The US Government Should Do More

Who Controls The Oil Prices?

Hey folks,

Happy Monday to you. Now I'm not sure if you are as fortunate as I, and do not have to worry about getting back to normal until about January fifth, or if you are getting up and ready right now to head off, but remember, it is most likely a short week either way. {Smile}

So last Tuesday, I caught this. From John W. Rich.

John W. Rich, Jr. has been a leader in the energy sector for decades and he is the CEO of WMPI PTY, LLC in Gilberton, PA and UltraCleanFuels.com. For over a decade his company has been leading the drive to build a waste coal and biomass to diesel fuel industry in the United States. Rich is proposing utilizing new technology for the gasification of existing waste coal intermingled with traditional biomass feedstock to produce an abundant supply of domestic liquid transportation fuels that will displace the foreign oil we are importing at the rate of $1 billion per day.

He wrote the following.

John W. Rich, Jr: API Must Do More About OPEC Production Cuts

The American Petroleum Institute should do more to resist OPEC's manipulation of the price of oil, says John W. Rich, Jr., a leader in the domestic waste coal and biomass to diesel fuel effort.

"OPEC's decision to cut oil production again to raise the price of oil and gasoline is economic terrorism and amounts to a foreign imposed surprise tax for the Holidays for American families. It's time for the domestic oil industry to stand up for the American consumer and take action to resist OPEC's manipulation of the price of oil."

John Rich has previously called for a cap and trade policy on oil imports. The system would work like other cap and trade plans, whereby a cap is set, say at today's import levels, and incremental demand would be sourced from domestic alternatives or suppliers could trade production credits with other suppliers. Overtime, as alternative sources were increased, domestic production increased, or conservation increased, the cap could be pressed downward, further driving down demand and prices for imported foreign oil. This form of cap and trade system is already used to successfully control emissions of toxic and greenhouse gasses.

Now, what was my first thoughts on this when I read it?

1- This is a guy trying to make a buck with the domestic waste coal and biomass to diesel fuel concept.

2- He is using API and OPEC as straw man to accomplish this.

3- It is not API that has to do more. It is those in charge, or soon to be in charge of Government that need to do more. They need to first, assure that there will be no oppressive taxation, and completely unreachable goals, and unmeetable restrictions and limitations. Second, they need to reassure EVERYONE that there will be no reinstatement of the Drilling Ban. Third, it is the Government that are the ones standing in the way of our complete independence of foreign Oil. They have been for years.

But since he named them, I figured, why not ask. So I sent a quick Email to my friend over at API and here is her response.

It appears that Mr. Rich doesn’t understand API’s role. We represent about 400 oil-related companies in the United States and focus our efforts on domestic issues. Needless to say, we don’t have any influence over OPEC, its member countries, and its decisions. Also, as several economists have noted, the oil industry is a “price taker,” not a “price maker.” In other words, this industry has no influence over the global price of oil. The price is determined by market forces. As you probably noticed, the price oil actually fell below $40 a barrel a couple of days after OPEC announced the recent cuts. That fact flies in the face of Mr. Rich’s comment that OPEC is applying a holiday tax on oil prices.

{Laughing} Yeah, I have noticed that. Thank you Jane. It is kind of like OPEC, losing all this unreasonable profit to begin with, attempted to cut production to artificially inflate demand. However, as always, the Free Market STILL controls the pricing. The Free Market is what said $4.00 a gallon was the breaking point. It was the Free Market that says prices are going to stay down.

You see folks, this is the whole concept behind the Drill Here, Drill Now, Pay Less, movement. More domestic oil, less demand, lower prices. Just the talk of it, brought the price at the pump down. The Ban lifting brought them down even more. As long as the Government stays OUT of it, allows domestic drilling to take place, we will GUARANTEE low prices for you and me at the pump, pretty much forever. While we are doing this, by all means, let's look for alternatives to Oil and let's look at ways to further end our dependency on foreign Governments.

If our new Government, lead by Obama, Pelosi, and Reid, decide to reinstate the Ban, and decide to take us back to total dependency, then we will also go back to paying $4.00 plus a gallon. It really is that simple.

As for Mr. Rich? You Sir, have been working on this plan of yours for over a decade. You and your company has been leading the drive to build a waste coal and biomass to diesel fuel industry in the United States. You are proposing utilizing new technology for the gasification of existing waste coal intermingled with traditional biomass feedstock to produce an abundant supply of domestic liquid transportation fuels that will displace the foreign oil we are importing at the rate of $1 billion per day. That all sounds impressive. Very impressive. But one question to you. What have you actually accomplished? What have you actually achieved? Ten plus years? Is it perfected? Could we go with your plan tomorrow and replace those $1 billion dollars per day worth of foreign Oil? How much cheaper will your plan be? Amount some facts?

No folks, we need to stick to what we KNOW works, while we work on pipe dreams, until those pipe dreams become reality. It really is just that simple.
Peter

Sources:
John W Rich, Jr.
API- Website
American Solutions - Website