an all) o* Hidel and DaZl a!tro" ReneJuela a! een !endin oil to u a at *a-ora le price!, wit part o* t e co!t paid t rou low?intere!t loan! and t e re!t o**!et ) !er-ice! *ro+ u an doctor! , teac er! and ad-i!er! a !weet deal *or t e a!tro re i+e t at +eet! t e i!land4! ener ) need!and *uel! it! !tru lin econo+)" Cut ReneJuelan oppo!ition leader 8enriFue aprile!, a pre!idential candidate, a! told -oter! t ati* e i! elected B not anot er drop o* oil will o toward *inancin t e o-ern+ent o* t e a!tro! "B Ande-en i* aprile! lo!e! to actin >re!ident =icola! Maduro, ReneJuela +a) e una le to !u!tain it! enero!it)" B8ow +uc lon er can ReneJuela pro-ide illion! o* dollar! in aid and petroleu+.B !aid U"S" Dep" at ) a!tor, K?5a+pa, w o +et wit ener ) o**icial! in8a-ana earlier t i! +ont " B5 e) [ u an o**icial!\ know t at i! !tarin t e+ in t e *ace" B5 e) were up*ront t at t e) a-e not een!ucce!!*ul to date,B ! e !aid" BCut t e) do a-e ot er *orei n in-e!tor! t e Du!!ian!, t e CraJilian!, An ola and t e) intend toproceed"B a!tor and ot er Hloridian! *ear t e con!eFuence! o* a potential o**! ore oil !pill, e!peciall) i* a iant !lick et! cau t inocean current! t at *eed into t e power*ul Oul* Strea+, w ic could dra it nort alon t e Hlorida coa!t and to t e arolina!"

Hlorida leader! *or )ear! a-e *ended o** oil drillin wit in 1&$ +ile! o* Hlorida4! Oul* oa!t *or *ear a !pill would da+a e t een-iron+ent and t e !tate4! 6


18/254

uq at drilling ine#ita4le

Onl% U"S" cooperation can trigger t!e lin8,-ussian companies !a#e 4ac8ed off -euters' ()3? (Deuter!, B u an oil ope! !putter a! Du!!ian i-e up *or now on wellB,$/&9/13, www"reuter!"co+/article/&'13/'$/&9/cu a?oil?idUSL&='EA''W&'13'$&9 //kd 28ARA=A, Ma) &9 (Deuter!2 ? Du!!ian !tate?owned oil co+pan) @aru eJ ne*t !aid t i! week it wa! i-inup *or now on a pro le+?pla ued exploration well o** u a4! nort ?central coa!t, w ic rin !to an end t e co++uni!t?led i!land4! onl) acti-e pro ect in it! !earc *or o**! ore oil *ield!" 5 enew! wa! not all ad ecau!e t e co+pan) !aid it would return to t e !a+e !pot next )ear" Cut it wa! anot er low to

u a4! ope! *or ener ) independence , w ic a-e acFuired new ur enc) wit t e Marc deat o* ReneJuelan>re!ident 8u o a-eJ, t e co++uni!t?led i!land4! top all) and ene*actor" 5 e Du!!ian!4 plan to drill ro!pect! *or an il?Hueled Econo+ic 0olt Halter WitKeparture o* Di B, 11/9/1&, www"n)ti+e!"co+/&'1&/11/1'/world/a+erica!/ri !?departure?to?

a+per?cu a!?oil?pro!pect!" t+l. r ' //kd 28 US5 = u aN! ope! o* re-i-in it! econo+) wit an oil oo+ a-e produced little +ore t ant ree dr) ole!, per!uadin *orei n oil co+panie! to re+o-e t e one deepwater ri a le to work in

u an water! !o it could e u!ed *or +ore lucrati-e pro!pect! el!ew ere" 5 e ri , w ic wa! uilt in ina to et around t eUnited State! trade e+ ar o, i! expected to depart in t e next *ew week! " Wit no ot er ri ! a-aila le *or deepwaterexploration, t at +ean! u a +u!t now po!tpone w at ad eco+e an a idin drea+: a wind*allt at would !a-e u aN! econo+) and lead to a uniFuel) u an utopia w ere t e i!landN! !ociali!t !)!te+ wa! paid *or ) oil !ale! to it! capitali!t nei or!" 5 e u an oil drea+ i! o-er and done wit , at lea!t *or t enext *i-e )ear!,# !aid 0or e >iYon, a *or+er C> and A+oco executi-e w o *led u a a! a c ild ut continue! to rie* *orei n oilco+panie! on u an oil pro!pect!" 5 e co+panie! a-e etter pro!pect! ) oin to CraJil, An ola andt e U"S" Oul*"#


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u"s"


20/254

uq at s!ale production

U"S" s!ale findings !a#e !ad 5ero influence@usiness&ee8 ()/9 /13 (Hred >al!, Ener ) orre!pondent ReneJuela at Kow 0one!//WallStreet 0ournal, ReneJuela Sa)! U"S" S ale WonNt 8urt >E N! 8ea-) il Exporter!#,Cu!ien!!week, ttp://www" u!ine!!week"co+/new!/&'13?'$?3'/-eneJuela?!a)!?u?dot?!?dot?! ale?won?t? urt?opec?!? ea-)?oil?exporter!, 0 a n25 e ri!in !uppl) o* U"S" ! ale oil doe!nNt a**ect exporter! o* +ediu+ and ea-) crude! !uc a!

ReneJuela , t e Latin A+erican countr)N! oil +ini!ter told reporter! e*ore an >E +eetin to+orrow" S ale i! aproduction o* li t crude and t at doe!nNt a**ect u! a! ein i producer! o* +ediu+ and ea-)crude! ,# Da*ael Da+ireJ !aid in Rienna, w ere +ini!ter! *ro+ t e r aniJation o* >etroleu+ Exportin ountrie! are at erin " We a-e a i capacit) to place our crude!, includin t e U"S" +arket" # 5 e pro!pect o* rowin U"S"ener ) independence a! co+e to t e *ore a+id a reduction in U"S" crude i+port! *ro+ !o+e >E nation!, nota l) t o!e in A*rica,o-er recent +ont !" At a ti+e o* weak econo+ic rowt and ri!in U"S" production, >E nation! ri!k a price decline unle!! t e) cut!uppl) t e+!el-e!, accordin to Societe Oenerale SA and t e entre *or Olo al Ener ) Studie!" Hi-e +ont ! a o, a*ter >E N! +id?Kece+ er +eetin , t e roupN! !ecretar)? eneral, A dalla el?Cadri, *ended o** Fue!tion! a out ur eonin U"S"! ale oil !uppl) , !a)in : WeNre not reall) concerned" I donNt !ee t at i a Fuantit)" # ReneJuelaN! Da+ireJ!aid di-er!i*ication a-oid! co+petition wit t e rowin !uppl) o* li ter oil *ro+ ! ale depo!it!" Lon ti+e a o we decided to

di-er!i*) our +arket! and ood *or u! we did it,# e !aid" We !ell to ina, 0apan, countrie! t at a-e !u!tained rowt like India wit t e capacit) to proce!! ea-) crude"#

S!ale findings &on0t adequatel% increase supplies62' / (Ed rook!, Hinancial 5i+e!, US e)e! i+pro-e+ent in oil production#, 0une 1%, &'1311:39 p+, ttp://www"*t"co+/intl/c+!/!/'/9%


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ttp://www"*oxnew!"co+/politic!/&'13/'re!ident o* In!titute *or Ener ) De!earc "

Oil &ill al&a%s 4e an issueN12' 3 (KARIK L" O LKW =, Makin an Ener ) Coo+ Work *or t e U"S"#, =o-e+ er 1&,&'1&, ttp://www"n)ti+e!"co+/&'1&/11/13/ u!ine!!/ener )?en-iron+ent/+akin ?an?ener )?

oo+?work?*or?u!" t+l.pa ewanted allP r ', ld25o elp countrie!, +o!tl) in A!ia, t at ad een lar e cu!to+er! *or Iranian oil, Saudi Ara ia ot increa!ed production andreportedl) pro-ided di!count! on oil !ale!" IraF and Li )a re-i-ed t eir production" Wa! in ton inted at anot er relea!e o* S">"D"crude to di!coura e !peculation in t e +arket!" 5 e *act t at U"S" production ro!e 3"1 percent in &'11 *ro+ a

)ear earlier, wit an expected increa!e t i! )ear o* 1'"7 percent, wa! i++aterial to +ana int e!e di!ruption!" A! lon a! !pare capacit), t e worldN! u**er a ain!t outa e!, i! t in and !uppl)di!ruption! can ar+ econo+ie! or allow countrie! to u!e oil a! a weapon, oil will re+ain!trate ic "


22/254

opec


23/254

uq opec perception

O=E< t!in8s demand is sta4le $$$ an% demand increase &ill 4e marginalSmit! / (Orant, orre!pondent Cloo+ er , >E Coo!t! Suppl) to Six?Mont 8i GKe+and Horeca!t Sta le#, Cloo+ er ,


24/254

EN;A;E EN2 > OIL 2-ADE


25/254

cu4a


26/254

lin8 cu4a em4argo

Lifting t!e em4argo &ould instigate oil trade2elegrap! ()3? /11 (US could li*t u a e+ ar o a*ter oil di!co-er)#, 5ele rap , $/&9/&'11,

ttp://www"tele rap "co"uk/new!/worldnew!/centrala+ericaandt ecari ean/cu a/ $%% 7'/US?could?li*t? u a?e+ ar o?a*ter?oil?di!co-er)" t+l, 0 a n25 e *i-e decade?lon United State! e+ ar o a ain!t u a could *inall) e li*ted a*ter t edi!co-er) o* an enor+ou! oil *ield in u an water!" 5 e world4! lon e!t?runnin e+ ar o a! endured inpart ecau!e t ere wa! little t e US wanted to u) *ro+ it! i+po-eri! ed nei our" Cut t edi!co-er) o* etween *i-e and &' illion arrel! o* oil in t e deep water! o** u a4! nort coa!t ,onl) iY n told law+aker!t at t e United State! a! a !trate ic intere!t in elpin u a tap it! potentiall) -a!t )drocar on !tore! and t at U"S" co+panie!! ould recei-e !pecial per+i!!ion to do !o" B A+erican oil and oil eFuip+ent and !er-ice co+panie! a-e t ecapital, tec nolo ) and operational know? ow to explore, produce and re*ine in a !a*e andre!pon!i le +anner u a4! potential oil and natural a! re!er-e!" et t e) re+ain on t e!ideline! ecau!e o* our al+o!t *i-e?decade?old unilateral political and econo+ic e+ ar o ,B !aid


27/254

>iY n, a +e+ er o* a Crookin ! In!titution ad-i!or) roup on u a polic) re*or+" u a a! !aid it welco+e! U"S" in-e!t+ent, ut A+erican co+panie! re+ain lar el) !ilent on t e i!!ue, at lea!t in pu lic, ound ) trade !anction! t at were e!ta li! ed under t e

enned) ad+ini!tration" W en u an oil o**icial! and U"S" co+panie! attended a oint ener ) con*erence at an A+e]rican?ownedotel in Mexico in &''4! Macondo well, t e !ource o* la!t )ear4! di!a!ter" A out $ illion arrel! o* oil and 1'trillion cu ic *eet o* natural a! lie eneat t e ul* in land elon in to u a, accordin to t e U"S" Oeolo ical Sur-e)" I* u a

*ind! oil in co++erciall) -ia le a+ount!, t i! would e tran!*or+ati-e" De-enue *ro+ natural re!ource!a! t e potential to pro-ide lon ?!ou t !ta ilit) *or it! econo+) and i! likel) to !i ni*icantl) alter u a4! relation! wit ReneJuela, A!ia and ot er leadin ener )?producin and con!u+in nation!" Ki!co-erie! o* co++erciall) -ia le re!ource! would al!o a-e an enor+ou! e**ect on t e ul* en-iron+ent ! ared ) u a and t e UnitedState! " 5 ank! to t e U"S" e+ ar o a ain!t u a ?? a re+nant o* t e old War ?? t e ri!k! to t e United State! e in t e +o+entt e *ir!t drill it pierce! t e !ea ed" And we are utterl) unprepared" =ot onl) doe! t e e+ ar o pro i it U"S" *ir+!*ro+ oinin u a in an) e**ort! to extract it! o**! ore re!ource! , t u! i-in t e co+petiti-e ad-anta e to*orei n *ir+!, ut it al!o denie! u a acce!! to U"S" eFuip+ent *or drillin and en-iron+ental protection ?? an e!peciall) trou linpolic) con!iderin t e potential *or a !pill" 5 e e+ ar o al!o co+pel! u a4! *orei n partner! to o t rou contortion!, !uc a!orderin a drillin ri uilt in ina and ! ippin it nearl) 1',''' +ile! to u an water!, to a-oid -iolatin U"S" law" Mo!t


28/254

i+portant, t e *ailed polic) o* i!olatin u a a! t e U"S" paral)Jed: It !top! u! *ro+ en a in u a in +eanin *ul en-iron+entalcooperation and pre-ent! u! *ro+ addre!!in in ad-ance t e t reat o* potential !pill! cau!ed ) urricane! or tec nolo ical *ailure!, w ic could put our water!, *i! erie! and eac e! at peril" A! u a et! read) to drill, t e a+a ad+ini!tration

a! li+ited option!" It could do not in " It could tr) to !top u a *ro+ de-elopin it! oil and natural a!, analternati-e +o!t likel) to *ail in an ener )? un r) world" r it could u!e it! executi-e aut orit) to cooperate wit u a, de!pite t ee+ ar o, to en!ure t at drillin in t e ul* protect! our +utual intere!t!" Since t e 199'!, u a a! ! owed a !eriou! co++it+entto t e en-iron+ent, uildin an arra) o* en-iron+ental policie!, +an) a!ed on U"S" and Spani! law" Cut it a! no experiencere!pondin to +a or !pill!" And, like t eU"S", u a a! to alance it! econo+ic and en-iron+ental intere!t!, and t e en-iron+ental!ide will not alwa)! pre-ail" A ain!t t i! ackdrop, cooperation and en a e+ent i! t e ri t approac , and t ere i! alread) precedent*or it" Kurin t e C> !pill, u a per+itted a -e!!el *ro+ t e =ational ceanic and At+o!p eric Ad+ini!tration to look *or da+a e in

u an water!" 5 e a+a ad+ini!tration declared it! willin ne!! to pro-ide li+ited licen!e! *or U"S" *ir+! to re!pond to t e C>!pill, and to ot er! in t e *uture t at t reaten u a" It al!o pro-ided -i!a! *or u an !cienti!t! to attend an i+portant en-iron+entalcon*erence in Hlorida" Cut t e!e +ode!t +ea!ure! are not !u**icient" Me+ er! o* on re!! *ro+ Hlorida a-e introduced ill! toi+po!e !anction! on *orei n oil co+panie! and U"S" *ir+! t at elp u a drill *or oil, and to puni! t o!e *orei n *ir+! ) den)int e+ t e ri t to drill in U"S" water!" 5 e!e propo!al! will not !top u a *ro+ drillin G i* enacted, u a4! partner! will di!re ardt e+, and t e) will +ake cooperation to protect our +utual coa!tal en-iron+ent e-en +ore di**icult" Ener ) polic) anden-iron+ental protection are cla!!ic exa+ple! o* ow t e e+ ar o i! an a idin t reat to U"S"intere!t! " It ! ould no lon er e accepta le to a!e U"S" *orei n polic) on t e illu!ion t at !anction! will cau!e u a4! o-ern+entto collap!e ?? or !top u a *ro+ de-elopin it! oil re!ource!" =or ! ould t i! polic) or t e political d)na+ic t at !u!tain! it pre-entt e U"S" *ro+ addre!!in ot t e c allen e! and ene*it! o* u a *indin +eanin *ul a+ount! o* oil in t e Oul* o* Mexico" 5 e

a+a ad+ini!tration ! ould u!e it! executi-e aut orit) to uarantee t at *ir+! wit t e e!t eFuip+ent and reate!t experti!e arelicen!ed in ad-ance to *i t t e e**ect! o* an) oil !pill!" 5 e 5rea!ur) Kepart+ent, w ic en*orce! u a !anction!, ! ould +ake clearto t e pri-ate !ector t at e**ort! to protect drillin !a*et) will not e +et wit ad-er!e re ulator) action!" 5 e U"S" o-ern+ent

! ould co++it to -i orou! in*or+ation?! arin wit u a, and open direct ne otiation! wit t e u an o-ern+ent *oren-iron+ental a ree+ent! +odeled on cooperation t at exi!t! wit our anadian and Mexican nei or!" Mo!t o* all, it ! ouldreplace a polic) predicated on u a *ailin wit a diplo+atic approac t at reco niJe! u a4! !o-erei nt)" nl) t en will our nation e a le to re!pond e**ecti-el) to w at could eco+e a new c apter in u a4! i!tor), and our!"

=adgett' 9 (5i+, 5IME Latin A+erica ureau c ie*, winner o* t e Maria Moor! a ot >riJe*ro+ olu+ ia Uni-er!it) *or Latin A+erica co-era e, Inter?A+erican >re!! A!!ociation award

winner, > i Ceta appa raduate o* Wa a! olle e, M"S"0" *ro+ =ort we!tern Uni-er!it)N!Medill Oraduate Sc ool o* 0ournali!+, 8ow u a4! il Hind ould an e t e US E+ ar o,5IME, 9/&3/&'' , ttp://www"ti+e"co+/ti+e/world/article/', $99,1 $3&$&,''" t+l, 0 a n2Hor decade!, t e onl) pro+i!e +o!t u an! !aw in t e ocean nort o* t eir i!land wa! t e current t at carrie! o+e+ade ra*t! toHlorida" 5 at all c an ed a *ew )ear! a o w en eolo i!t! e!ti+ated t at etween $ illion l" and 1' illion l" o* oil lie eneatt e water! o** u a4! nort we!t coa!t" Suddenl) it !ee+ed a! t ou t e e+i!p ere4! !ole co++uni!t nation +i t *inall) end it!

de!perate dependence on oil?ric allie! like t e *or+er So-iet Union and ReneJuela and per ap! e-en e!cape it! i+po-eri! edecono+ic ti+e warp alto et er" Wa! in ton4! own u a ti+e warp ot a olt a! well" 5 e oil di!co-er) a! renewedde ate o-er w et er a crude?t ir!t) U"S" ! ould loo!en it! %


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week" BWe a-e +ore dataB t an t e USOS" Cut upet, an ar+ o* u a4! ultra?!ecret co++uni!t o-ern+ent, a!n4t o**ered +uc+ore e-idence t an t at" ri! Sc enk, w o a! USOS coordinator in t e ari ean led t e &''% !ur-e), a ree! t at u an eolo i!t!Bare -er) ood"B Cut e add!, BWe would like to !ee +ore data"B Still, Sc enk note!, ecau!e o* t e e+ ar o and 8a-ana4! in!ularin*or+ation policie!, Bwe can4t con-er!e wit t e u an!"B 5 e Spani! ener ) co+pan) Dep!ol? >H a! entered into a production?! arin a ree+ent wit upet and i! !c eduled to !tart drillin t e *ir!t real well in t e EE@ next )ear" t er international *ir+!,includin =orwa)4! Statoil8idro and India4! il P =atural Oa! orp", are part o* t e Dep!ol?led con!ortiu+" ReneJuela4! !tate?run>etroleo! de ReneJuela i! con!idered a le!!er pla)er ecau!e it a! little deep?water drillin experience" ( ina i! al!o intere!ted ut!o *ar onl) in-ol-ed in on! ore drillin in u a"2 u a i! now in i+portant ne otiation! wit CraJil4! >etro ra!, w ic u!t +ade it!

own +ulti illion? arrel oil *ind o** it! coa!t near Dio de 0aneiro and could, anal)!t! !a), e t e +a or o**! ore drillin partner *oru a i* it u+p! in" Still, t e conce!!ion! !o *ar repre!ent le!! t an a Fuarter o* t e $9 drillin lock! t at u a ope! to exploit int e %3,'''?!F"?+i" (11&,''' !F k+2 EE@" Anal)!t! !a) one rea!on i! t e dauntin in*ra!tructural di**icultie! *acin an) co+pan) t atdrill! in u a: *ir+! a-e to rin +uc +ore o* t eir own capital, eFuip+ent, tec nolo ) and on?t e? round know? ow t an u!ual"5 i! )ear4! !e-ere urricane da+a e in u a a! +ade t e !ituation wor!e" anada4! S erritt, in *act, recentl) dropped out o* it!*our? lock contract" BW o el!e i! oin to e willin to actuall) co+e in and take t e ri!k in u a.B !a)! Cen a+in?Al-arado" B Inter+! o* proxi+it) and tec nolo ), t e onl) people reall) a le to do it to t e extent t e u an!need are t e A+erican! "B u a now produce! a out K2 and con!u+e! +ore t an 1$','''C>K" (It al!o produce! natural a!"2 ReneJuela +ake! up t e di**erence ) ! ippin al+o!t 1'',''' C>K to u a" 5 e Uni-er!it) o*Mia+i4! >inon !a)! t e +ore !eriou! i!!ue i! re*inin capacit): e-en i* u a a! onl) t e low e!ti+ate o* $ illion l" w ic could )ield +ore t an 3'',''' C>K it need! ReneJuela4! in-e!t+ent to up rade re*inerie! like t e So-iet? uilt plant at ien*ue o!" Cutplu++etin crude price! +ean t at T-eJ +a) a-e a lot le!! wealt to !pread around *or i! petro?diplo+ac) pro ect!" BLike t ecollap!e o* t e So-iet Union,B !a)! >inon, Bt i! kind o* t in a! alwa)! een u a4! Ac ille!4 eel"B I* u a reall) doe! a-e &' illion l" to drill, owe-er, it could +ore ea!il) *ind ot er intere!ted re*iner) in-e!tor!, like CraJil" 5 e Fue!tion i! w et er t e U"S" will want to !tep o** t e !ideline! and et a piece o* t e action too" ir ) 0one!, ead o* t e U"S"? u a 5rade A!!ociation and ane+ ar o opponent, !a)! 5enre)ro4! !ta** a! een credi le in t e pa!t, and e elie-e! t e new e!ti+ate i! pro a l) accurate" B So*or t e U"S", t i! eco+e! an ''?l " uerrilla knockin on e-er) od)4! door,B !a)! 0one!" BWitt at +uc oil, t ere would e t e *eelin t at t ere4! a real [U"S"\ price to e paid *or[+aintainin \ t e e+ ar o " It c an e! u a4! econo+ic !ituation dra!ticall) and +ake! t e U"S" le!! rele-ant"B >er ap!, ut in t e ! ort run it4! +ore likel) to +ake t e U"S" +ore deter+ined to do it! own o**! ore drillin " Rice >re!ident Kick ene)and ot er Cu! Ad+ini!tration o**icial! point to u a4! petro *ortune! a! u!ti*ication *or openin +ore o* A+erica4! coa!tline to oilproduction" Decent poll! in U"S" coa!tal !tate! like Hlorida !upport t at idea, de!pite en-iron+entali!t co+plaint! t at ot U"S" and

u an o**! ore ri ! will *oul t e Oul* o* Mexico" Meanw ile, e+ ar o proponent! on apitol 8ill a-e !pon!ored ill! t at would,a+on ot er !anction!, den) -i!a! to t e executi-e! o* *orei n oil co+panie! t at drill oil in u a" 5 eir rea!onin : t e +ore oil wealt 8a-ana ain!, t e le!! incenti-e it a! to pur!ue de+ocratic re*or+" 5 at la!t part +a) well e true" Cut at t e end o* t e da),U"S"? u a relation! continue to exi!t in a old War ti+e warp" A! a re!ult, in ot Wa! in ton and 8a-ana, &' illion l" o* oil+i t not e !uc a a+e c an er a*ter all"


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lin8 cu4a econom%


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mexico


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lin8 mexico engagement

U"S"$ exican economic ties &ill result in oil importsar8etplace' ()3 /13, (0enni*er ollin!, new! roup *ocu!in on international co++oditie!

tradin , A! a+a -i!it! Mexico, t e !lipper) topic o* oil co+e! up#, Marketplace, $/&/13,ttp://www"+arketplace"or /topic!/world/o a+a?-i!it!?+exico?!lipper)?topic?oil?co+e!,

0 a n2>re!ident Carack a+a i! in Mexico toda), +eetin wit t at countr)N! leader EnriFue >eYa =ieto "5 e)Nll e talkin i++i ration, order !ecurit) and trade" Cut anal)!t! !a) t eir con-er!ation will likel) turn to onetouc ) topic: il and a! re!er-e! in Mexico" 5went) )ear! a*ter t e =ort A+erican Hree 5rade

A ree+ent, MexicoN! oil re!er-e! a-e re+ained clo!ed to U"S" in-e!t+ent, ut t at +a) !oon ec an in " 5 ereN! prett) +uc one rand o* a!oline )ouNll !ee in Mexico: >e+ex , t e !tate *uel+onopol)" Cut >e+ex i! in trou le " MexicoN! oil production a! een droppin , and in le!! t an 1' )ear!, t e countr) could e i+portin +ore oil t an it export!" Anal)!t! !a) t e *o!!il *uel re!er-e! are t ere" Mexico re+ain! one o* t e worldN!top 1' oil producer! " 5 ere could al!o e ten! o* illion! o* arrel! in untapped deep?!ea oil re!er-oir!" 5 e countr) a!, #5 epro-en *ourt lar e!t ! ale a! re!er-e! in t e world,# !aid Mic ael S i*ter i! pre!ident o* Inter?A+erican Kialo ue" S i*ter !aid>e+ex lack! t e tec nolo ) to tap t o!e re!er-e!" International co+panie! a-e t e experti!e, ut MexicoN! con!titution pro i it! oint -enture! in t e !ector" S i*ter !aid re*or+! +a) e on t e wa)" #I t ink i* t ere are oint -enture!, U"S" co+panie! would e -er)attracted to t e opportunitie! in Mexico,# e !aid" Arturo Saruk Tn, w o wa! Mexican a+ a!!ador to t e U"S" until 0anuar), !aid eexpect! Mexico to introduce oil and a! re*or+! in 0ul) or Au u!t t i! )ear" #5 i! i! a i !trate ic a+e c an er,# !aid Saruk Tn, w o i! now t e c air+an o* Olo al Solution!, a con!ultanc) wit in t e >ode!ta o+pan)" 8e !aid t o!e oint -enture! could c an et e oil and a! a+e lo all)" # C) rin in MexicoN! ener ) a!!et! to t e ta le , o-erni t anada, Mexico andt e United State! eco+e t e lar e!t producer o* oil on t e *ace o* t e eart , *ar out!trippinSaudi Ara ia ,# e !aid" 5 at ! ould en!ure t at oil and a! keep *lowin *or )ear! to co+e"

Export gro&t! is 8e% to spur oil production in exico 2O' +) ?) / (Weekl) 5anker pinion, >oten P >artner!, BWill Mexico 0oin =ort A+erican>roduction Coon.B, www"poten"co+/Kocu+ent"a!px.id &%%9&P*ilena+e Will;&'Mexico;&'0oin;&'=ort ;&'A+erican;&'>roduction;&'Coon."pd* //kd 2Keclinin production, coupled wit low le-el! o* in-e!t+ent in do+e!tic re*inerie! and crude exploration

a-e di+ini! ed MexicoN! role a! a +a or crude oil producer and exporter" MexicoN! do+e!tic crude

oil production and export -olu+e a-e *allen ) nearl) 1 +illion arrel! per da) (+ pd2 !ince &''


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#ene5uela


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lin8 #ene5uela engagement

Stronger economic ties &ill instigate oil tradeat Do ert!on called *or t e a!!a!!ination o* a-eJ" 8e in*la+ed a c oru! o* extre+i!t -oice! in !eekin a wa) to Bdeal wit a-eJ"B 5 at t)pe o* ot r etoric !er-e! no producti-e purpo!e" I went to talk wit a-eJG I talked wit 0ewi!reli iou! leader! in ReneJuela" I talked wit A*ro?ReneJuelan!" I learned a out t e tran!ition takin place *ro+ t e old ananarepu lic re i+e! to t e new leader!, wit new idea!, !uc a! a-eJ in ReneJuela, LuiJ Lula da Sil-a in CraJil and 0uan ManuelSanto! in olo+ ia" I looked not to exploit di**erence! and *uel di-i!ion, ut *or co++on round" 5 at4! w ) I went to IraF to talk wit Sadda+ 8u!!ein in 199' a! e in-aded uwait and con-inced i+ t ere wa! no -alue in oldin undred! o* people *ro+ t eUnited State! and ot er countrie! a! B u+an ! ield!"B 8e relea!ed t e+" 5 at4! w ) I went to w at re+ained o* u o!la-ia a+id t e*la+e! o* war in 1999, to talk wit Slo odan Milo!e-ic to per!uade i+ to relea!e t e t ree U"S" !oldier! ein eld o!ta e" 8e did" And t at4! w ) I went to u a in 19 % ?? lon under a !en!ele!! U"S" lockade ?? to talk wit a!tro and per!uade i+ to relea!edoJen! o* political pri!oner!" In eac in!tance, t e U"S" ad a no?talk polic) wit t e!e leader! and nation!" It4! een +) experiencet at talkin , keepin line! o* co++unication open to *riend and *oe alike, can reap di-idend!" =ation! cannot alwa)! a ree, ut wecan alwa)! talk" 5 at doe! not reFuire a !acri*ice o* principle! or !i nal weakne!!" I elie-e in t e Oand i principle!, *a-orinpeace*ul ne otiation o-er +ilitar) con*rontation" 8e called t e doctrine B!at)a ra aB ?? and explained t e Bpur!uit o* trut did notad+it o* -iolence ein in*licted on one4! opponent ut t at e +u!t e weaned *ro+ error ) patience and co+pa!!ion" BHor w atappear! to e trut to t e one +a) appear to e error to t e ot er" And patience +ean! !el*?!u**erin " So t e doctrine ca+e to +ean -indication o* trut , not ) in*liction o* !u**erin on t e opponent, ut on one!el*"B It work!" In +) -iew, it4! alwa)! +ore producti-eand +utuall) ene*icial to talk t in ! out and not *i t t in ! out" A! t e world +ourn! t e deat o* a-eJ, it4! ti+e to o e)onddi-i!i-e r etoric and i!torical *ear! t at lea-e all o* u! in t e dark" W ere i! our co++on round. We are nei or!G we li-e in t e!a+e e+i!p ere" 5 ere are &'',''' ReneJuelan! li-in in t e U"S" ?? includin nearl) 7' Ma or Lea ue a!e all pla)er! in &'1&,a+on t e+ 5riple rown winner Mi uel a rera" We are tradin partner!" ReneJuela !urpa!!ed Saudi Ara ia a! t enation wit t e lar e!t oil re!er-e! in t e world, and t e U"S" i! t e lar e!t i+porter o*

ReneJuelan oil" 5 at oil i! *our da)! awa), co+pared wit *our week! awa) in t e Middle Ea!t"5 ere i! a u e potential to expand our +arket and ReneJuela4!" And wit !tron er econo+ictie! co+e! political !ta iliJation" It4! ti+e to turn cri!i! into opportunit), to *ul*ill t e un*ini! ed u!ine!! o* realiJin tot e *ulle!t potential t e relation! ip etween t e U"S" and ReneJuela" SeiJe t i! +o+ent to eal t e wound and ind t e tie!" It won4t e ea!), ut not in i!" And not in will e acco+pli! ed wit a no?talk polic)" =o dou t, ReneJuela4! relation! wit t e U"S" a-e een !trained ?? diplo+atic relation! were !e-ered *or a ti+e in &'' w en ReneJuela accu!ed t e U"S" o* plottin t e o-ert row o*

a-eJ" 0u!t la!t week, da)! e*ore a-eJ died, Rice >re!ident =icola! Maduro expelled two U"S" +ilitar) o**icial!, accu!in t e U"S"o* tr)in to de!ta iliJe t e o-ern+ent" 5 e ood new! i! t at >re!ident Carack a+a a! !ou t to re!tore relation!, !a)in in a!tate+ent t at t e United State! Brea**ir+! it! !upport *or t e ReneJuelan people and it! intere!t in de-elopin a con!tructi-erelation! ip wit ReneJuela4! o-ern+ent" """ A! ReneJuela e in! a new c apter in it! i!tor), t e United State! re+ain! co++ittedto policie! t at pro+ote de+ocratic principle!, t e rule o* law and re!pect *or u+an r i t!"B 5 e U"S" i! !endin an o**icialdele ation to a-eJ4! *uneral" And a+a and Secretar) o* State 0o n err) a-e expre!!ed t eir de!ire to *or e a +ore po!iti-eand producti-e relation! ip wit ReneJuela" A! I +eet wit political, reli iou! and co++unit) leader! in ReneJuela, t i! i! t e+e!!a e I rin " Let4! put an end to ot r etoric, de+oniJation and policie! o* i!olation" It4! ti+e to *or e a practical, producti-erelation! ip t at will lead to nor+aliJation o* diplo+atic relation! etween t e U"S" and ReneJuela"


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lin8 #ene5uela econom%

Economic reco#er% allo&s 7ene5uela to end its de4t to

ReneJuela export! to ina, &'',''' went toward! !er-icin t e countr)4! de t to Cei in " Unle!! >KRSA4! underper*or+ance can e re+edied, t o!e de t! will re+ain and will pro a l)

row a! t e countr)4! ap etween !pendin and inco+e widen!"


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LIN


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prices lin8s


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prices lin8 cu4a

An increase in u+pin -er & Million Carrel! o* il Annuall)B, www" u-entudre elde"co"cu/cu a/&''7?1&?&7/cu a?pu+pin ?o-er?& ?+illion? arrel!?o*?oil?annuall)/ //kd 2

Trdena!" u aN! -olu+e o* oil and natural a! production will reac *our +illion ton! & " +illion arrel! t i! )ear *or u!t t e t ird ti+e in it! i!tor)" 5 i! a! een a ood )ear *or t e u an oil indu!tr),# !aid arlo! La eKT-ila, !ecretar) o* t e Executi-e o++ittee o* t e ouncil o* Mini!ter!, at a cere+on) +arkin t e one +illiont ton o* oilproduced ) t e MatanJa! entral il Krillin and Extraction o+pan) (E>E>? 2" La e noted t at t e la!t ti+e productionreac ed t i! +ark wa! in &''3 , and !tated t at in order to +aintain and increa!e production, t e drillino* a lar e nu+ er o* new well! i! needed a! well a! a little it o* luck i-en t e natural depletion o* exi!tin well!" Acco+panied ) Ca!ic Indu!tr) Mini!ter adira OarcXa, and >edro Cetancourt, t e *ir!t !ecretar) o* t e pro-incial part)or aniJation, La e !aid, t e countr) a! alread) *ul*illed it! )drocar on production plan, wit a! production plan a-in eenexceeded and t e crude oil production expected to e +et ) Kece+ er 3'" 8owe-er, a! t e a! production pro ection! were!urpa!!ed ) 11 percent, t e annual plan a! alread) een +et"# 5 e national o**icial explained t at depletion o* well! lead!to i er oil price! and !aid t at i-en t e current world +arket wit oil price! a o-e 69' a

arrel t e deci!ion wa! +ade to !ecure new drillin ri ! and i-e priorit) to t i! !ector o*

econo+) to stem declining production rates " We a-e alread) !tarted to !ee t e *ruit! o* t i! polic) anddeci!ion +ade ) co+rade Hidel a!tro, w ic are now +ore clear and e-ident t an e-er,# e !aid" A+on t e )earN! i li t! i! anincrea!e in crude production alon wit t e utiliJation o* 97 percent o* t e a!!ociated a! produced, w ic -irtuall) eli+inate!en-iron+ental conta+ination *ro+ a!!ociated a! relea!ed into t e air"

Increasing oil production &ould drasticall% lo&er glo4al oil prices , t!is is in t!econtext of


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prices lin8 mexico

Increasing exican oil production &ould lo&er oil prices glo4all%' 3 (B il >rice! >ro+i!e to 8ead 8i er A! Mexican >roduction Kwindle!B, Mone)

Mornin , +one)+ornin "co+/&'1&/' /&%/oil?price!?pro+i!e?to? ead? i er?a!?+exican?production?dwindle!/ //kd 2Mexico i! currentl) ranked =o" 7 on t e li!t o* t e world4! top oil producer!, !o less exican oilproduction would al!o mean !ig!er oil prices worldwide" 5 e lo!! o* Mexico4! 1 +illion arrel! a da) inexport! o-er an extended period would e a reater low t an t e total lo!t due to !anction! on Iran" W ile t e e**ect! o* Mexico4!la in oil production are clear, t e cau!e! are +ore co+plex" 5 e root o* t e pro le+ i! )ear! o* ne lect and a o-ern+ent?en*orced+onopol)" =ationaliJed in 193 , Mexico4! oil indu!tr) a! pro i ited oil e e+ot ! like Exxon Mo il (= SE: Q M2, C> (= SE AKD: C>2 and ot er! *ro+ takin an) !iJa le !take in t e countr)4! oil operation!" I* it allowed +ore in-e!t+ent! *ro+international oil co+panie!, Mexico could re-i-e production , indu!tr) anal)!t! !a)" Cut t at won4t e ea!)">etroleo! Mexicanco!, >EMEQ, a! !ole control o* t e Mexican oil indu!tr) and dole! out o-er 3&; o* it! re-enue to Mexico4!

o-ern+ent" Cut w ile t e Mexican o-ern+ent like! t e oil re-enue, it a! *ailed to re?in-e!t enou +one) ack into t e indu!tr)"Mexican law+aker! a-e lon re!i!ted pro-idin >EMEQ wit t e *und! needed to *ind new !ource! o* crude" * late, >EMEQ a!+o-ed to relax it! oil +onopol), allowin *orei n *ir+! to id *or >EMEQ contract!" A!poke!per!on *or >EMEQ !aid t e!e newe**ort!, in addition to t e current dou lin o* it! ud et, would allow t e co+pan) to Fuickl) oo!t production" Cut >EMEQ4!director o* operation! arlo! Morale! told Deuter! t e co+pan) i! extre+el) cautiou! and prudent w encalculatin t e price! it i! willin to pa) *ir+! to de-elop oil *ield a! a reed on in new contract!" BWe can4t lea-e+one) on t e ta le" We al!o can4t !et -er) low price!""" ecau!e we +a) e le*t wit out an) o**er! , u!t like w at appened wit [oil *ield\ ArenFue"B 5 e ina ilit) to auction o** t e ArenFue oil *ield rai!e! t e Fue!tion o* u!t ow co++itted>EMEQ i! to expandin pri-ate !ector in-ol-e+ent" A! lon a! >EMEQ dra ! it! *eet, Mexican oil production will keep !lippin " B5 enext o-ern+ent +a) want an openin , ut >EMEQ lo-e! ein a +onopol),B Miria+ Orun!tein, an ener ) re!earc er wit Mexico4!

IKE In!titute, told Deuter!" Cut ecau!e oil i! !o -ital to t e Mexican econo+), ot >EMEQ and t e Mexican o-ern+ent +a)e-entuall) e *orced to ad u!t t eir t inkin " B5 e *act t at Mexico4! production i! rapidl) declinin could potentiall) cau!e a*inancial cri!i! not onl) *or >EMEQ ut *or t e o-ern+ent,B EnriFue Sira o* ener ) con!ultin *or+ I8S told t e = 5" BA! )ou lo!eMexican oil, )ou lo!e critical !uppl)" It4! not a out ener ) !ecurit) ut national !ecurit), ecau!e our nei or4! econo+ic andpolitical well? ein i! lar el) linked to it! capacit) to produce and export oil,B 0ere+) M" Martin, director o* t e ener ) pro ra+ att e Uni-er!it) o* ali*ornia, San Kie o told 5 e =ew ork 5i+e!"

In#esting in exican oil &ould su4stantiall% decrease U"S" dependence on iddleEast

A!doot et" al' (0a!on K" A doot, Attorne) at t e Law **ice! o* 0a!on K" A doot, Ma!ter! in>u lic >olic) *ro+ >epperdine Uni-er!it) Sc ool o* Law, Ka-id Rela, arit) Mor!e),BAlle-iatin U"S" Kependence on >E B, >epperdine Uni-er!it) Sc ool o* >u lic >olic), April&''1, pu licpolic)"pepperdine"edu/+a!ter?pu lic?polic)/content/cap!tone!/opec"pd* //kd 2I* t e U"S" in-e!t! +ore +one) in countrie! t at a-e pro-en re!er-e!, it +a) e a le to le!!endependence on oil *ro+ >E and !a*e uard it!el* *ro+ an oil ! orta e at a ti+e o* cri!i! or econo+ic di!ruption" 5 eU"S" could in-e!t in do+e!tic production capacit), a! well a! production and re*inin *acilitie! a road " urrentl),non? >E production i! concentrated in !e-en countrie! includin anada, U Mexico, =orwa), ina, Du!!ia and t e US"

urrentl), t e Cu! ad+ini!tration a! called *or an expan!ion in i+port! o* petroleu+ *ro+ Mexico" 5 e ad+ini!tration call! *or+ore pri-atiJation o* t e oil re!er-e! in Mexico and +ore in-e!t+ent ) U"S" oil producin co+panie!" 5 i! +ake! !en!e ecau!ea!ide *ro+ t e *act t at Mexico i! one o* our clo!e!t nei or!, we a-e a ilateral trade pact t at would *acilitate t e export o* oil,creatin a relati-el) !a*e in-e!t+ent opportunit)" In a recent !tud), t e Criti! >etroleu+ Stati!tical De-iew, Mexico a! & "% +illion arrel! o* pro-en oil re!er-e! a! o* 1999" ontract! wit Mexico *or t e i+portation o* oil to t e U"S" a-e een on t e ri!e !ince199%"37 5 i! capacit) a! een *urt ered wit t e i+ple+entation o* t e =ort A+erican Hree 5rade A ree+ent (=AH5A2" =AH5A

a! pierced t rou +an) uri!dictional arrier!, allowin A+erican! to en o) t e i+portation o* Mexican petroleu+" Cecau!eMexico a! lar e pro-en re!er-e!, and t e U"S" a! !uc a i de+and *or petroleu+ , we ! ould ea le to *acilitate a +utuall) ene*icial relation! ip" In Mexico, pri-atiJation o* t e nationaliJed petroleu+ indu!tr) +a) e ac allen e, ut t e current ad+ini!tration a! pro+i!ed to elp A+erican! wit t eir ener ) cri!i!" >EMEQ a! lon een t eexi!tin +onopol), and t e Mexican on!titution !tipulate! t at natural re!ource! !uc a! oil and a! +u!t re+ain nationaliJed" In

ope! o* li eraliJin a !ector o* t i! +onopol) and a+endin t e con!titution, newl) elected Mexican >re!ident R" Hox a!appointed *our o* MexicoN! wealt ie!t u!ine!!+en to t e >EMEQ oard" 5 e U"S" o-ern+ent in t i! in!tance can opt to in-e!t inMexicoN! ener ) !ector -ia =AH5A ne otiation!" I* !o, =AH5A will e rene otiated in t e )ear &''7" 5 i! could !er-e a! anopportunit) *or t e US to propo!e plan! *or a +ore inte rated ener ) trade and re ional !el*?!u**icienc)!trate ) "5 e precur!or! *or e!ta li! in a re ional trade a ree+ent wit Mexico alread) exi!t wit in t e political and


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econo+ic *ra+ework o* t e Mexico?U"S" =AH5A partner! ip" 5 e!e policie! are a enc +ark*or t e de-elop+ent o* eo rap ical linka e! *or !el*?!u!tenance"# An in-e!t+ent in Mexico would+iti ate t e i+pact o* a re!!i-e policie! ) t e Middle Ea!t and it! de!ta iliJin !urpri!e!"

U"S" imports from exico &ould decrease pricesre!ident a+a wa! ri t to !a) recentl) t at t ere i! little a c ie* executi-e can do a out a! price!" 5 at !aid, pre!identialcandidate! ! ould !top pro+i!in ot erwi!e" At t e +o+ent, our politician! !ee+ to e runnin low on idea! and )et o-er*lowin wit an ea erne!! to exploit t e uptick in price! *or t eir own political ene*it" =ewt Oin ric i! pro+i!in lower price!" 8e al!opled e! t at, i* elected pre!ident, e won4t ow e*ore a Saudi kin " So w at. W at doe! t at a-e to do witan)t in , e)ond political r etoric. At t e +o+ent, our +ain concern ?? and certainl) t at o* our one true *riend and all) in t eMiddle Ea!t, I!rael ?? i!n4t Saudi Ara ia ut Iran" A! part o* a !+all roup o* Latino ournali!t! w o -i!ited I!rael la!t +ont , I wa!re+inded ) I!raeli o**icial! in one rie*in a*ter anot er t at ?? were Iran to uild a nuclear weapon ?? t e e ntire world wouldc an e" Iranian >re!ident Ma +oud A +adine ad could lock t e Strait o* 8or+uJ and t e re!t o* t e world would e too*ri tened to do an)t in a out it" 5 at4! w at we ! ould e worried a out, not w et er U"S" pre!ident! ow e*ore t e Saudi!" Ital!o wouldn4t urt to pa) +ore attention to oil re!er-e! in t i! e+i!p ere" Mexico i! a +a or producer, and a *riendand all)" 5 e relation! ip etween t e United State! and Mexico i!n4t per*ect G ten!ion! recur o-eri++i ration, dru ! and trade" Eac countr) a! an anno)in a it o* la+in t e ot er *or it! pro le+!" Cut it4! a !tron +arria et at will endure" In!tead o* c antin BKrill, a ), drill,B +ore o* our leader! ! ould e !a)in : B8ola a+i o"B 5 e U"S"

o-ern+ent ! ould increa!e oil i+port! *ro+ Mexico " =ot onl) i! it etter to deal wit *riend! t an ad-er!arie!,it4! al!o a ood wa) to elp t e Mexican o-ern+ent *und it! war a ain!t t e dru cartel! ?? a attle t at i!, let4! not *or et, *ueled )anot er one o* our addiction!" Oranted, in order *or t e United State! to increa!e oil i+port! *ro+ Mexico, our nei or +a)

a-e to increa!e production " 5 at4! a !lipper) !ituation" Mexico nationaliJed t e oil indu!tr) in t e &'t centur) and*orei n co+panie! are pro i ited *ro+ dr illin " Cut t at re!i!tance !ee+! to e weakenin " Mexico4! national oil co+pan) a!allowed !o+e pri-ate contract! and !a)! it! +ature *ield!, w ic produce u!t 1&,''' arrel! o* oil per da), could produce up to &&'+illion arrel! o* oil" We can a-e t at con-er!ation" And let4! *ace it, t e United State! would rat er work t rou t at i!!ue t an work wit countrie! t at are o!tile to A+erican!" Look at t e poll!, and )ou4ll !ee t at one o* t e +a or rea!on! e-er)da) A+erican!t ink we need to eco+e +ore ener ) !el*?!u**icient and de-elop a etter !trate ) *or i+portin oil i! t at t e)4re leer) o* eco+intoo dependent on countrie! in t e Middle Ea!t t at are o*ten unwelco+in , unde+ocratic and un!ta le" A*ter all, no +atter ow+uc we lo-e our car! and need our a!oline, *ew t in ! are !carier t an reakin down in a ad nei or ood"


41/254

prices lin8 #ene5uela

Saudi Ara4ia &ill flood t!e mar8et,empiricall% pro#enorse and -ic!ard' 3 (Edward and 0a+e!, Executi-e ad-i!er at 8e!! ener ) tradin

co+pan), *or+er deput) a!!i!tant !ecretar) o* !tate *or international ener ) polic) and port*olio+ana er at Hire ird Mana e+ent, an in-e!t+ent *und acti-e in ea!tern Europe, Du!!ia, and

entral A!ia" 5 e attle *or ener ) do+inance#, *orei n a**air! 1"& // kd 25 en, in t e 199'!, >E +e+ er ReneJuela c allen ed Saudi Ara ia ) decidin to +axi+iJe it!production " Alt ou ReneJuela ad an >E Fuota o* &"3 + d, araca! e+ arked on an a+ itiou! polic) de!i ned toe-entuall) triple it! production capacit) " araca! knew it could not do t i! on it! own, !o it reopened it! nationaliJedre!ource !ector to *orei n in-e!t+ent" C) t e winter o* 199


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;KRSAi! not oin to e turned around o-erni t and +an) ener ) anal)!t! elie-e t e political tran!ition will +o!t pro a l) lead to!i+ilar !t)le o* o-ern+ent"

7ene5uela production &ould lo&er oil prices,empirics pro#e

N12' /) ) / (BKwindlin >roduction 8a! Led to Le!!er Dole *or ReneJuela a! Ma or il>owerB, www"n)ti+e!"co+/&'13/'3/'9/world/a+erica!/-eneJuela!?role?a!?oil?power?di+ini! ed" t+ // kd 28 US5 = >re!ident 8u o T-eJ reli! ed u!in ReneJuelaN! oil wealt to pro ect power internationall),nud in >E to rai!e oil price! w en e could , ! owerin allie! like u a and =icara ua wit !u !idiJed oil! ip+ent!, and +ockin t e United State! w ile !ellin it i! crude" Cut Mr" T-eJN! deat on 5ue!da) a! ad !urpri!in l) littlei+pact on lo al oil +arket!, i li tin ow ReneJuelaN! dwindlin crude production and export! a-e undercut it! lo al powerin recent )ear!" International oil price! a-e arel) +o-ed !ince Mr" T-eJ died" >E a! decided toincrea!e ! ip+ent! to t e United State! and Europe t i! +ont , u!in oil *ro+ Saudi Ara ia and ot er Oul* !tate!" il co+pan)executi-e! , lon *ru!trated ) Mr" T-eJN! nationaliJation!, are -oicin onl) tepid ope! t at t e) could po!!i l)return in *ull *orce to w at wa! once one o* t eir crown ewel! " ReneJuelaN! annual oil production

a! declined !ince Mr" T-eJ took o**ice in 1999 ) rou l) a Fuarter, and oil export! a-e dropped ) nearl) a al*, a +a orecono+ic t reat to a countr) t at depend! on oil *or 9$ percent o* it! export! and %$ percent o* it! *ederal ud et re-enue!"

ReneJuelaN! clout on >E and on world oil price! a! een reatl) di+ini! ed ecau!e o* it!ina ilit) to exploit it! enor+ou! re!ource! ,# !aid Mic ael L)nc , pre!ident o* Strate ic Ener ) and Econo+icDe!earc , a con!ultanc)" In t e 199'!, t eir production wa! oo+in and t e) could t u+ t eir no!eat Saudi Ara ia and et awa) wit it, ut now t e) a-e eco+e >E N! poor cou!in"# In a *unda+ental eopolitical turn,

ReneJuela now relie! *ar +ore on t e U nited S tate! t an t e United State! relie! on ReneJuela" ReneJuela depend!on t e United State! to u) %' percent o* it! export! ecau!e Oul* o* Mexico re*inerie! were de!i ned to proce!! low?Fualit) ReneJuelan and Mexican crude! t at +o!t re*inerie! around t e world cannot ea!il) andle" Cut in recent )ear!, t e United State!

a! een replacin it! i+port! o* Latin A+erican crude! wit oil *ro+ anadian oil !and! *ield!, w ic i! !i+ilarl) ea-)" A+ericani+port! o* ReneJuelan oil a-e declined to u!t under a +illion arrel! a da), *ro+ 1"7 +illion arrel! a da) in 1997, accordin to t eEner ) Kepart+ent" And w ile ReneJuelan export! o* oil are in decline, it! dependenc) on A+erican re*inerie! *or re*ined petroleu+product! a! rown to nearl) &'',''' arrel! a da) ecau!e o* !e-eral recent ReneJuelan re*iner) accident!" Expert! expect ReneJuela to !end arrel! no lon er needed in t e United State! to ina, a! pa)+ent! in kind under oil?*or?loan! contract!" ReneJuelaN! roken re*iner) !ector a! le*t ! orta e! o* a!oline and die!el in part! o* Latin A+erica, openin t e door *or -alua le+arket! to A+erican re*iner!" -er i! 1% )ear! in power, Mr" T-eJ relied ea-il) on oil re-enue! to *inance i! !ocial pro ra+!"Ener ) expert! !a) i! a!oline !u !idie! dou led do+e!tic con!u+ption, cuttin deepl) into export!, ut t at i! o!tilit) to *orei n

in-e!t+ent and +i!+ana e+ent o* t e !tate oil co+pan) >etroleo! de ReneJuela were t e pri+ar) rea!on! *or t e !teep decline inproduction" A !trike and t e *irin o* +ana e+ent talent and &',''' worker! at t e oil co+pan) in &''& led to a !teep decline in t eco+pan), w ic a! een under!cored ) t e re*iner) accident!" ReneJuela i! a *raction o* w at it u!ed to e,# !aid Sadad I ra i+al?8u!!eini, a *or+er ead o* Saudi Ara+coN! exploration and production di-i!ion, and t atN! reall) ecau!e ReneJuelaN!tec nocrat! a-e !cattered o-er t e world and are no lon er acti-e in ReneJuela"# Mr" T-eJ *urt er o-er auled oil exploration andproduction wit a nationaliJation pro ra+ in &''< t at ordered a rene otiation o* contract! wit *orei n co+panie!, +andatin t at ReneJuelaN! oil co+pan) et a +ini+u+


43/254

0o!e Ralera, a 8ou!ton ener ) law)er, !aid t at i* =icolT! Maduro, Mr" T-eJN! -ice pre!ident until e wa! !worn in a! pre!ident onHrida), or anot er +e+ er o* t e Mr" T-eJN! +o-e+ent wa! elected pre!ident in a !pecial election it i! rea!ona le to expectcontinuit) o* a !u !tantial portion o* t e policie!"# Cut a! *or ReneJuelaN! econo+), e ar ued, t e !ituation ri t now i! not!u!taina le and itN! onl) a +atter o* ti+e e*ore !o+e !i ni*icant c an e! will a-e to e in!tituted"#


44/254

prices lin8 small c!anges 8e%

Small c!anges in prices influence t!e glo4al mar8etplace:ill 3)/ /13 (>atrice, ie* Econo+ic orre!pondent at Wa! in ton 5i+e!, de ree *ro+ erlin

olle e, Ma or c an e! *ro+ oil re-olution#, Wa! in ton 5i+e!, &/3/&'13,ttp://www"wa! in tonti+e!"co+/new!/&'13/*e /%/!ea?c an e!?*ro+?oil?re-olution/, 0 a n2

5 e U"S" +ilitar) pre!ence in t e Middle Ea!t a! ad !o+e unde!ira le !ide e**ect!, !uc a! !tokin t e indi nation o* +ilitantMu!li+! in t e re ion in a wa) t at a! elped *eed !upport *or t e al Vaeda terrori!t network one o* w o!e pri+e oal! i! to ett e U"S" out o* Mu!li+ ol) land! in Saudi Ara ia and IraF" 0a+e! 0e**re), *or+er U"S" a+ a!!ador to IraF, !aid t e U"S" will a-e to+aintain it! pre!ence in t e >er!ian Oul* de!pite t e ud etar) pre!!ure!" 5 e re ion keep! eruptin into one kind or anot er o* -iolence or in!ta ilit)" So we a-e to e pre!ent,# e !aid on >lattN! Ener ) Week" Oil is fungi4le" 2!ere is oneinternational oil mar8et" GIfH prices go up 4ecause of s!ortages in one area' t!e%are going to go up in e#er% ot!er area' e#en in t!e United States , e-en i* we i+port*ro+ !a*er area! or produce it our!el-e!" E#en more importantl%' at t!e #er% core of America0s securit%relations!ip since orld ar II !as 4een guaranteeing supplies of oil and gas to our friends and allies" E#en if &eare independent in energ%' most of our friends in East Asia and certainl% in Europe' and else&!ere in t!e &orldare not" # Mr" in !ton !ee! anot er +a or Fue!tion ari!in *ro+ t e c an in oil d)na+ic!: W ) doe! t e U"S" need to old !o+uc oil in t e Strate ic >etroleu+ De!er-e i* it! i+port dependence i! plu++etin .# e a!ked" >re!ident Oeor e W" Cu!undertook to *ill t e re!er-e to a record 7&7 +illion arrel!, o*ten at price! o* +ore t an 61'' per arrel" et t e oil a! rarel) eenu!ed, e-en t ou t e U"S" *ro+ ti+e to ti+e a! een t reatened wit oil ! utdown! ecau!e o* war! and e+ ar oe! in countrie!!uc a! IraF, Li )a, ReneJuela and Iran" 5 e re!er-e contain! enou crude to co-er 9' da)! o* i+port! at t e current, reduced rateo* con!u+ption, Mr" in !ton !aid" il anal)!t! expect t at political leader! will e te+pted to !ell !o+e o* t e oil in t e re!er-e int e *uture eit er *or political or ud etar) rea!on!, to elp at lea!t te+poraril) reduce t e ud et de*icit"


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flood lin8s


46/254

flood nc

O=E< mem4ers &ill flood t!e mar8et our e#idence postdates %ours and assumesU"S" s!ale findings

cetroleu+ Exportin ountrie! i! ettinner-ou!, and expert! are Fue!tionin ow lon t e cartel can act to et er to old !wa) o-er lo al oil price!" At t e +eetin , w eret e roup kept it! production ceilin o* 3' +illion arrel! a da), it al!o took t e re-ealin !tep o* *or+in a co++ittee to !tud) t ei+pact o* t e )draulic *racturin and oriJontal drillin " 5 e tec nolo ) i! propellin =ort A+erica toward ener ) !el*?!u**icienc)and +a) !pread to ot er countrie! wit t eir own ! ale oil pro!pect!" It i! a reat concern *or u!, e-en i* we do re!pect t e inte rit)o* t e U"S" to e !el*?!u!taina le in ter+! o* oil and a!,# !aid =i erian il Mini!ter o* >etroleu+ De!ource! KieJani Ali!on?Madueke, w o!e countr) i! a+on t e +o!t a**ected in ter+! o* t e lo!! o* export! to t e United State!" More t an $' )ear! a*ter it wa! created to wre!t econo+ic power *ro+ t e +a or oil co+panie!, t e >E oil cartel *ind! it!el* at ri!k o* lo!in it! do+inant rolein t e lo al oil +arket" 5 e roup i! increa!in l) co+petin wit new oil !ource! t at are !tartin to c ip awa) at it! ! are inpre-iou!l) !ecure +arket!, w ile a ! ak) lo al econo+) keep! de+and *or oil at a)" Al!o trou lin *or >E a! it look! to protectoil price!: ne ke) +e+ er, lon ?!u**erin IraF, i! ai+in to dra+aticall) increa!e production and *lex it!+u!cle! a ain a! a +a or exporter " It add! up to a ni t+are !cenario *or t e roup" ina, Du!!ia and ot er countrie!are takin earl) !tep! to e+ulate t e =ort A+erican uncon-entional oil oo+ o* recent )ear!, w ic a! t e U"S" on track too-ertake Saudi Ara ia a! t e worldN! lar e!t oil producer" So+e ke) >E +e+ er!, +eanw ile, are ea er topu+p a! +uc a! po!!i le to rin in adl) needed re-enue, rat er t an re!train output a! parto* an) concerted e**ort to add upward pre!!ure to price!" 5 e ri!k i! t at !uc a !cenario lead! tocutt roat co+petition and a *lood o* oil in lo al +arket!, tri erin a plun e in price! t at

could t reaten t e econo+ic and political !ta ilit) o* it! +e+ er nation!" 5 ereN! a !tor+ rewin on t e oriJon,# !aid Ore >ridd), an anal)!t wit Eura!ia Oroup, a Wa! in ton? a!edpolitical ri!k *ir+, ou are lookin a )ear or two out e*ore it eco+e! acute" Cut t at i! t e direction we are eaded"# 8owSaudi Ara ia and t e re!t o* t e *ractiou! roup cope wit it! external and internal t reat! will

a-e ripple e**ect! around t e lo e , *ro+ con!u+er! e-er !en!iti-e to pu+p price!, to inaN! *a!t? rowin indu!trie!,to Al ertaN! i ?co!t oil !and! producer! t at need ric enou price! to u!ti*) new in-e!t+ent in t eir own -a!t re!er-e!" 5 eco+in ^!uppl) ! ockN 5 ere i! no Fue!tion t at >E !till old! !wa) in t e +arket " 5rader! *ro+Sin apore to =ew ork to al ar) an on e-er) word it! +ini!ter! utter a! t e) enter and exit clo!ed?door +eetin !, to au epotential i+pact! on price!" 5 e roupN! *ir+ and on it! oil tap! in t e *ace o* rowin !upplie! *ro+ non? >E countrie! continue!to in*luence international price!, w ic a-e re+ained around it! 61'' (U"S"2 a arrel tar et" Still, >E N! world i! c an in " 5 e)are not at a pi-ot point )et, ut t ere are clear c allen e! a ead,# !aid Kaniel er in, -ice?c air+an o* I8S Inc" and a leadincon!ultant on t e lo al oil indu!tr)" 5 ere are eopolitical c allen e! re ional c allen e! t at co+e wit t e !tand?o** o-erIranN! nuclear pro ra+ and t e concern! Ara Oul* !tate! a-e o-er it, and t e S)rian con*lict, w ic a! ele+ent! o* ein a prox) war a+on countrie! t at are ke) +e+ er! o* >E " And t ere i! t e uildup o* !uppl) co+in *ro+ =ort A+erica in particulart i! dra+atic increa!e, t i! !ur e, in U"S" oil production and al!o t e potential reco-er) o* IraF, [w ic i!\ -er) keen to +ake up *orlo!t ti+e"# A! recentl) a! la!t )ear, >E +e+ er! di!+i!!ed oo+in U"S" ! ale oil production a!a *la! in t e pan " 5 e *or+ation o* a !tud) roup to pore o-er t e i+pact! ! ow! t e t at t inkin a! c an ed" It i! no wonder" In it! Ma) Mediu+?5er+ il Market Deport, t e International Ener ) A enc) re*erred to rowt in U"S" li t oil, alon witt e anadian oil !and!, a! a !uppl) ! ock# t at will e a! tran!*or+ati-e to t e +arket o-er t e next *i-e )ear! a! wa! t e ri!e o*

ine!e de+and o-er t e la!t 1$"# Kri-en ) t e oo+ in oil production *ro+ re ion! !uc a! t e =ort Kakota Cakken and Ea leHord in 5exa!, t e United State! i! now on track to e t e worldN! lar e!t oil producer in t e next decade, accordin to !o+e*oreca!t!" 5 e IEA, t e We!tN! ener ) watc do , a! predicted t e United State! will pu+p 11"1 +illion arrel! a da) ) &'&', up*ro+ nearl) !e-en +illion in &'1& and !urpa!!in Saudi Ara ia in t e proce!!" =ort Kakota production a! +ore t an dou led intwo )ear! to nearl) '',''' arrel! a da)" Alread), a*ter decade! o* pro+i!e!, t e ! ale re-olution i! elpin t e U"S" *inall) ! akeit! un ealt ) addiction# to i+ported oil, a! *or+er pre!ident Oeor e W" Cu! called it" 5 at alone will not !trip >E o* it! o-erall+arket power" Cut cartel +e+ er! !uc a! =i eria and Al eria t at are known *or producin li t !weet crude t e ea!il) *lowin


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!upplie! t at are low in !ulp ur content and !i+ple to re*ine are *eelin t e pinc " U"S" i+port! *ro+ =i eria were +ore t anal-ed to %'3,''' arrel! a da) in Marc , &'13, *ro+ 913,''' in Marc , &'11, accordin to t e U"S" Ener ) In*or+ation

Ad+ini!tration" =i eria, Al eria and ot er! a-e redirected export! to A!ia and ot er +arket! a+id expectation! t at t e U"S" wille-entuall) reFuire no !uc !upplie!, !aid Mic ael Wittner, +ana in director and ead o* co++oditie! re!earc *or Soci_t_ O_n_raleSAN! A+erica! operation!" I! >E rele-ant. A! lon a! t e ! ale oil i! a =ort A+erican t in , )e! "5 atN! !o+et in I would !a) will old *or +a) e a *i-e?)ear ti+e oriJon",# Mr" Wittner !aid" ut e)ond t at, t e Fue!tion eco+e! +uc +ore co+plicated"# 8e point! out t at ot er countrie!, includin Du!!ia, ina, Au!tralia and Ar entina, +a) a-elar e ! ale oil re!er-e! t at could one da) +ean !ti** new co+petition *or t e >E producer!" A! we +o-e into uncon-entional!,

>E i! no lon er oin to old all t e card!,# !aid 5 o+a! >)le, pre!ident o* t e In!titute *or Ener ) De!earc in Wa! in ton"Man) in t e U"S" !ee anada and t e propo!al to uild t e e)!tone QL pipeline to et increa!in -olu+e! o* Al erta itu+en to t eU"S" Oul* oa!t a! an i+portant +o-e in t e eopolitical a+e" I* t e U"S" o-ern+ent ot it! act to et er and appro-ed t e

e)!tone pipeline, it would *or e u! a la!tin relation! ip wit anada t at would ! i*t lo al ener ) power Fuite !i ni*icantl),# Mr">)le !aid" An i++ediate concern *or >E due to *allin li t oil export! to t e U"S" i! increa!ed co+petition wit ot er crude! !uca! t o!e *ro+ t e =ort Sea and Du!!ia, !aid 0udit Kwarkin, director o* re!earc at I5O In-e!t+ent De!earc " A! t e U"S" draw!le!! on lo all) traded crude!, t o!e crude! will t en e lookin *or a o+e and t atN! w ere t e pre!!ure co+e! co+petitiona+on non?=ort A+erican internationall) traded crude! o* w ic >E i! a i part, ut t ere are ot er!,# M!" Kwarkin !aid SoitN! a !o+ew at +ore co+petiti-e en-iron+ent in t at !en!e"#

Le#ine' 3 (Ste-e, Cernard L" Sc wartJ Hellow at t e =ew A+erica Houndation, and i! Wa! in ton corre!pondent *or VuartJ, ad unct pro*e!!or at Oeor etown Uni-er!it)4! Sc ool o*Horei n Ser-ice, *or+er *orei n corre!pondent *or 5 e Wall Street 0ournal, 5 e =ew ork5i+e!, 5 e Wa! in ton >o!t, t e Hinancial 5i+e! and =ew!week 5 e o+in il ra! #,Horei n >olic), re!ident Rladi+ir >utin, !ince i! Bpopularit) and aut orit) are clo!el)correlated wit econo+ic rowt ,B uc in! told +e in an e+ail exc an e" Wit *ew exception!, t e !a+e oe! *or t ere!t o* t e world4! petro?ruler!, w o!e oil re-enue !upport! -a!t !ocial !pendin ai+ed at lea!t in part at !u duin po!!i ledi!!ati!*action ) t eir populace" Saudi Ara ia can alance it! ud et a! lon a! price! !ta) a o-e 6 ' a arrel, accordin to t eInternational Monetar) Hund, alt ou pro ected *uture !ocial !pendin o li ation! will dri-e it! reak?e-en price to 69 a arrel in&'1


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lood w en it co+e! to *ellow petro?!tate! Du!!ia and Iran , t e *or+er *or *ailin to elp cal+ t e *ur) in S)ria,and t e latter *or re*u!in to o to eel and i-e up it! nuclear a+ ition!G in ot ca!e!, t e Saudi! t ink lower price!

will produce a +ore rea!ona le attitude" In addition, Saudi Ara ia i! terri*ied o* a current U"S" oo+ in ! ale oilG it i! opin t at lower price! will render +uc o* t e drillin in =ort Kakota4! Cakken S ale and anada4!oil !and! unecono+ical" Hinall), t e Saudi! are well aware t at low oil price! elped to turn around t e

lo al econo+ic downturn in 199 and 1999, and t e) ope to elp acco+pli! t e !a+e now, and per ap! win newa**ection *ro+ t e world4! leadin econo+ie!" Meanw ile, t ou , Rerle er t ink! t at oil price! will cra! " Market! o-er! oot w enone i! tr)in onl) to *ine?tune t e+, a! t e Saudi! are, e ar ue! ?? w ic i! t e a!i! *or i! *oreca!t! o* 6%'?a? arrel oil and 6&?a?

allon a!oline ) =o-e+ er" 5o t e de ree t at !uc *ire?!ale price! are lon ?li-ed, t e) could cau!e +a) e+ a+on petro?ruler!" W ile Rerle er t ink! t at t e Saudi! can +aneu-er price! ack up w en t e) want, t e -er) nature o* a cra! de+on!trate! t at+arket! can e uncontrolla le" Cut t e Saudi! are willin to !u**er t e con!eFuence!, knowin t at t eirown *inancial re!er-e! (!o+e 67'' illion2 i-e t e+ !ta)in power" B5 e Saudi! are a le to look at t elon ter+,B > il Hl)nn, an anal)!t wit >ricin Huture! Oroup, told +e" iti roup4! Mor!e t ink! t at price! can *all *urt er *ro+ w ere t e) are now, ut not a! low a! Rerle er *oreca!t! ecau!e, e told +e, toda)4! +arket condition! are di**erent *ro+ &'' ??t e decline in de+and i! not a! !teep, and in-entorie! are not a! lar e" Mor!e calculate! t at Crent can *all into t e 67'!?per? arrelran e and U"S"?traded oil into t e 6


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flood 3nc

Increasing U"S" oil independence forces Saudi to flood t!e mar8et and sin8 oilpricesU2' 3) ( (BWit out il" Wit out Allie!: USA and t e =ew A+erican Krea+ o* IndependentEner )B, &/1$/13, Ur an 5i+e! Ma aJine, ur anti+e!"co/+a aJine/&'13/'&/u!a?oil?!audi?ara ia?independent?do+e!tic?ener )?!uppl)/ //kd 2 At t e end o* t e da), t e U nited S tate! o* A+erica i! o-erco+in Saudi Ara ia *or a !i+ple rea!on" 5 e cut! onSaudi production are part o* a well?planned econo+ic !trate )" 5 e +ore oil )ou pu+p, t e +ore oil )ou

a-e on t e +arket" 2!e more oil on t!e mar8et' t!e lo&er t!e price of t!e oil " 5 e Saudio-ern+ent know! t at in ectin t e +arket wit +ore t an t e nece!!ar) a+ount o* oil would reduce re-enue!" 5o top it all,

A+erican oil production i! expected to o-erco+e t e SaudiN! &'&'" 8owe-er, Saudi Ara ia will re ain it! po!ition ) &'&7" US i!li-in t e drea+, *or now" 5 e per!pecti-e o* i-in up t e dependence on Saudi oil i! appealin " 5 e

e)!tone pipeline will open o po!ition! *or t ou!and! o* A+erican worker! w ic i! ood new! a! 7"9; o* t e workin populationre+ain une+plo)ed" Cut t e ac ie-e+ent o* ener ) independence !ound! like a *lu**) *air) tale

wit out t e li-in appil) e-er a*ter#" Saudi oil production i! deter+ined ) Saudi o-ern+entpolic)" Saudi! could potentiall) produce +ore oil t an t e) do now , ut *or w ate-er rea!on! t e) c oo!enot to do !o" I elie-e we need an all?o*?t e?a o-e !trate )" 5 at +ean! producin +ore io*uel!" More *uel?e**icient car!" More

!olar power" More wind power,# Carack a+a !tated, in u! in , la!t )ear" 5 e Fue!tion we ! ould a!k i! w et er an ener )independent countr) w o!e econo+) i! a!ed on do+e!tic *o!!il *uel! i! actuall) +oti-ated to +o-e toward! a reen econo+)+odel. So *ar, !+all countr)!ide town !uc a! 8ardi!t) and u! in are ettin i er, ric er and prouder, a+on crop *ield!" 5 e

e)!tone i! t e !)+ ol o* t i! new era" Cut, i* t e *oreca!t! are correct, t i! new A+erican drea+ wonNt la!t lon " If reen ener ) +erel) re+ain! an electoral pled e and Saudi re$opens t!e taps w ile t e US i! una le to

re+ain ener ) independent, t!e 4ac8las! could 4e far &orse t!an an% price fluctuationor di!counted !tock o* H?1$ " Wit out reen ener ), wit out oil, wit out allie!"

Saudi Ara4ia is feeling t!e pressure of U"S" oil independence no&,anot!er stepcould cause t!em to flood t!e mar8et:a&8ins' ()3?) / (Awr 8awkin!, > K in US +ilitar) i!tor) *ro+ 5exa! 5ec Uni-er!it),

weekl) contri utor to Creit art, and a con!er-ati-e colu+ni!t, Creit art, BSaudi Ara ia Heelin>re!!ure A! U"S" il >roduction Coo+!B, www" reit art"co+/Ci ?>eace/&'13/'$/&9/Saudi?

Ara ia?Heelin ?>re!!ure?A!?U?S? il?>roduction?Coo+! // kd 2Lon accu!to+ed to do+inatin world ener ) , Saudi Ara ia i! !cra+ lin *or wa)! to +aintain a!tron role in ener ) *or decade! to co+e" Wit U"S" oil production oo+in and t e I nternationalE ner ) A enc) predictin t e U"S" will actuall) e t e world4! top ener ) producer ) &'&', Saudi

Ara ia i! !tartin to *eel t e !FueeJe " Accordin to Horei n >olic), t i! new pre!!ure a! put t e Saudi!in !o+ew at o* a Fuandar) , a! B%' percent o* [t eir\ & +illion citiJen! [are\ under t e a e o* 1$BG t e +ale! a o-e t i! a eare +o!tl) e+plo)ed in t e nation4! B loated pu lic !ector"B Add to t i! t e Bpo!t?Ara Sprin era o* ele-atedper?capita o-ern+ent !pendin B and it4! ea!) to !ee w ) Saudi Ara ia *eel! pre!!ure " et t eir plan*or dealin wit t i! pro le+ a! een unclear" n April &$, >rince 5urki al?Hai!al Bannounced t at Saudi Ara ia i! !et toincrea!e it! total production capacit) *ro+ 1&"$ +illion arrel! per da) (+ d2 toda) to 1$ +illion+ d ) &'&'"B Suc an increa!e would uarantee t at Saudi Ara ia re+ain! t e world4! top oilproducer " 8owe-er, u!t *i-e da)! a*ter t i! announce+ent wa! +ade, t e Saudi Ara ian Mini!ter o* >etroleu+ and MineralDe!ource!, Ali al?=ai+i, !aid 1$ +illion + d couldn4t e produced ) &'%', +uc le!! &'&'"

Saudi Ara4ia &ill let prices fall@ro&er' 3 (Kerek, writer and contri utor to t e Econo+i!t, >etroleu+ Econo+ic!, t e 5i+e!,t e Ouardian, and te Oul* il De-iew, > "K" Du!!ian literature, M"A" in Ea!t European Studie!,Uni-er!it) o* London, x*ord Uni-er!it), Euro+one) In!titutional In-e!tor, In!ide t e pecoil?price u le#, 7/&'1&, Lexi!, 0 a n2Kerek Crower, RIE==A: Hor an) -endor, a &&; drop in t e price o* t e product i! ound to et pul!e! racin " 5 at4! t e ca!e *or

pec4! oil producer!, w o a-e watc ed !tren t drain *ro+ Crent *uture!, w ic a-e tu+ led *ro+ April4! i ! o* +ore t an 61&$a arrel to u!t a o-e 697/ now" It !ee+! t ere4! !o+et in +a ical a out t e 61''/ arrier, too" An)t in lower, !aid Li )a4! oil+ini!ter A dura +an Cen)eJJa, ere in Rienna t i! week *or t e pec +eetin , Bi! -er) pain*ulB *or i! countr)" So+e t ink price!


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! ould e e-en i er" 5 e *inance! o* IraF and Iran, w o!e oil +ini!ter! eld a ilateral +eetin a ead o* t e roup4! !u++it on 1%0une, are ettin de!perate" A dul aree+ Luai i, IraF4! oil c ie*, reckon! 61''?1&'/ i! a *airer price" 5 o!e two countrie!, lood)ri-al! in t e pa!t, will adopt a uni*ied !tance w en t

Oil DA - MichiganClassic 2013

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