Is there really a worldwide shortage of crude oil? Lots of publicity would convince the American people that there is and that the shortage is responsible for the steep increase in the price of gasoline. China’s industrial juggernaut, India’s increased usage plus America’s prodigious consumption are said to be creating a major deficiency.
Self styled experts have popped up all over the place predicting dire shortfalls of crude oil that will force the barrel price to $100 or more. Automobile manufacturers are producing fuel efficient cars, ethanol is being added to gasoline, and even a few scooters are appearing on our streets.
The oil industry is esoteric, probably on purpose. In America the Rockefellers still control the Seven Sisters which are the remnants of the lucrative government break up of the Standard Oil Trust in 1911. More recently, a small item appeared in the Washington Times indicating that following Putin’s arrest of Yukos President Mikhail Khodorkovsky, Jacob Rothschild of the English Rothschilds was the recipient of voting rights on $13.5 billion in stock in Yukos, a Russian oil giant. Henry Kissinger reportedly accompanied Lord Rothschild on his visit to Putin. It turned out that Jacob Rothschild and Mikhail Khodorkovsky have been close friends for a long time.
Large owners of oil companies are sometimes also major forces in world banking.
Rockefeller got his start by secretly buying up his competition and cutting his delivery costs by controlling the railroads. Oil Barrons have been known to try to restrict the supply of the product in order to increase its price. Foundations controlled by the oil rich have offered financial assistance to environmental groups that have been responsible for nixing refinery and oil drilling efforts that might add to the supply of crude oil.
Republican Congressman James Sexton of New Jersey, Chairman of the Joint Economic Committee, in a 2005 study entitled “OPEC and the High Price of Oil” writes,
“Oil exists on earth in different forms and in enormous quantity. The Energy Information Administration (EIA) estimates the world’s recoverable conventional oil endowment at 3.3 trillion barrels, i.e., liquid oil in underground reservoirs, of which only 950 billion barrels have been removed in 145 years of production as of 2004. Annual oil consumption in 2004 was 30 billion barrels. At that rate the remaining conventional oil would last another 78 years. In addition, there are more than 4 trillion barrels of oil in the form of so-called oil sands an extra heavy oil, and at least another 2.6 trillion barrels in the form of oil shale.“
Granted it will take time to set up facilities to extract all of it but the oil is available and peak oil is a myth. Not only is peak oil a myth but neither is there a shortage. In the face of rising demand OPEC has held production quantities at the same levels for the past thirty years thus curtailing quantities immediately available to what is being immediately used. As the price has gone up their revenues have more than doubled.
Oil does not need to be so expensive. The cost of producing a barrel of oil is tiny compared with the current price. In the Middle East oil is produced at cost between $1 and $6 a barrel.
OPEC is a cartel that meets periodically to manipulate production in order to get the maximum revenue for a commodity which they have in abundance; they control about 70 percent (another estimate) of known liquid reserves. Crude oil is not sold in a free market but in a tightly controlled market. The transfer of wealth from American consumers to the OPEC countries since the 1973 embargo was estimated in a 2003 Economist article at more than a trillion dollars.
The selling price of a barrel of oil has been unhitched from its cost of production, it is determined by the commodities market and is subject to manipulation by buyers with large sums of money who can inflate by purchasing futures at higher and higher prices. Even OPEC members themselves can buy futures and inflate the price. Current prices are being sustained by the infusion of huge sums of money.
Estimates of oil reserves vary according to the estimator. One source estimated liquid oil reserves at 645 billion barrels but today in spite of the billions of barrels consumed in the interim, the estimate is at 1.278 trillion. New sources of oil are constantly being found and the price continues to make more of them viable. Estimates at one particular time are just that, estimates, subject to very substantial error, always, it seems, on the minus side.
According to the EIA’s current assessment of conventional liquid oil at the 2004 consumption rate of 30 billion barrels, available oil will last the world for 78 years. Since the market has now pushed the price of oil to over $75 per barrel the oil sands of Canada with a $25 a barrel price tag, come on line with exceptional profit potential adding 174 billion barrels of reserves. In 2006 Canada’s oil sands will produce between a million and a million and a half barrels of oil. This rate of production is scheduled to more than double in the next decade. It is estimated that Canada has a potential non liquid resource base of up to 7 trillion barrels.
There are economic considerations involved in extracting all of the available crude oil and often these considerations leave large quantities of reserves out of the total figures. At current prices all of these huge reserves would appear to be viable.
Congressman Sexton’s 2005 study places the majority of the blame for high oil prices on the OPEC cartel.
I believe it is more complicated.
As the U. S. dollar looses value through inflation by the Federal Reserve, the dollars that buy oil from the OPEC cartel buy less. In 1983 when the price of oil was in the $35 range OPEC received $572 billion in real revenue. From about 1987 till almost 2000 with a short exception, the price of oil stayed low and OPEC’s real revenues were between $100 and $200 billion. Since 2000 the price of oil has consistently risen to over $70 and even at that price real revenues to OPEC, though huge, are still lower than the $572 billion received in 1983. The consistent inflating of the dollar results in a steady increase in the price of imported goods.
Since the refiners apparently peg the percentage price increase of gasoline to the percentage price increase of a barrel of oil, they benefit in direct proportion to the oil producers.
America is the financial engine behind the new world order and our government is in constant need of huge sums of money to finance the war in the Middle East. When the price of oil goes up the Arab Sheiks have more money to invest in U. S. Bonds allowing the Federal Reserve, through the magic of fractional reserve banking, to increase the amount of available credit up to twenty times.
Several groups benefit from high oil prices: OPEC is enriched, refiners become wealthy, international bankers add to their largess, and the United States Government secures more of the elixir that allows them to continue their binge.
Is there a down side? Yes, you guessed it – it is mostly paid for by American consumers. The investment of OPEC excess profits in U. S. Bonds amounts to a hidden tax on the American consumer.
There is even a vicious circle involved. When Joe Smith fills his automobile with $3.00 gasoline at his local service station up to 10% of the cost may go to government, both Federal and local. The service station owner may get a profit of 3% or less. The balance of the money goes to the refiner who also gets rent on the station itself. The steep new profits enjoyed by the refiners produce dividends on the stock which is largely held by owners who are often bankers. Much of the increased revenue going to OPEC being paid by the refiners is used to buy U.S. bonds.
Notice that the only double dipping in this lucrative soup is being done by the International Bankers!
No, gentle reader, I do not believe there is any shortage of crude oil nor do I believe we have hit peak oil. What we are experiencing is a siphoning of the power of wealth to be used to enslave us.
“Rest in the Lord and wait patiently for Him; do not fret because of him who prospers in his way, because of the man who carries out wicked schemes. Cease from anger and forsake wrath; do not fret, it leads only to evil doing. For evil doers will be cut off, but those who wait on the Lord, they will inherit the land. Yet a little while and the wicked will be no more; and you will look carefully for his place, and he will not be there. But the humble will inherit the land, and will delight themselves in abundant prosperity.”
Psalm 37:7-11
“Published originally at EtherZone.com : republication allowed with this notice and hyperlink intact.”