FLINT, Mich. - The 47-year-old trade embargo against Cuba has been shaken by the revelation that drilling for oil and natural gas is about to take place less than 50 miles off the U.S. coast - in Cuban waters.
No one knows for sure just how much oil lies off the northwest coast of Cuba, but the consensus is that it's sizable.
The U.S. Geological Survey initially came up with an estimate in 2004 of between 5 billion barrels and 10 billion barrels. But Cuba's state oil company, Cubapetroleo, recently said the undersea geology was "very similar" to Mexico's giant Cantarell oil field in the Bay of Campeche and that the Cuban field may contain 20 billion barrels, more than twice the previous estimate.
If confirmed, this would place Cuba's oil reserves among the top 20 in the world and not far behind the United States, which has 29 billion barrels. A number of U.S. geologists believe Cuba's revised estimate could actually be conservative and that it may only scratch the surface of its real potential.
The Cuban government is not only sitting on a potential oil bonanza but it has already awarded oil and gas exploration leases to companies from Canada, China, Spain, India, Venezuela and Norway. And Cuba is negotiating with Brazil's Petrobras, a company with years of experience in deepwater drilling.
Forbidden to drill
If U.S. firms are forbidden by their own government to drill for oil and gas in Cuban waters, then the national oil companies of other countries will benefit while our investor-owned companies watch from the sidelines.
With the global economy in recession, we should not place U.S. energy companies at a disadvantage in the international marketplace. The last thing we need is for U.S. companies to be shut out of leasing in a potentially big oil field in Cuba's offshore area known as the Exclusive Economic Zone, covering 43,000 square miles, while national companies from other countries pump out the oil.
Access to global oil and natural gas resources is essential for America's energy security. Other countries, notably China, are investing around the world, securing energy and raw materials to support their economies.
We need to consider that if the situation in the Persian Gulf becomes more volatile, or oil production in other regions is disrupted, we cannot count on other countries to share their oil supplies with us.
Congress must act
Congress should lift the trade embargo against Cuba. It is a failed economic policy that has stood since the Kennedy administration, but it has hurt ordinary Cubans, while failing to bring about the intended changes in human rights. On the other hand, resuming normalized trade relations could contribute to what everybody wants: a more productive, open and cooperative relationship with Cuba.
The embargo hurts both the United States and Cuba. Preventing U.S. companies from drilling in Cuban waters within 45 miles of U.S. shores, when foreign firms are allowed to, is ludicrous. Since the drilling will take place, it may as well be by U.S. energy companies.
On the other hand, if countries like China, Brazil and Venezuela find a way to get all of that Cuban oil, their days as global energy powerhouses could be just beginning.
Mark Perry is a professor of economics and finance at the Flint campus of the University of Michigan, e-mail email@example.com.