Do Cuban Waters Hold America’s Energy Future?
Development of vast tracts of oil in Cuban-controlled waters awaits a green light from the White House, and the go signal may be just a few years away.
America’s long-term energy supplies could get a significant boost from Cuba. That’s right -- Cuba.
The island nation controls an offshore bonanza of up to 20 billion barrels of crude oil just inside its territorial waters, barely 60 miles off the coast of Florida.
The U.S. embargo against Cuba will keep anyone from getting to the oil in the Florida Straits in the near term. But it’s only a matter of time before the strings are untied. Already, oil firms such as Brazil’s Petrobras, Spain’s Repsol-YPF, Russia’s Zarubezhneft and others from Canada, Malaysia and Norway have bought leases in the area, but bringing up oil would require U.S. know-how and equipment that’s now banned.
From just $107.88 $24.99 for Kiplinger Personal Finance
Be a smarter, better informed investor.
 
Sign up for Kiplinger’s Free Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
American energy companies have a virtual lock on the technologies needed to engage in ultra-deep sea drilling, oil recovery and ocean rig-platform building, and routinely partner with foreign oil companies around the world.
All the interested parties are willing to wait for a thaw in U.S.-Cuban relations. “U.S. oil companies know they’re prohibited from selling (sophisticated) oil drilling technology to intermediaries doing business with Cuba” and would incur huge fines for violations, says Jonathan Benjamin-Alvarado, an associate professor of political science at the University of Nebraska, Omaha. And foreign firms know that doing an end-run around the embargo would get them blacklisted by the U.S. from participating in lucrative oil production projects in the Gulf of Mexico.
The best guess is that in two to five years, the U.S. will issue special licenses to U.S. firms to participate in Cuban offshore drilling, much as Obama issued licenses that enable firms to sell cell phones and telecommunications equipment to Cuba. Taking that route is far less controversial than tinkering with the embargo.
Production from Cuban wells of around 2 million barrels a day would help to offset the continuing decline in production from existing U.S. oil fields. Domestic production topped out at 8 million barrels daily in the early 1970s and is around 5.4 million barrels today, including output from Alaska’s now-declining giant North Slope oil fields.
U.S. refiners are also crafting long-term plans to build fuel refineries in Cuba. Such installations would help to meet Americans’ motor fuel needs, replacing some of the domestic output likely to be curtailed by carbon dioxide emissions constraints that would make it tough to expand facilities in the U.S. Of course, building refineries in Cuba would require a change in Havana’s ban on foreign ownership and likely, a change in the government, too, an unlikely prospect in the near term.
For weekly updates on topics to improve your business decisionmaking, click here.
Profit and prosper with the best of Kiplinger's advice on investing, taxes, retirement, personal finance and much more. Delivered daily. Enter your email in the box and click Sign Me Up.
- 
 The Original Property Tax Hack: Avoiding The ‘Window Tax’ The Original Property Tax Hack: Avoiding The ‘Window Tax’Property Taxes Here’s how homeowners can challenge their home assessment and potentially reduce their property taxes — with a little lesson from history. 
- 
 Is Mint Mobile's Home Internet a Game-Changer or Just Another Option? Is Mint Mobile's Home Internet a Game-Changer or Just Another Option?Mint Mobile recently unveiled its new home internet service. We break down how it works so you can determine if it's a great value for your needs. 
- 
 Will AI Videos Disrupt Social Media? Will AI Videos Disrupt Social Media?The Kiplinger Letter With the introduction of OpenAI’s new AI social media app, Sora, the internet is about to be flooded with startling AI-generated videos. 
- 
 What Services Are Open During the Government Shutdown? What Services Are Open During the Government Shutdown?The Kiplinger Letter As the shutdown drags on, many basic federal services will increasingly be affected. 
- 
 The Economy on a Knife's Edge The Economy on a Knife's EdgeThe Letter GDP is growing, but employers have all but stopped hiring as they watch how the trade war plays out. 
- 
 Banks Are Sounding the Alarm About Stablecoins Banks Are Sounding the Alarm About StablecoinsThe Kiplinger Letter The banking industry says stablecoins could have a negative impact on lending. 
- 
 Apple Readies for AI Upgrade with New iPhones Apple Readies for AI Upgrade with New iPhonesThe Kiplinger Letter The tech giant has stumbled when it comes to artificial intelligence, but a new batch of iPhones will help it make headway. 
- 
 Japan Enters a New Era of Risk and Reform Japan Enters a New Era of Risk and ReformThe Kiplinger Letter Japan has entered a pivotal moment in its economic history, undertaking ambitious policy and structural reforms to escape from decades of stagnation. 
- 
 How Consumers Are Tinkering with Cutting-Edge AI How Consumers Are Tinkering with Cutting-Edge AIThe Kiplinger Letter Companies launching artificial intelligence tools are jostling for consumer attention. Some products are already building a deep connection with users. 
- 
 After Years of Stagnant Growth, Hope Emerges for EU Economy After Years of Stagnant Growth, Hope Emerges for EU EconomyThe Kiplinger Letter Can a German fiscal push outweigh French political peril?