Apparently a writer named Cenk Uygar was pestered by a question that has been on my mind: to what extent does the oil drilled for and pumped up in the U.S. remain in the U.S.?
In a piece for the Huffington Post on August 1, 2008, Uygar wrote,
“The oil that comes from that drilling will not be United States property (Republicans aren’t suggesting we nationalize the oil companies, are they?). It will be the property of whichever oil company got the rights to that contract. They can then sell it to whoever they like — and they will. They will sell it on the world market, so the Chinese will have just as much access to the oil that comes out of the coast of Florida as we will.
The Democrats have done a decent job of beating back the argument that this will affect prices in the short run, or even in the long run. But no one has addressed the point above. The Republicans make it seem like we won’t be dependent on foreign oil — and that prices will go down in the US — if we have our own oil. But it won’t be ours. And it will be sold on the world market, so its effect on global oil prices will be even smaller.”
So there, at least, is Uygar’s point of view. It seems to be supported by something I saw when visiting a site concerned with the world oil trade: “West Texas intermediate” crude oil is traded on the London Market. What the “intermediate” means, I do not know.
Apparently, however, some oil from Alaska is supposed to be sold to U.S. refineries, according to federal legislation, but there are probably ways around that.
With awful irony, then, the oil in the Gulf Coast erupting from the sea-bottom will indeed remain “domestic”; more is the pity. If it had been harvested by the British company, it would have headed for the world market. I assume economists would assert that at least that production would BE on the market and, in theory, help to raise supply and lower cost. In theory.
Naively, I wonder if there is a functional midpoint between nationalizing oil companies (neither desirable nor possible) and seeing almost all oil produced here go on the world market (an exercise in futility, it seems). If U.S. oil stayed U.S. oil, I wonder, would OPEC simply raise oil prices accordingly and cancel out our “domestic” move?
I wouldn’t mind seeing these questions about “domestic” oil and the meaning of “domestic” debated visibly and extensively in Congress, in print, and on a variety of screens.