Friday, November 18, 2016


WHEN GOOD NEWS CAN TURN BAD


EDITORS NOTE:

This is an afterthought to the original post.  Our politicians have been promising to work towards energy independence.  There are good arguments for and against.  For, we are no longer dependent on anyone for our energy.  Against, by the US importing less and less oil it disrupts the world economies and could lead to unrest in many places in the world, which we all know will mean US intervention. Political economy is never simple.

If the goal is energy independence and our refineries as it is cannot process the oil at its current rate of production and we now have this new big discovery which is potentially good for Texas and the U.S., why are the Republicans continuing to push for the Keystone Pipeline which will mean using our limited resources to refine Canadian oil while Texas oil will have to wait for new refineries, assuming someone is willing to build them?  I have nothing against Canada, but should not our limited capacity to refine oil be used for U.S. oil first?  Or does it go back to the question of disrupting world markets so the U.S. must remain dependent on foreign producers even though we are approaching the point of self sufficiency?

ORIGINAL POST

I first read this yesterday, and decided to ponder on it before commenting.  In North Dakota and in fact all over Texas, because of the low price of oil workers are finding wages cut, or in fact being laid off. There is simply too much oil.  This is a far cry from the days I would spend 2 hours on line with mom to get a tank of gas at the BP.

Part of the Keystone Pipeline which confuses people is Texas as it is cannot process all of the oil it produces and already comes into its ports on the Gulf.  So to what end do we need to import raw crude from Canada for processing?

This issue has just become more compounded with the largest oil deposit in Texas just discovered.

From CNN:  "Geologists say a new survey shows an oilfield in west Texas dwarfs others found so far in the United States, according to the US Geological Survey.


The Midland Basin of the Wolfcamp Shale area in the Permian Basin is now estimated to have 20 billion barrels of oil and 1.6 billion barrels of natural gas."
Now if you know the history of West Texas and oil you know a lot of this land is owned by UT, which means millions more in revenues to the UT system. Or does it?  Will the development of this new discovery bring down the price of oil so low, UT's revenues actually drop from highs just a few years ago.
If Texas has tankers sitting in the Gulf of Mexico waiting to be unloaded because we cannot refine the oil as fast as it is coming in, where will we refine this new oil?  With the inevitable drop in the price of oil, is it worth it for the refineries to build new refineries?  And what will happen if Donald Trump allows for the Keystone Pipeline to be completed?
Our politicians have spent decades promising to make America free of foreign imports.  We are getting there.  But the result is the disruption of the world economy.  It is an oddity, but too much oil may actually put the middle east in even more turmoil as they compete for buyers in a flooded market.  The price can only go so low.  
Yes we are all very happy with the price of gas.  But be careful what you ask for?  In North Dakota, people can no longer afford their homes because wages have collapsed with the price of oil.  A foreclosure crisis is in their future.
But the good new is, in Texas if the refineries can be built Texas will have more oil than it can possibly handle.  Our gas will continue to get cheaper, but so too will wages for the oil workers.  
And then there is the environmental issue which will surely raise its head.  Fracking is increasingly becoming controversial.  The upper Gulf cities will agree to more refineries if someone will build them.  They are already accustomed to the environment disaster associated with the refineries.  Will our Port be next.  Remember our Port's motto, "jobs at any cost no matter the environmental consequences on our tourism and natural beauty."

ADDED TO THE ORIGINAL STORY

As word of this gets out to the Port Commissioners, and money makers, they will be begging refineries to build at our port.  It is coming and there is nothing we can do about it. Sometimes more money and jobs at any cost is not the solution.

Brownsville if we could just train our workers in robotics could become a major manufacturing center in the U.S.  Long before anyone heard the term NAFTA or discussion for NAFTA began, maquiladoras were being build along the border on the Mexican side.  I remember at UTEP Europeans sending their children for their Masters to study the issue. Brownsville is a gold mine ready to explode.

I will support anyone who sees this.  I may be a Democrat by voting, not philosophy, but I praised Governor Abbott for supporting the new work force training center.  I cannot worry about political labels.  I worry about making Brownsville and Cameron County into the major manufacturing center it can be.

We have to stop limiting our vision to industry which pollutes, and start focusing on industry which is clean and provides good manufacturing jobs.



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