Oil, Oil, Everywhere!
How consumers are being duped
More refineries equates to more oil on the market and lower prices at the pumps, and less profit in the oil companies' pockets. It's a great scheme.
When I tell people there is more oil in Canada than in Saudi Arabia, they look at me as if I just fell off a bar stool. Unfortunately however, I am quite sober and the above statement is quite true and, ironically, sobering. The world has plenty of oil--not only in Canada, but Russia, China, but right here in the U.S. as well In fact, the only argument amongst geologists is whether there are three trillion or five trillion barrels of oil remaining beneath the Earth. The real issue causing all the grief in the world is refining capacity. Simply put, over the last twenty years, the world's fuel consumption has increased almost 35% (thanks primarily to China, India and other emerging economies), but refinery and storage capacities have remained the same--most probably by design. Ninety percent of the world's oil refineries are owned by American oil companies and have been operating at 100% capacity for the last four to five years.
All market pricing of any commodity fluctuates according to the laws of supply and demand, as any first-year business major is taught. However, if one can artificially suppress the supply side, pricing can be kept at record high levels, especially when the supply is tightly held by just a few companies. We have witnessed exactly this type of price manipulation in the diamond industry for years. Despite, an overflowing supply of diamonds, mostly from one or two sources in Africa, only a pre-determined supply is introduced into the market every year to keep retail prices inflated. But the recent introduction of Russian diamonds into the market will soon disrupt the clever game plan. Sadly, we have the same situation in the oil industry, where oil companies, despite billions in record profits, refuse to build a single new refinery. More refineries equates to more oil on the market and lower prices at the pumps, and less profit in their pockets. It's a great scheme.
If one can artificially suppress the supply side, pricing can be kept at record high levels, especially when the supply is tightly held by just a few companies. We have witnessed exactly this type of price manipulation in the diamond industry for years.
Many companies like Ivanhoe and Hobson Secondary Oil have proven beyond any doubt that they can release vast quantities of crude oil trapped in rock formations as far as 12,000 feet below the suface with high-pressure steam injection. This technology alone would produce over a billion barrels of oil a year right here in the U.S.--eliminating transportation costs and dependency on foreign oil. Even the Chinese have demonstrated how to cost-effectively retrieve a barrel of oil from a ton of shale. And the Canadians are successfully producing over a million barrels of oil a day from their Alberta Oil Sands. There is plenty of oil, friends--the shortage is on the ethics and will to reduce profits and fuel taxes. Not surprisingly, where the governments administer the oil industry (Venezuela, Nigeria, and Kuwait, for example), the price of gas at the pump is less than fifty cents a gallon. This should speak volumes, but few American consumers are even listening--if they learn this information at all. Our collective ignorance of this oil scam is bliss to oil executives, but costing us all a fortune every time we fill up. It doesn't have to be this way, folks.
Our "oil problem" is not at all about oil--it is all about greed.
If our legislators really want to help "We the People," they would mandate the construction of two new refineries in America. When completed and operating, we could expect to see the price of gas go below $1 a gallon very quickly. But really, what oil company wants to make less money than more? And what politician wants to receive less campaign contributions than more, or have fewer tax dollars than more (from oil and gas sales) to pay for their many pork barrel projects? Indeed, our "oil problem" is not at all about oil--it is all about greed. We were first duped with invisible "weapons of mass destruction," and now it's the "critical oil shortage". Wake up America--we are all being violated for the profit of a few with a very sophisticated ruse.
Bruce A. Gorcyca, of Parma, Ohio, holds a BBA from Inter American University (Puerto Rico), and is a military veteran and former Fortune 500 marketing executive who currently works as a marketing and growth consultant.
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This story was published on August 30, 2006.