After 53 years of rancor and mistrust, Cuba and the US are renewing diplomatic relations. Among the many factors which might have motivated the warring partners to call off their animosity could be oil.
Experts contend that one of the most productive oil and gas basins on the planet sits just off the North-West coast of Cuba. With its relations with the US on the mends, it now hopes that the Cuban Oil and Gas industry can finally get into action. The prospect has been welcomed by Cubans who are desperate to kick start their economy and achieve some parity in living standards of their superpower neighbor.
However the Cuban Oil boom is unlikely to happen any time soon and the biggest reasons are low oil prices and better prospects elsewhere.
Cuban oil industry has been long open to foreign investment; US sanctions denied it the best deep water drilling technology for extracting oil offshore. It is the biggest reason why Cuba produces a measly 55000 barrels of oil per day and one third of this is produced by just one company- a Canadian oil company named Sherritt International.
Cuba needs 155,000 barrels of oil per day and the gap is largely filled by its benign neighbor Venezuela under an agreement signed by its charismatic former Venezuelan President Hugo Chavez.
Venezuela at present ships 100,000 barrels of subsidized oil to Cuba daily and for this favor Venezuela receives the services of thousands of doctors, teachers and some military advisers. However falling oil prices have taken a big toll on Venezuelan revenue. High inflation, food shortages coupled with US sanctions for its human rights abuses has made the going difficult for Cuba’s ideological soul mate. It is only a matter of time before Venezuela will raise its hands.
Cynthia Arnson, director of the Latin American program at the Woodrow Wilson International Center said, “Given the economic disaster in Venezuela today any rational person dependent on Venezuelan financial support would have to be looking at other options.”
Buster Doney says
These discussions started about 18 months ago when oil was at its peak.
David says
Venezuela was already having sever financial problems even then.
sofi says
the Left told us, growing up,…that the world would be out of oil by 2000. Same bombastic folks that predicted Global Ice Age,..and now won’t shut up about their latest hoax–Global Warming.
Tom Denham says
Just why somebody who be a “proud university drop out” puzzles me.
TheTruthAsIKnowIt says
Pivot? When you get the better deal, it’s not a pivot. obama is just desperate to have his legacy be more than a failed healthcare system, among other failures.
FAIL.
Don Ziolkowski says
true but its quite likely they’ve happened a lot in the past. They could have been just Cuba and the US humoring the Pope etc.
It’s quite possible the first 15 months were basically nobody doing anything at all.
Henry Major says
Or, you are parroting Big Oil’s talking points.
Henry Major says
You know, as the price of oil declines, it makes the Venezuelan oil subsidy less painful. So why would they stop shipping?
Marvin Harrison says
Cuba has been a thorn in the US side for 50 years. When the Soviets funded them they exported revolution throughout Latin America. They took their forces as far away as Angola. After the Soviets Venezuela bailed them out. Now that oil prices are down and Cuba is struggling, here comes the US to help their economy so communism perpetuates and they can again afford to export revolution. Great idea. This couldn’t wait until the Castros are no longer running things? It couldn’t wait to be an award for democratic elections? We tried this with Vietnam and they are still oppressive communists. We aren’t even going to get a pitcher because the people of Cuba still can’t leave. maybe someone in the administration has an eye on a 57 Chevy.
Marvin Harrison says
Oh, come on. he also had Cash for Clunkers.
Morgan says
This has nothing to do with Venezuela. This has everything to do with the United States wanting to keep Cuba away from the likes of Russia and China. This is about the overall geopolitical climate and how the United States is dealing with an increasingly hostile Russia and China. Make no mistake, Cuba is a strategic ally or partner to have and the U.S. does not want another Cuban Missile Crisis on its hands. It’s best to just mend bridges wherever possible and hammer out compromises where you can.
Swimmer says
Because low oil prices severely reduces Venezuela’s cash flow. There will be pressure on the government to sell that oil at full price rather than give it away at discount.
Regenz says
“We’ll never change our communist system.” Oh well, so much for this strategy. Nice way to support dictators and torturers (that only matters when the CIA makes terrorists uncomfortable).
John Shontz says
What will be particularly interesting will be who the President chooses to be the new U.S. Ambassador to Cuba and who Castro will appoint as the Cuban Am. to the U.S. Will the President choose someone from the old guard in Miami or not?
ed57 says
Spoken like a true neo con who’s against anything Obama does and, if not readily available, is willing to invent reasons for his opinion. I don’t like a lot of things Obama does either, particularly domestically, but I try to be open minded and this was a good move!
ed57 says
Henry, they have to make a profit elsewhere in order to continue to be able to subsidize Cuba!
If prices fall too low they aren’t making a profit.
Kdaniel says
And the right wingers screamed that Obama’s policies would drive the price of oil through the roof, ruin the economy, cause a collapse on Wall Street, drive up unemployment, and destroy America. Right wingers blame Obama for anything that goes wrong, like the recent failed hostage rescue mission conducted by brave special forces, but refuse to give him any credit for the great things that have happened over the last 6 years.
feduprepublican2 says
This is more about the western hemisphere. TheLatin nations have viewed the US as more a quasi “Colonialist” country than an ally, simply because of our blockade of Cuba. Within hours of the announcement almost all of the Latin American countries expressed gratitude for the raprochment with Cuba, including Brazil, Bolivia and Venezuela. We are attempting to get closer with our neighbors in an attempt to keep our neighbors from becoming close allies to the likes of Iran, Russia and China.
Another aspect is that the 50+ year embargo simply has not worked against the Castro regime. The only Cubans that it has harmed are the Cuban people. Most of the Cubans in Florida that are against this are the elderly refugees that were white Cuban Battistas from the more well to do Cuban population. All they want is their wealth given back to them that they left behind when they fled.
When the Castros’ die their revolution will die with them.
feduprepublican2 says
@Regenz
“support dictators and torturers” , are you referring to Dick Cheney or the CIA?
feduprepublican2 says
Too many from the old guard in Miami were Battistas, I doubt that Cuba would accept them.
feduprepublican2 says
Or we could try the old “Tried and True Method” that the Republicans have relied upon so often – We could declare war and invade. That would solve the problem (sarcasm on).
Marvin Harrison says
I think the last ones to think about that were Democrats and they changed their mind in the middle of the operation. And since when does the US need to declare war?
Marvin Harrison says
I am not anti-Obama. Most of the things a President does would be the same no matter who is in office. I don’t think he really understands the consequences in some of the things he does. Now if he said it gives a new market for winter wheat I can see that. If he says it will open up our selling more high tech oil drilling equipment to open the fields off the Cuban coast I can see that. If it got another starting pitcher for the Yankees I could see that too. What are his real reasons?
ed57 says
They are, after Canada and Mexico, our closest neighbor and were once a very close ally. They have lived basically in peace ever since the Cuban Missle Crisis. Castro may have taken over and hurt a lot of people but it was 50 years ago! The people are isolated, driving outdated cars with no availability of parts! They have a great musical and artistic heritage that has given pleasure to a lot of people, and many are hard workers….(esp. the ones that escaped..ironically) Anyway its time to bury the hatchet. There can be other good reasons besides economic, altho those new oilfields certainly could be a factor!
Marvin Harrison says
Peace, except for little forays into Angola, or throughout Central and South America.
ed57 says
All of which occurred a very long time ago…. other than the solidarity with Morales and Chavez which was political and didn’t involve troops.
Marvin Harrison says
They give military assistance to Valenzuela as part of the oil agreement. They don’t do Angolaesque campaigns because they are broke. Help them recover so they can go back to doing it?
ed57 says
Well I never hear of Venezuela physically attacking other countries, about the worst I heard was some kind of minor disagreement with Columbia. Yes they talk but that’s cheap.
I think you’re still stuck in the free world vs communism debate of a few decades ago. Not that this wasn’t a valid concern (then) I hear from those who’ve traveled to Cuba. Enterpreuners on every street corner, all kinds of hand made items, and services popping up, they’re nice to tourists, the people are very industrious, altho isolated in terms of foreign products.
I don’t think Raul Castro and the others are as committed to Communism as before. Fidel is sickly, weak and tires easily..seems to stay out of government, content to write a small newspaper column. I understand Russia hasn’t been supporting them for years now and you never hear of Russian officials visiting…usually its religious figures like the Pope.
I just don’t think they’re any longer the threat you imply.
Marvin Harrison says
Right now, no. But restore their economy under Castro and they will be right back at it. Anyweay you look at it, their people are not free. they may be able to ship their 1957 Chevy Bel Aire to the USA but not any baseball players (they have to escape).
ed57 says
Its a friggin’ island man they can’t exactly walk across the border, Castro or no Castro. And the real Castro (Fidel) might as well be dead anyway.
If your thesis were valid why don’t we stop all relations with China, with Vietnam, with Russia for that matter.
As I said before, and this will be the last you hear from me on this, you’re dwelling on an old cold war fear that should be a non-issue at this point.
Marvin Harrison says
Vietnam is probably a mistake. We really don’t have much of a relationship anymore, our trade between us is not significant once you get past vodka for Pepsi. If we stopped with China we would have nothing on our shelves. We gave them every small industry we had.