Oil prices are reaching $150 per barrel with no end in sight. Why is this occurring, and who is responsible. In response, many are considering alternative fuel sources, including Water.
With gas prices rising and gas consumption in the USA dropping, one would expect that prices would stabilize and eventually drop. Yet this is not the case.
In an efficient market, the forces of Supply and Demand would lead to equilibrium rather quickly. Let's take a look at the market to see if we can determine who controls oil prices.
Looking first at the Supply side, the growing disparity between the production of oil and the growth in new sources of oil has been on the rise since 1980. It was in that year that we realized that our resource of oil is finite. Economists predict that until a global equilibrium is reached, oil prices will continue to rise. In addition, the instability in West Africa and the violence in the Middle East have resulted in a reduction in oil exports.
Looking at the Demand side, the increasing consumption of oil by emerging industrial countries is a significant factor. The two fastest growing consumers of oil are India and China. Rapid urbanization, industrial growth, and the rising standard of living have all contributed to soaring energy needs. Over the last decade, China has doubled its oil consumption. At the current annual consumption rate of 8%, China's oil consumption will double again in less than a decade.
Transportation accounts the largest share of oil consumption, reflecting the growing rate of vehicle ownership. China and India are experiencing rapid growth in vehicle ownership which now accounts for 75% of total oil consumption. This compares to the USA at 70% consumption by vehicles.
Also, as world population increases, so will the demand for oil. Production per capita peaked in 1979 when population growth exceeded oil production. Since then it has been declining. World population in 2030 is expected to be double that of 1980.
Given the above, who controls gas prices? Is it OPEC by limiting oil exports? Is it the large integrated oil companies making huge profits, such as Exxon Mobil and ConocoPhillips? Or maybe the distribution sector, including refiners and gas stations.
The answer given by many regarding who controls gas prices is the large integrated oil companies. Few are aware that these companies sell to the highest bidder, and buy back oil for their refineries from the lowest cost supplier.
The control of gas prices today is clearly with the Institutional Investor, who sets the spot price for oil. Michael Masters, a Hedge Fund manager, recently testified (in May 2008) before Congress. He stated that "What we are experiencing is a demand shock coming from a new category of participant in the commodities futures markets: Institutional Investors...". However, what is often cited in the media is the rise in oil prices over the last five years is due to the explosive demand of both China and India. Little is mentioned about the Index Speculators whose demand for oil in the spot market over the same period has equaled that of China.
OPEC's Secretary General Abdullah al-Badri provided statistics in June 2008 that showed rampant speculation in the oil-related financial markets. According to al-Badri, the "paper market" for oil equals nearly 1.36 billion barrels daily, or about 15 times the 87 million barrels daily of current world consumption.
Institutional Investors face very little oversight regulation with regard to manipulating the spot price of oil. As a result, they truly do control its price.
So, what can we do about it? Short of waiting for Congress to implement legislation, or the Chairman of the SEC to take action, we can take action and effectively be the one who controls gas prices. How? We can effectively control prices by dramatically improving the gas mileage of our cars and trucks.
The automakers, specifically GM, are taking steps to introduce EV (electric) cars with a small engine to recharge the batteries. Such vehicles will average over 150 mpg and dramatically reduce maintenance. GM hopes to introduce its EV car, the Volt, in 2010.
There is also the Hydrogen Fuel Cell car, which is at least a decade away (I don't hold much promise for this design).
And, there is the current Hybrid car which augments the engine with electric motors. By 2010, advances in battery technology will enable the car to run on electric power only for up to 40 miles before the gasoline engine kicks in. They will also be pluggable, which means that the batteries can be recharged from an ordinary a/c outlet.
However, with today's technology there is an inexpensive alternative that can increase the mileage of your existing vehicle. It would be like running your car on Water, and the improvement to gas mileage could exceed 50%. The cost is low and the installation is relatively simple.
The system improves gas mileage by capturing wasted energy from the engine and then reintroducing it to the engine as needed. This is same approach that Hybrid car technology applies. Wasted energy occurs when the engine is idling, usually when the vehicle is at a standstill or when it is coasting down a hill. The system captures the wasted energy by converting water to a highly combustible gas, oxyhydrogen (HHO) through electrolysis. It's like running your car on Water.
With gas prices rising and gas consumption in the USA dropping, one would expect that prices would stabilize and eventually drop. Yet this is not the case.
In an efficient market, the forces of Supply and Demand would lead to equilibrium rather quickly. Let's take a look at the market to see if we can determine who controls oil prices.
Looking first at the Supply side, the growing disparity between the production of oil and the growth in new sources of oil has been on the rise since 1980. It was in that year that we realized that our resource of oil is finite. Economists predict that until a global equilibrium is reached, oil prices will continue to rise. In addition, the instability in West Africa and the violence in the Middle East have resulted in a reduction in oil exports.
Looking at the Demand side, the increasing consumption of oil by emerging industrial countries is a significant factor. The two fastest growing consumers of oil are India and China. Rapid urbanization, industrial growth, and the rising standard of living have all contributed to soaring energy needs. Over the last decade, China has doubled its oil consumption. At the current annual consumption rate of 8%, China's oil consumption will double again in less than a decade.
Transportation accounts the largest share of oil consumption, reflecting the growing rate of vehicle ownership. China and India are experiencing rapid growth in vehicle ownership which now accounts for 75% of total oil consumption. This compares to the USA at 70% consumption by vehicles.
Also, as world population increases, so will the demand for oil. Production per capita peaked in 1979 when population growth exceeded oil production. Since then it has been declining. World population in 2030 is expected to be double that of 1980.
Given the above, who controls gas prices? Is it OPEC by limiting oil exports? Is it the large integrated oil companies making huge profits, such as Exxon Mobil and ConocoPhillips? Or maybe the distribution sector, including refiners and gas stations.
The answer given by many regarding who controls gas prices is the large integrated oil companies. Few are aware that these companies sell to the highest bidder, and buy back oil for their refineries from the lowest cost supplier.
The control of gas prices today is clearly with the Institutional Investor, who sets the spot price for oil. Michael Masters, a Hedge Fund manager, recently testified (in May 2008) before Congress. He stated that "What we are experiencing is a demand shock coming from a new category of participant in the commodities futures markets: Institutional Investors...". However, what is often cited in the media is the rise in oil prices over the last five years is due to the explosive demand of both China and India. Little is mentioned about the Index Speculators whose demand for oil in the spot market over the same period has equaled that of China.
OPEC's Secretary General Abdullah al-Badri provided statistics in June 2008 that showed rampant speculation in the oil-related financial markets. According to al-Badri, the "paper market" for oil equals nearly 1.36 billion barrels daily, or about 15 times the 87 million barrels daily of current world consumption.
Institutional Investors face very little oversight regulation with regard to manipulating the spot price of oil. As a result, they truly do control its price.
So, what can we do about it? Short of waiting for Congress to implement legislation, or the Chairman of the SEC to take action, we can take action and effectively be the one who controls gas prices. How? We can effectively control prices by dramatically improving the gas mileage of our cars and trucks.
The automakers, specifically GM, are taking steps to introduce EV (electric) cars with a small engine to recharge the batteries. Such vehicles will average over 150 mpg and dramatically reduce maintenance. GM hopes to introduce its EV car, the Volt, in 2010.
There is also the Hydrogen Fuel Cell car, which is at least a decade away (I don't hold much promise for this design).
And, there is the current Hybrid car which augments the engine with electric motors. By 2010, advances in battery technology will enable the car to run on electric power only for up to 40 miles before the gasoline engine kicks in. They will also be pluggable, which means that the batteries can be recharged from an ordinary a/c outlet.
However, with today's technology there is an inexpensive alternative that can increase the mileage of your existing vehicle. It would be like running your car on Water, and the improvement to gas mileage could exceed 50%. The cost is low and the installation is relatively simple.
The system improves gas mileage by capturing wasted energy from the engine and then reintroducing it to the engine as needed. This is same approach that Hybrid car technology applies. Wasted energy occurs when the engine is idling, usually when the vehicle is at a standstill or when it is coasting down a hill. The system captures the wasted energy by converting water to a highly combustible gas, oxyhydrogen (HHO) through electrolysis. It's like running your car on Water.
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Fight back against the oil companies. A simple inexpensive system will show HOW TO RUN YOUR CAR ON WATER
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