NARO Hits Report Lauding Cheap Oil; Warns of Implications For Trade Deficit, National Security
ADA, Okla., April 23 /PRNewswire
''Saying the American economy will benefit over the long haul by falling crude oil prices, as noted in an analysis released yesterday by John S. Herold, Inc. out of Stamford, Connecticut, is akin to saying our future is better if it is in the hands of the unstable governments of the oil producing countries around the world,'' said James L. Stafford, president of the Ada, Oklahoma-based National Association of Royalty Owners (NARO).
''Comparing the price of a gallon of oil ($15.25) to a gallon of milk ($126) or a gallon of Budweiser ($342.72) is ludicrous and extremely misleading because the price of these items will never be controlled by a foreign country. In truth, this country would be better off if the price of oil was high enough to encourage domestic production and the price of milk was lower,'' Stafford pointed out.
''This ill-conceived report fails to note that more than half of our oil is imported,'' said Stafford. ''If the pump prices remain low and there is no help for marginal or 'stripper' well production in this country -- which provides the bulk of production in many states -- we could see oil imports jump to 60 or 70 percent, creating havoc with our trade deficit. At the same time, we would see many more of our nation's 500,000 marginal wells abandoned forever, threatening our national security in times of crisis. The result could quickly become a complete dependence on violence-prone countries that could totally control our economy for years to come.''
Stafford said, ''Those who take the advice of the Herold analysis and 'fill up every tank available to take advantage of the situation,' may find that this is their last chance for cheap gas. As soon as we get hooked on cheap foreign oil, the producing countries can once again pull the rug out from under us just as they did in 1973 when we had short supplies and escalating prices and gridlock at the gasoline lines.
''The better alternative is to support measures, such as the effort here in Oklahoma through tax incentives, to preserve marginal and stripper wells which are the backbone of the oil and gas industry. In fact, nearly four out of five Oklahoma oil wells are marginal wells and nearly half of Oklahoma's gas wells are marginal.
''There is further economic fall-out in areas of the country dependent in part on royalty payments from these wells,'' Stafford said, pointing out that NARO serves as the voice of this nation's 4.5 million owners of private royalty interests. ''While few royalty owners are fat cats -- most royalty checks are well under $200 per month -- when you add it all up, that money is a major shot in the arm for virtually every small town in the oil patch, paying local doctors, local grocers and local taxes plus supporting many endangered farms and ranch operations.
''We are playing economic roulette and studies, such as the one released yesterday by John S. Herold, look at the winners of a rigged wheel,'' Stafford concluded. ''If we continue to lose production to foreign interests, the comparisons with other commodities a year or two from now will show clearly the folly of our gambling addiction.
''The nation is playing economic roulette with a rigged wheel. Unless our addiction to cheap oil is broken, most of the nation's consumers will be hitchhiking home from the casino.''
NARO was founded in 1980 as a watchdog organization pledged to fight the Carter Administration's Windfall Profits Tax. Since then, the group has not only maintained Washington representation and statehouse watchdog activities in producing states, but also expanded into self-help education and, through ties with colleges and universities, a far-flung network of seminars.
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