Oil Diaries Part Two; The Left's Hit Job on Big Oil (Taking Down the Competition)

C.T.

The Left is constantly bantering that we need to be using "renewable energy sources" and so we can get off oil, because we are running out and it is bad for the environment. Renewable energy sources are fine, if we had spent the time to find one that is an acceptable alternative to oil and can produce the same output, economically. To date, there is not a technology that is in existence, to my knowledge, that can accomplish this. Solar, wind, water, hybrids, none of them have any of the capacity, right now, to replace oil. So, why all the blistering debate; environment, security, lifestyle? Nope, it is about money, control, and elimination of competition through the government.

Investment activities that focus on companies or projects that are committed to the conservation of natural resources, the production and discovery of alternative energy sources, the implementation of clean air and water projects, and/or other environmentally conscious business practices. In fact, investing in "green" companies can be riskier than other equity strategies, as many companies in this arena are in the development stage, with low revenues and high earnings valuations. [1]

Green tech, as noted above, is a risky and volatile investment right now. Let's get real though, if you have an industry that is growing, the government is backing it up, and you are the government how much risk are you actually taking? But there is a huge problem with this equation and that is Big Oil. Oil companies, if allowed to exploit coal, shale, and offshore drilling would be able to extend the life of petrol products for quite along time. No one would really see a need for renewable energy sources in the near future.

Look at the potential for fossil fuel development just here in the United States alone.

The reserves of oil sands, which are actively being mined in Canada's Alberta Province, are estimated to be 1.8 trillion barrels. Experts estimate that much of this can be produced for $45 per barrel or less. Global reserves of oil shale are estimated at more than 3.3 trillion barrels, with 70 percent in the United States (primarily in Colorado, Utah and Wyoming). [2]

Shell Oil Co. last year announced it has developed a process for extracting the oil from the shale, without mining, at a price of roughly $35 per barrel. The United States also has the world's largest reserves of coal — enough for hundreds of years of production at present levels. Coal also can be turned into liquid petroleum (as the Germans and South Africans proved decades ago). Current estimates of the conversion cost are as low as $35 per barrel. [2]

Really? Proven technology in place, clean, safe, and cheap.

Why not develop it then? All we hear about is the environmental impact, derricks look ugly in the distance, the spotted owl, yadda yadda yadda. Feel good reasons and stupidity which will inevitably undermine the very economic fabric of this nation. This will force us to wait for a sound renewable energy source while remaining dependent on foreign oil and playing hostage to the Middle East and others. Yup, that sounds like a great plan.

If it were only that easy in my own twisted little mind. The only other conclusions I can draw are these. Money in big oil is already tied up with a certain list of players and I would hardly think that it includes any Harry Reid's, Nancy Pelosi's, or Al Gore's. So, they aren't in the club. Watching past fiascoes like Y2K, I think they learned something about panic and how much money it can generate, or maybe they already knew it. Secondly, the oil companies are already entrenched and would create to much competition for green tech/renewable energy. Especially if they were allowed to process coal, shale, and untapped oil. The Left must destroy or severly cripple these corporations through insane government regulations to create a need. If there is a gaping hole and green tech is the only way to fill it, imagine the money. Thirdly, through outrageous scare tactics and clever marketing, they have already created a market in the US and Europe to peddle their pill. At this point it is just a matter of removing the competition. All of this may be the why, but what about the how? Here you go.

Does it seem a bit odd that the current price of oil is more than twice the cost of producing all the oil the world presently needs and will need long into the future? The reason the price is so high is that the supply has been artificially constrained by governments. Most (88 percent) of the conventional oil reserves are owned by governments, and these governments have underinvested in new production. As is well-known, the U.S. government has restricted offshore and onshore drilling, shale development, and coal conversion. [2]

Although, there is one "small" problem and it is the American people. Let's look at a very popular Rasmussen poll taken not to long ago.

Six out of 10 Americans (61%) say Congress should return to Washington immediately to vote on lifting the ban on offshore oil drilling, according to a new Rasmussen Reports national telephone survey. But voters overwhelmingly expect Congress to adjourn this year without taking action. [3]

Seems the polling data might have scared the High Priestess of the Cult of Obamafornia.

On Monday Pelosi reversed course and said she was willing to allow such a vote – in September. [3]

With all of this in mind I am not against the development of renewable energy sources. This, from a free market perspective, is a great thing. A new and potentially profitable market to tap into and it will spur some competition. Not to mention the potential it has for space exploration, medical industries, information technologies, etc. But, as of now, it is not ready for prime-time.

C.T.

[1] Green Investing
[2] Oil and Oily Politicians
[3] 61% say Congress Should Vote on Offshore Drilling Right Now

P.S. If I am right about the way the Left is going about this, their behavior is criminal and they are using the average American's future as a bargaining tool. On the other hand, I could just be giving them way to much credit for their intelligence and they are as short sighted, cultish, and idiotic as ever. I dunno.

Continue reading ...

The Oil Diaries; Part One

C.T.

Like most Americans, I admit that I am angry about the raping we are taking at the pump and how, over the last five years the price has steadily risen. The marker for me was when I lived in Washington D.C. and hurricane Isabella hit in late 03'. There was a spike in the cost of petrol; it went up to a whopping $1.50/gallon, plus or minus. I thought, "Oh my, God! How will we survive?" Then things stabilized and Katrina hit the Gulf Coast, my present home. Well, we all know the story from there.

While I am angry, I have also been fascinated by this industry and how out of control they have become. You have a whole laundry list of companies, cartels, and countries to choose from to place the blame. But before anyone can do that you have to understand why things have become like they are and what solutions are actually viable in the short and long run.

First, you must examine the web of intrigue that might have created this conundrum. We have heard everything from OPEC, to oil drying up, to speculators. Like everything, there is a little bit of truth in all of them.

For years, the chicken littles of the world, have been claiming that oil is drying up and that was the reason given to find alternative energy sources. While alternative energy sources are not a bad idea, the whole concept of oil drying up is alarmist and based on little fact. Even as far back as 1875, John Newberry the chief geologist for the state of Ohio predicted that oil was running out. In 1979 the Carter administration echoed the findings of a C.I.A. assessment that oil wells were drying up all over the world. Based on the technology of the time, with regards to exploration and drilling techniques, the C.I.A. was correct to a point. We were only able to achieve a certain depth for drilling and exploration. Now, times have changed quite dramatically.

Then there is OPEC, our favorite arch nemeses. OPEC does have a hand in this problem that is facing the American consumer. It comes down to supply versus demand and how much oil you will let flow. Simply put, if you constrain the amount of oil production, you drive prices higher. Sounds easy enough to pin the blame on OPEC, but the problem is, it isn't that simple. In 1980, the cartel pushed for $40/barrel. The general idea was that they could attain an even higher price based on supply and demand, but the rate of consumption fell dramatically. This greatly cut into OPEC's profits and resulted in them lowering the price. So, why isn't that happening today? This is where the analysis starts to sting us as Americans. Two of the problems are our mindsets and lifestyles. There are far more vehicles in the States these days and we have become accustomed to being able to move around as we please. In order to put the squeeze on the OPEC problem you have to be willing to limit your movements and become more dependent on less luxurious ways to get to where you need to be (i.e. public transportation, car pooling, etc.). Not so glamorous, but an effective tool, or weapon, that can be used against OPEC to increase the flow of oil. If they gouge you, gouge them back by cutting the usage of oil as much as possible.

After OPEC, what is left? I would love to stop there, unfortunately the trail continues on. There is much more at work here than just supply/demand problems. You have the speculators. Speculators are people who deal in the futures markets and are highly unregulated. They can manipulate a market to achieve a certain price without regards to supply or demand. Unfortunately, one of the only solutions I see is government intervention and forcing a certain degree of transparency on the industry. Yes, I know the government sticking its nose into the free market. But applying Burkean Conservative thought to the whole situation, government regulation does not look so bad. As I am fond of saying," You have to find a balance between the needs of the individual and the governing authority." Right now there is growing evidence that the individual consumer is being taken advantage of, to some degree, by forces that are beyond their control. It is the government's responsibility to protect the American consumer, when this point is reached, and the only way to do it is force some regulation on a community of people who are taking advantage of us and our families. There is a great need for a Theodore Roosevelt and a Square Deal initiative.

There are many players in this saga and I have probably on touched on two at best. Right now, all any of us can do is tighten our belts and get ready for an uphill battle. Most pundits on this subject feel gas prices are going to rise, a major correction not withstanding. Hopefully, a solution can be reached that might alleviate the pain at the pump for the short term and maybe some innovative thought can be given to a long term solution. Either way, it will be both interesting and expensive.

C.T.

P.S. Stay tuned for the continuation of the Oil Diaries. Next epsisode we will examine the possible short term solutions and fixes.

Continue reading ...