US fails to renew emergency oil supply pact with Israel
Last November, Reuters reported:
The United States is in the midst of renewing its 35-year-old commitment to supply Israel with oil in emergency situations after the pact expired on Tuesday, a U.S. State Department official said.
The United States “is in close contact with the government of Israel on extending the longstanding memorandum of understanding” between the two countries on emergency oil supplies, a State Department official said on the condition of anonymity.
The agreement was first signed in 1979 by Secretary of State Cyrus Vance and Israeli Foreign Minister Moshe Dayan after the Iranian revolution sent shock waves of higher prices and fears about disruptions in the Middle East through oil markets.
Under the agreement, the United States, provided it has enough oil for its own use, will provide Israel crude for purchase. If Israel is unable to secure transportation for the oil, Washington will make “every effort” to help Israel secure transit, according to the agreement.
The pact is an exception to Washington’s ban on crude oil exports that Congress passed after the Arab oil embargo of 1973 to 1974 spiked petroleum prices and led to fears of shortages. Israel has never asked the U.S. to supply it with emergency oil.
Amid a six-year drilling boom that has led to a glut of light sweet crude along the U.S. Gulf Coat refinery hub, the Obama administration has been pressured by oil companies to relax or lift trade restrictions.
The agreement between the United States and Israel was extended in 1994 and in 2004.
It looks like this never happened.
For more than three decades, the United States has pledged to help Israel get crude in case the country’s own oil supplies were cut off.
But a U.S.-Israel agreement guaranteeing that emergency assistance expired last November. And now, six senators are pressing the Obama administration to re-up the deal.
The senators delivered their plea in a letter to Secretary of State John Kerry, urging him “to expedite the renewal of this important agreement as a meaningful gesture of support to our friend and ally at this challenging time.”
Sens. Lisa Murkowski, R-Alaska, and Mark Warner, D-Va., spearheaded the letter. Other signers were Republican Sens. John Barrasso of Wyoming and Jim Risch of Idaho as well as Democratic Sens. Heidi Heitkamp of North Dakota and Joe Manchin of West Virginia.
The US has not renewed a historic agreement under which it guaranteed a supply of oil to Israel in emergencies, that is, instances in which Israel might be cut off from its regular commercial sources of oil because of war or closure of sea lanes. The agreement expired in November 2014, and since then the US administration has done nothing to renew it, Washington sources told “Globes”.
The sources said that it was not clear whether this was a deliberate step by the administration, stemming perhaps from renewed friction between Prime Minister Benjamin Netanyahu and the White House, or a matter of bureaucratic inertia in Washington.
Israel has never invoked the agreement, but Israel sources say that its importance lies in its very existence. An Israeli source compared the oil supply agreement to the loan guarantee agreement between the two countries that enables Israel to obtain commercial loans at low rates of interest. “Israel used the loan guarantee agreement very sparingly, but it is important that the loan guarantees agreement should exist, and the same applies to the energy agreement that guaranteed a regular supply of oil,” the source said, “We never used it, but it’s important that it should lie signed in a drawer.”
Is the White House that petty?
Unfortunately, the answer seems to be yes.