Tuesday, December 30, 2014

Saudis Might Push Oil Price Even Lower

Saudi Arabia’s oil minister, Ali al-Naimi, said recently it was “not in the interest of OPEC producers to cut their production, whatever the price is...”

Naimi also said the Saudis might even raise their output to improve their market share (which would also lower prices further). "The best thing for everybody," he says, "is to let the most efficient producers produce..."

What exactly does he mean? Olivier Jakob, an oil analyst at Petromatrix Oil in Switzerland, spells it out in plain English. Jakob writes: the OPEC oil ministers “basically want oil prices to move lower to reduce production in the U.S.” There it is.

That's what monopolies do. If a monopoly can produce a commodity or product cheaper than anyone else (and Saudi Arabia has the cheapest oil in the world to produce — and also the most oil), their best bet in the long run, if they can get away with it, is to drop the price so low it puts all the competition out of business.

Oil prices are low and getting lower, and that's great. It will boost the U.S. economy while it lasts. If the Saudis get their way, eventually most of its competition will be dead and they can go back to gouging the world. The only way to get our economy off their roller coaster is robust fuel competition. It can be done now, and when they raise their prices again, our economy will keep humming. Let's hope enough of us see the wisdom to keep pursuing it while oil prices are low.

Saturday, August 9, 2014

Roundtable Discussion of Fuel Competition in America

On the 40th anniversary of the oil embargo, the U.S. Energy Security Council held a roundtable discussion, which was broadcast live on C-SPAN. You'll find a link to the video below.

This is a roundtable discussion by a collection of the top energy policy and security experts in the world, including John Hofmeister, the former president of Shell, Gal Luft, Anne Korin, Frank Gaffney, Robert "Bud" McFarlane, the former national security adviser to Ronald Reagan, James Woolsey, the former CIA Director, Joe Cannon of the Fuel Freedom Foundation, leaders from China and Venezuela, and even a couple of rocket scientists. Here is the video:

Roundtable discussion (1 hour, 48 minutes): http://www.c-spanvideo.org/program/315644-2

Saturday, July 19, 2014

A Monopoly Endangers Consumers

The following was an email message from Fuel Freedom Foundation. If you'd like to sign up for their emails, click here.

Nobel Prize-winning economist Milton Friedman said that “the great danger to the consumer is the monopoly.” True to his famous words, consumers are once again threatened by the oil monopoly and actions forced by its chokehold on our transportation.

One underreported factor contributing to unseasonably early, skyrocketing gas prices is oil companies abandoning their refinery operations to feed their drilling and exploration divisions. This development has alarming consequences for our economy and we have little power to respond to this issue as long as viable replacement fuels are barred from competing on an equal footing with oil.

Refinery closings lead to the immediate loss of direct and indirect jobs in the local economy.

Refinery closings in Hawaii and New Jersey are causing residents of those states to increasingly rely on imported gasoline and other refined petroleum products to meet demand.

Higher gasoline prices, as a result of tighter supplies, tax the already overburdened budgets of working Americans.

Since most food and consumer retail goods are transported throughout the country, higher gasoline prices increase inflationary pressure on the price of these items.

Friedman also said, "The most important single central fact about a free market is that no exchange takes place unless both parties benefit." Surely, companies should be permitted to do what they can to succeed, but in a monopoly, the absence of free-market forces means that one side benefits all the time while the rest of the economy always loses. As long as the oil monopoly stays intact, the consumer and the economy at large will be put in danger by every action the oil industry takes.

Let’s bust this trust, once and for all, with replacement fuels. Ethanol, methanol, natural gas and electric vehicles will create a free market for transportation fuels and save us from the predatory pricings of big oil.

To find out what you can do to help, click here.

Tuesday, April 29, 2014

The Accidental Discovery of Atmospheric Lead Poisoning

Episode 7 of the new Cosmos series (watch it here: The Clean Room) was about a scientist, Clair Patterson, researching the decay of uranium and lead in pieces of a meteorite. In the process, he accidentally discovered that our atmosphere had far more lead in it than it did two hundred years ago.

Patterson tracked down the source of this atmospheric lead to leaded gasoline. Until 1987, lead was added to gasoline to prevent "knocking."

Unfortunately, the oil industry was funding Patterson's research, and, needless to say, they didn't like it. Patterson made a major discovery, but it was another 20 years before lead was made illegal as a fuel additive. The oil industry had already paid a highly credentialed scientist to testify with assurance that the amount of lead in the atmosphere was completely natural. Patterson's work showed it was not.

This Cosmos episode was a surprising place to learn about the reach and power of oil money, and the oil industry's determination to maintain its monopoly at all costs.

Read more:

Thursday, April 3, 2014

The Village Hub

Villager tapping a sugar palm.
We thought you might find this invention as interesting and inspiring as we did. The "Village Hub" is a mini factory that can completely change the well-being of local villages in Indonesia. It is all based on the sugar palm. First, villagers tap the juice from a living palm tree, just like getting maple syrup from a maple tree. So it doesn't kill the tree. The sugar palms are growing in a biodiverse forest rather than on a monoculture farm. The trees don't need any fertilizer.

The juice is brought to the Village Hub, which is a system of interconnected small facilities in one central location. The Village Hub turns the juice into two products: ethanol to use locally as fuel, and syrup to sell.

Many of these rural areas often experience fuel supply difficulties, so this ethanol production is important. They also use the ethanol for bright light (using a Coleman-lantern-like lamp) and for clean cooking fuel.

Fermentation of ethanol produces carbon dioxide, which is captured in the Village Hub and fed into an algae pond (when carbon dioxide is added to algae, it grows a lot faster). The algae is then harvested and used as a high-protein feed for cattle and goats.

The manure from the animals goes into a small biogas installation, which produces methane that they use as fuel to create heat for the ethanol distillation. The leftover from the biogas installation is used as fertilizer to grow crops.

The other product the Village Hub produces is palm syrup. The palm juice is heated to evaporate some of the water, and that steam is used to preheat the juice before it goes into the evaporator (making the process use less overall fuel) and the contact between the steam and the cool juice produces condensation, which is collected and made available as clean drinking water.

The whole Village Hub unit is compact and transportable, and could change the lives of millions of Indonesians. Everyone involved with the Village Hub earns more money, so they can afford to send their children to school.

If you'd like to see a Village Hub in action, watch this YouTube video: Village Hub.

Friday, February 28, 2014

What We Are Proposing

Our purpose here is to create fuel competition in America, so when you fill up your car with fuel, you will have at least two options besides petroleum.

Because your car will be warranted to burn multiple fuels, you'll be able to choose what fuel you want to buy today. Will it be gasoline? Ethanol from the local waste-management facility? Ethanol from corn? Methanol from agricultural waste? Methanol from natural gas? You will be able to choose. You will be able to decide where your fuel dollars go. And because these fuels will have to compete with each other, fuel prices will come down. You will pay less at the pump.

Our purpose is to break the oil monopoly and introduce a free market in transportation fuels. The way to accomplish this is to make the cars themselves platforms upon which fuels can compete. This requires only a small tweak to the cars themselves because internal combustion engines burn methanol and ethanol very well.

There are many things you can do to help make this happen. The very first thing you can do is stop contributing to the oil monopoly. What we are proposing is that you immediately install a conversion kit in your car if it is not already an FFV (flex-fuel vehicle) so you can use E85 (85% ethanol) for fuel, and we urge you to spend all of your fuel dollars on E85 instead of gasoline from now on, or until an even better alternative fuel comes along. See a list of conversion kits available here. Some are EPA approved and some are not. The conversion kit page explains more about that.

And we urge you to convince all your friends and family to do the same: Convert their gas-only cars to flex fuel cars and then buy E85.

Our first move toward fuel competition is for each of us to use all our fuel dollars to strengthen the ethanol industry so it becomes the thin edge of a big wedge with which we can force open the fuel market into greater and greater fuel competition.

The problem we face is not "oil addiction." The problem is that oil has a virtual monopoly over transportation fuel. The solution is fuel competition.

The reason we are suggesting the exclusive use of E85 is that it's the only alternative fuel widely available that can be used in the cars we already own. But that's just the beginning. We can go much further to create robust fuel competition in America.

And fuel competition will change the world.

America consumes more oil than any other country, so what Americans do will have an impact on the car and fuel industries throughout the world. By creating vigorous fuel competition here, we will strip oil of its strategic status, which will have massive positive repercussions for national and international security. And it will benefit the economy of America and create millions of high-paying jobs.

Because fuel competition will reduce the excessive money flowing to repressive regimes, it will help to create freedom for millions of oppressed people, especially women, who have very limited human rights and very little freedom in many of the richest oil-producing nations like Saudi Arabia and Iran.

Fuel competition will cause more food to be grown around the world as millions of acres that now lie fallow will be fruitful again. And in developing nations, there will be rising opportunities to grow fuel crops for an energy-hungry world, boosting local and rural economies worldwide.

America's national security and economic vitality have been tied to oil for a hundred years. Since 1973, OPEC has used its illegal cartel to control our economy. Fuel competition will permanently free us from their control.

We don't have to wait for "the people in charge" to solve this problem. It can be solved by the individual choices of each driver. When you go to the fuel station, you make the choice to either maintain the monopoly or help create fuel competition. You get to choose what your money will support. You are literally choosing to fund tyranny or freedom. And since fuel is expensive, your personal choice makes a difference. You personally spend a lot of money on fuel, and when you buy ethanol rather than gasoline you are simultaneously cutting off money to one industry and boosting the other.

If you're ready to fill your tank with freedom, start by getting a conversion kit for your car if it's not already an FFV. Click here to find out what kits are available. Click here to find out if the car you own is an FFV.

Then fill up with E85 from now on. Click here to find E85 stations near you. If there isn't an ethanol pump close by, persuade your local gas station to carry it. Find out more about how to do that here.

Subscribe to this blog (in the upper right sidebar) and send our posts to your friends and family, talk to them about what you're doing and why, and convince them to start choosing fuel competition. Always bring the conversation back to competition. Anyone can see that fuel competition is better than a fuel monopoly. And click here to like us on Facebook, and share our posts. Or here on Google+.

When an Open Fuel Standard is proposed in Congress, urge your Members of Congress to vote that bill into law. We need fuel competition to commence as soon as possible because we are hemorrhaging our wealth quickly and dangerous regimes are growing in financial power. Sooner is better than later.

Monday, February 24, 2014

The Chinese Want to Eat More Pork

Many criticize the ethanol industry in America. We shouldn't be turning corn into fuel, they say, because there are hungry people in the world. It is an admirable sentiment, but it doesn't take into account how the market works. When American farmers grow corn, they sell it to somebody. One of the markets they sell it to is growing: China.

As more people in China have more money to spend, one of the things they want to spend it on is pork. So the demand for pork is rising. And with it, the demand for feed is rising. Specifically, the demand for corn. I keep coming across news stories with titles like these:

China’s Corn Imports May Top 10 Million Tons
China’s Taste for Pork Continues to Grow
China’s Hunger for Pork to Boost Corn Demand

To quote from the third article: “Rather than becoming more dependent on imported meat, Mr. Urlich expects China will favour purchasing more feed grains. This should lead to a greater reliance on imported corn for the growing livestock and poultry sector."

Those who say we should not use “food” to make fuel may not mean to say it, but what they’re unwittingly proposing is something like this: “We should forget about energy independence, national security, and economic vitality so people in China can eat more pork.”

In other words, the “food versus fuel” argument means we should not use our land to grow feedstocks to make fuel, but instead we should use it to grow corn and export it to China because they really like pork.

I think if most Americans were given the choice, we would choose to give up our addiction to oil, and leave it to China to work out their pork addiction problem themselves.

I’d like to clarify that. We are not addicted to oil. We are the victims of an illegal transportation fuel monopoly. The moment we have access to a better fuel, we will drop oil like a hot rock. The oil companies want us to stick with oil, but American drivers would love to be free of oil’s fuel monopoly and the high prices, high pollution, and high level of terrorist threat it causes.

Given how small the yield is for corn, especially compared to using algae, the criticism about corn is now moot. But many people bring it up, and the facts about China's pork feed should be added to the discussion. Read more about algae's yields here: Ethanol For $1 a Gallon Using Unfarmable Land and Undrinkable Water.

- Excerpted from the book, Fill Your Tank With Freedom

Saturday, February 8, 2014

Who Needs High Oil Prices?

Click on the image to see it larger.

This chart shows what oil prices are necessary to sustain different types of crude production. So, for instance, countries in the Middle East and North Africa can keep pumping out oil at a profit even when prices drop to $30 a barrel.

It's a different story in the United States, however. Production of "light tight oil," like that in North Dakota and Texas, typically requires higher prices (between $50 a barrel and $100 a barrel).

The flip side, however, is that many OPEC countries need high prices to sustain the social spending they've ramped up in recent years. By some estimates, Saudi Arabia needs oil prices to stay at about $82 a barrel to maintain its current budget. Iraq needs prices around $104 per barrel. Russia's "break-even" point might be even higher. So there are a lot of nations that would actually prefer to keep prices high.

The above is excerpted from an article in the Washington Post entitled, How the Oil Boom Could Change U.S. Foreign Policy.

Friday, February 7, 2014

9 Myths About Fracking

The following list is adapted from Phelim McAleer's Ten Big Fat Lies About Fracking. McAleer is an Irish filmmaker based in America whose pro-fracking movie FrackNation is described by the New York Times as "meticulously researched and provocative."

Fracking has gotten a lot of bad press, of course. But like everything else, there is another side to the story that should be included in our thinking about it. As we've already seen (here), at least some of the bad press has been generated by an OPEC nation with a good reason to stop American fracking (their own self-interest). Anyway, read the list and follow the links and let us know what you think. Here is the fracking myths list:

1. Everyone hates fracking.

From news coverage, you would think that everyone in America hates fracking. Even the name sounds awful. Who could support such a terrible practice?

Well, it turns out that just about everyone who lives with it loves it.

Dimock, Pennsylvania is one place where all journalists reported that everyone hates fracking. Yes, there were 11 families in the village involved in a very lucrative lawsuit with an oil-and-gas company, and the journalists always interviewed them. But they completely ignored a petition signed by 1,500 people in the community who said their water was fine and had not been affected by fracking. What is 11 out of 1,500? Less than 1%. It’s the 99% who support fracking.

There is one other group that is opposed to fracking in Pennsylvania — the New York elite. This coalition of grumpy hipsters and celebrities have holiday homes in Pennsylvania, or they’re concerned that if a new industry brings wealth and progress to Pennsylvania then the "traditional" (read poor) way of life there will be destroyed.

So once or twice a year, the likes of Mark Ruffalo, Susan Sarandon and Yoko Ono get bussed in from the city to meet disgruntled locals, and then are chauffeured back to their gas-heated homes after another day of successfully blocking natural-gas development.

If you want proof positive that communities love fracking, look no further than the ballot box. Consider this U.S. Businessweek report on the 2012 election: "Anti-fracking candidates in the Southern Tier [New York] were beaten up and down the ballot after intense campaigns, some of which were framed as referendums on shale-gas development."

At least 20 anti-fracking candidates were rejected by New York voters (New York is supposed to be the heartland of anti-fracking sentiment). But hey, keep protesting, fracktivists — after all, democracy is for the little people, and you can walk all over them on your way to your next starry TV interview about the ‘evils’ of fracking.

2. Fracking is brand new and untested.

Pop quiz: how long has fracking been around? Here are your choices:

a) Since 2010
b) Since 1990
c) Since 1975
d) Since 1960

Sorry, you’re wrong. Trick question. The first fracked well was in 1947! And more than one million wells have been fracked in the U.S. since then (2.5 million worldwide). In terms of industrial processes, it doesn’t get much older or more thoroughly tested than fracking.

3. Fracking makes your water flammable.

No myth about fracking is more widely believed than this one. It was popularized by Josh Fox in his HBO-funded documentary, Gasland. In it he shows a man who can light his tap water on fire, supposedly because of fracking.

I asked Josh about reports that some people could light their water before fracking occurred. He didn’t like this question.

He eventually admitted that he knew people could light their tap water on fire decades before fracking ever started but chose not to include this fact in his documentary because "it wasn’t relevant."

There are three places in the U.S. called "Burning Springs," and there are historical records of people lighting their water since the 1600s.

4. Fracking contaminates drinking water.

If fracking doesn’t make your water flammable, it must at least contaminate it with dangerous chemicals, right?

Not according to Lisa Jackson, the former head of the U.S. Environmental Protection Agency (EPA) and no friend to big business. She testified before Congress that there have been zero proven cases of water contamination due to fracking.

That’s right — one million fracked wells later, there are no examples of contaminated water anywhere. Zero.

5. Fracking uses a lot of dangerous chemicals.

Standard fracking fluid is 98.5% water, 1% sand, and 0.5% chemical additives. Some of these additives are also used in making ice cream! Colorado’s Democratic governor, John Hickenlooper, drank fracking fluid to prove its safety to his local residents.

But these are still chemicals and we should be scared of them — that is the cry of the fracktivists. But water is a chemical. Coffee has a whole bunch of chemicals in it. Everything is a chemical. Don’t be duped by bad science (like the people these American comedians convinced to ban the scary sounding "dihydrogen monoxide").

And fracking is still developing. It is being made even safer. Read about some new developments here, here and here.

6. Fracking causes breast cancer.

In his short film, The Sky is Pink, Josh Fox claimed that a spike in breast cancer in Texas was a result of fracking. Turns out he was wrong. Again. (Seems like a theme for Josh.)

The Associated Press interviewed leading cancer researchers who all concluded: There was no spike.

Did Fox apologize for scaring women and families? No. He’s an environmental activist. The media don’t ask him difficult questions or demand that he clears the record. Less than a year later, HBO released Gasland Part 2, Fox’s sequel about the dangers of fracking. There was no mention of breast cancer in it, and he has never withdrawn his original claim. This is the anti-fracking playbook. Scare people, get media attention. And when the science comes in debunking the scare story, move on to the next scare story.

7. Fracking uses a lot of water.

Even fracking fans have a hard time swallowing the water stats for fracked wells: The EPA estimates that fracking used between 70 and 140 billion gallons of water in 2011. That sounds like a lot of H2O. Unless you have a lawn.

Americans use 20 times more water on their lawns than they do on fracking.

Besides that, one of the developments in fracking is waterless fracking, also called "gas fracking." It actually gets a better yield than using water. Read more about that here.

8. Fracking should be banned because it causes earthquakes.

One of the scarier arguments against fracking is that it causes earthquakes, especially if you live in a tectonically charged U.S. state, like I do. Yet all activity under the ground affects the earth, and if you don’t like this fact then you should also campaign to ban supposedly ecofriendly hydropower, which actually has caused earthquakes.

But the biggest cause of man-made earthquakes is a very popular power source: geothermal. It seems that some earthquakes are more equal than others.

9. Fracking destroys the landscape and disturbs the serene vistas of rural America.

The process of fracking (which is separate from drilling) is noisy and looks messy — for a few days. Then the land is reclaimed and the industry moves on to the next area. All the scary photos of huge machinery and big trucks are taken during this initial process. Which is a bit like photographing the building site of a half-built house and saying all house-building should be banned. As a filmmaker, my biggest problem was trying to film working gas wells in a way that would look interesting. They are tiny and often hidden behind hills or behind bushes and trees.

Oh, and fracking does create traffic. That claim is true. Locals call this "jobs." They generally like it. They may complain sometimes but they know that the only thing worse than traffic in rural America is no traffic.

The list above was adapted from an article by Phelim McAleer. Read the original here: Ten Big Fat Lies About Fracking. Read more about his film here: FrackNation.

Wednesday, February 5, 2014

How Oil Industry Doublespeak has Influenced the Media

What's with the strange language writers are using to describe what OPEC is doing? In most articles, they describe OPEC's influence on the oil market as "stabilizing prices." I feel as if I've been dropped into the Stalinist Soviet Union where the title of everything meant the opposite of what it really was.

In an article by Sami Alnuaim, for example, he writes, "The observer of what is happening in some OPEC countries finds some undesired voices that question the successful, wise and balanced OPEC strategy which — in my opinion — was the main reason for the unprecedented oil prices stability in the global oil markets in the last few years."

Okay, he is a Saudi obviously defending Saudi Arabia's commitment to keep world oil prices high (which allows them to make maximum profit on their oil and not use it up too fast). But what about the rest of the writers on the oil market? What could they be thinking? In an article in Gulf Times, the author describes Saudi Arabia's heroic efforts: They are "willing" to increase production to "steady the market." How nice of them. World oil prices are high because of Saudi Arabia's leadership within OPEC (an illegal price-fixing cartel that has gouged the world for 40 years). And because some oil production in other OPEC nations temporarily dropped, Saudi Arabia "came to the rescue" to sell more of its oil.

In other words, the Saudis could have been producing more oil all along, but they haven't because they want the world's oil price to remain high. So the entire world has been paying extra for a product that the Saudis are making deliberately scarce, and now the Saudis are heroes for selling some extra oil at top dollar? This is doublespeak at its finest.

In an article in Trend, OPEC Secretary General Abdalla El-Badri is quoted as saying, "The Organization is making sure its consumer's needs are met. At the same time, spare capacity remains at comfortable levels. And we see these comfortable levels remaining for the foreseeable future." Comfortable levels of spare capacity? The Energy Information Administration says that in September and October 2013, "OPEC pumped an average of about 2.3 million barrels a day below its capabilities..." And that doesn't even count the oil fields they have deliberately left undeveloped.

El-Badri also was quoted as saying, "It is important that prices do not witness extremes — neither too high nor too low."

Yes, God forbid we have low oil prices. The whole world might experience an economic boom!

Okay, so these people might be excused because they're in favor of high oil prices. They benefit from them, of course, and need some way to justify it. But what about the language from this article in Business Week: "OPEC may have to reduce crude output next year (2014) amid increasing supply from producers outside the group..."

What an odd thing to say. Or what? The price of oil will come down! I want to grab the author by the lapel and yell, "Whose side are you on?!"

What about this one from Bloomberg? "Analysts at banks including BNP Paribas SA, Citigroup Inc. and Deutsche Bank AG predict that some members of OPEC, notably Saudi Arabia, will probably need to reduce output in 2014 to prevent a global glut."

A global glut? What a strange way to put that. Oh my God! Cheap fuel prices! Further in the same Bloomberg article is this little gem from Michael Lewis, head of commodities research at Deutsche Bank in London, saying: “Downside risks to the oil price may require OPEC to cut production to defend oil prices.”

Defend oil prices? I might expect that kind of language from someone rooting for OPEC. But from Deutsche Bank of London?

This perspective is common in writers all over the world. Here's one from South Africa's Business Day Live: "In the months ahead, new oil supply is expected to outstrip new demand, largely following improvements in output in Iraq and Libya. By the end of the first quarter of 2014, Saudi Arabia will likely have to reduce production to keep prices stable."

In other words, if Saudi Arabia doesn't reduce production, the world price of oil will drop. So "stable" is doublespeak for "high." Wouldn't that sound completely different without the doublespeak: "Saudi Arabia will have to reduce their oil production to make sure oil remains expensive for the whole world."

Everybody in the world — rich people and poor — have to pay double or more for their fuel because Saudi Arabia has bills to pay. They've got to pay off all their non-working citizens (which is most of them) so the people don't revolt against the dictatorship, and the Saudis have mosques and madrassas to build all over the world, spreading Wahhabi fundamentalism (Saudi oil money funds 90% of all Islamic institutions around the world), and they've got American lobbyists to pay (they have 100 full-time lobbyists in America promoting their agenda to our representatives). So yes, I guess Saudi Arabia will have to reduce its production to keep prices "stable."

I think if the language in the media was more straightforward, the level of outrage at this ridiculous situation we're in would reach a threshold and everything would change overnight. People would immediately grasp how pathetic it is that the greatest nation on earth hasn't solved the problem of oil's monopoly yet. It is clear to anyone with better than a tenth grade education that the answer to a monopoly is, of course, competition. And yet the icon of free markets — the United States — hasn't yet allowed a free market with the most important commodity on earth?

The media probably won't change. So it's up to us. Please take up this cause. Explain to your friends and family what is at stake here. You will know you've succeeded when they become outraged. Light them on fire and encourage them to light others on fire. We need to hit that threshold. Sooner is better than later.

Author: Adam Khan, the co-founder of OpenFuelStandard.org and co-author of the book, Fill Your Tank With Freedom. 

Friday, January 31, 2014

What Competition Can Do

The Superbowl is a demonstration of what competition can produce. Each player competes with others to get on the team. The teams compete with each other to get into the Superbowl. Even advertising companies compete with each other to make the best ads.

Each competitor's innovation or extra effort forces the other competitors to bring their level of excellence up another notch.

While you're watching the Superbowl, amazed by feats of athletic execution, think about this: Shouldn't we see what transportation fuel — the most important strategic commodity on earth — could do with the same kind of vigorous competition?

The Open Fuel Standard would make that happen.

Thursday, January 16, 2014

What Will it Take to Break Oil's Monopoly?

Many people want to introduce competition into the fuel market and break the oil monopoly. But we are completely outgunned. The oil industry is vastly outspending the fuel freedom fighters. The oil industry has so much more money in their war chest that this is like an elephant being challenged to a duel by an ant.

The only way we'll win is by talking to our fellow citizens and increasing our numbers. The more people involved in this cause, the more clout we'll have in the marketplace and with Congress. Swarming ants can, in fact, defeat entire herds of elephants.

That means the most important thing that needs to be done is recruiting. Increasing our numbers. In other words, those of us who already understand what's at stake need to take it upon ourselves to talk to people and get them motivated to talk to others about it.

We are not outnumbered. Far more people would benefit from an open fuel market than are now profiting from oil's monopoly. It wouldn't take a majority of us to make this happen, but it will take more than we have now. So let's get on it. What can you do today that will recruit more people to this cause?

Sunday, January 12, 2014

Alnuaim Threatens to Burst America's Shale Oil Bubble

In an article in the Saudi Gazette, Dr. Sami Alnuaim discusses OPEC. Alnuaim is a Saudi expert on the Saudi oil business. On its surface, it is merely an article about OPEC's oil strategy. Barely veiled by its superficial appearance is a threat. On behalf of Saudi Arabia, Alnuaim is threatening the United States with the collapse of its oil boom. He says the Saudis could drop the world price of oil to $70 a barrel. Many experts in America have pointed out that a significant percentage of American shale oil production begins to be unsustainable below $90 a barrel.

In other words, whenever they think the time is right, Saudi Arabia could drop the world price of oil and burst the shale oil bubble in America, just as they did to the ethanol industry in the 1980s.

Are they waiting for a better time to bring down the shale oil industry? Are they waiting until much more money is invested before they pull the rug out from under it? Are they waiting until Americans feel overconfident and begin gloating over our new "energy independence?"

Saudi Arabia has the cheapest-to-produce oil in the world. That's the leverage they have over the other members of OPEC and why Saudi Arabia can dictate to them what the world oil price will be. Member nations of OPEC must agree to do what Saudi Arabia says or the Saudis can retaliate by lowering the price so much (by increasing their oil production) that the rest of the OPEC nations go into debt or even collapse.

They have the same power over America's oil industry, and for the same reason. But their power over our energy security and economic vitality only exists because we haven't yet bothered to create true fuel competition in America, even though it would be easy and inexpensive to do. Part of the reason is that some of the immense profit from the oil industry has been used for over a hundred years to prevent competition.

This is ridiculous. If we were already using methanol made from natural gas, Saudi Arabia couldn't touch us. Their ability to influence our economy or our national security would drop to almost nothing. They would have nothing to threaten us with. And as a side-effect of our new fuel competition, our economy would be thriving.

We must — urgently — diversify our fuel portfolio. We must introduce competition.

If our cars were able to burn methanol, the price per barrel of oil would drop below $70 a barrel, completely changing the balance of power in transportation fuel. But it would also hurt the shale oil boom in America because that price is too low for much of that oil to be worth recovering. However, there would be a simultaneous profusion and expansion of other American fuel-producing businesses, and American drivers would save big money at the pump, which means we would have more money to spend on other things, which leads to job creation.

Saudi Arabia would no longer have the ability to threaten the United States. In fact, their repressive regime may well collapse without their massive oil revenue to pay off their subjects. And when fuel prices drop in America, the economy soars. It would greatly increase our national security, it would reduce the amount of money the oil industry has to influence our government, it would help solve our garbage and landfill problem, help people in developing nations rise out of poverty, help prevent mental illness, put fewer military personnel in harm's way, and reduce the amount of pollution and greenhouse gases that are sent into the atmosphere, into the ocean, and into the ground.

It would be such a technically simple thing to do, but the consequences would be world changing. Get involved and let's make this happen. Use whatever resources you can muster to support this goal. Support and promote Fuel Freedom's plan and support and promote the Open Fuel Standard. Overkill would not be out of line for a goal this significant.

Author: Adam Khan, the co-founder of OpenFuelStandard.org and co-author of the book, Fill Your Tank With Freedom. 

Monday, January 6, 2014

How Important Are Fuel Prices?

Material used in manufacturing is often created using fuel: Mining, logging, farming, etc. The material is then SHIPPED (using transportation fuel) to a manufacturing plant. The finished product is then SHIPPED (using transportation fuel) to a distribution center, where it is then SHIPPED (using transportation fuel) to a store, where you DRIVE (using transportation fuel) to the store to get it, or you order it online, in which case it is SHIPPED (using transportation fuel) to you.

Someone has to pay for all this fuel. Guess who?

Without transportation fuel, the world as we know it stops functioning. With expensive fuel, more of the economy's resources have to be spent on shipping rather than the material or products themselves.

With inexpensive fuel, more economic activity can happen, more goods are created, more goods are delivered, and it is all less expensive. The result: Everyone has a higher standard of living all over the world.

What will make fuel less expensive? Competition.

Sunday, January 5, 2014

Does America's Shale Oil Boom Require High Fuel Prices to Sustain It?

Arjun Sreekumar says, "If the oil price falls below its marginal cost of production, drilling activity in costlier locations, such as Canada's oil sands and deepwater prospects offshore Brazil and Africa, could quickly become uneconomical. Mining projects in Alberta's oil sands, for instance, have breakeven costs in the $90-$100 per barrel range, according to consultancy Wood Mackenzie, leaving them especially vulnerable to lower prices."

Keith Schaefer writes, "The report says that massive infrastructure spending (pipelines, refineries, etc.) is a key to energy independence — and notes that oil companies have already proven unwilling to invest in new infrastructure at prices as high as $90 per barrel, despite most wells remaining profitable."

Marshall Kaplan says, "Many experts have indicated that the marginal cost of oil shale development is about $90 [per barrel]."

Dr. Sami Alnuaim writes, "The stability of the prices of OPEC basket during the last three years (2011, 2012, and 2013) to reach an average price of $106 a barrel despite of all the challenges and the many factors that could have negatively impacted the oil prices confirms this successful strategy...This high average oil price has also encouraged a lot of countries and oil companies to invest in exploration, development and production of what is so-called shale-oil..."

Saturday, January 4, 2014

What Kind of Government Controls the World's Economy?

In an article in US News and World Report entitled, Activists Say 2013 Dark Year for Saudi Rights, activists warn the world about Saudi Arabia's egregious human rights violations. I will excerpt part of the article below, but first think about this:

1. Because of our lack of fuel competition, petroleum is the foundation of the world's economy. Without transportation fuel, the world's economy as we know it would collapse.

2. OPEC determines the world's price of oil (find out how here).

3. Saudi Arabia has the most influence over OPEC.

4. When the price of fuel is low, the entire world's economy booms. When the price of fuel is high, the entire world's economy struggles (except Brazil).

5. OPEC is deliberately keeping oil's price high.

In other words, the country with the terrible human rights record you will read about below, has a controlling influence on the world's economy. This intolerable reality can be changed quickly and inexpensively with the introduction of fuel competition in America. The fastest way to achieve it is to pass The Open Fuel Standard. Here are the excerpts:

With global attention focused on upheaval elsewhere in the Middle East, Saudi Arabia quietly intensified its clampdown on dissent in 2013, silencing democracy advocates and human rights defenders with arrests, trials and intimidation in what reformists say was one of the darkest years ever for their efforts in the powerful U.S.-allied Gulf state.

This year, at least nine prominent reformers were given lengthy jail sentences for offenses including "breaking allegiance with the king." A leading rights lawyer was forced to flee the kingdom for fear of arrest. One of the kingdom's most prominent rights organizations — the Saudi Association for Civil and Political Rights, was shut down. A tough anti-terror law was approved by the government, defining acts as vague as "defaming the state's reputation" as terrorism.

More than 200 protesters, including women and children, were detained in Buraydah, north of the capital Riyadh, for demanding the release of imprisoned relatives. A Saudi man was sentenced this week to 30 years in prison for his role in leading protests by the country's Shiite minority, who complain of discrimination. At least five women were detained for several hours for flouting a driving ban, and a Saudi male writer supportive of their push was detained for almost two weeks.

Saudi Arabia is one of the world's last absolute monarchies. All decisions are centered in the hands of 89-year-old King Abdullah, who has the sole power to ratify new laws. There is no parliament. There is little written law, and judges — implementing the country's strict Wahhabi interpretation of Islam — have broad leeway to impose verdicts and sentences. A Specialized Criminal Court created in 2008 for terrorism cases has tried reformers and activists. Offences such as "disobeying the ruler" can result in years in prison.

When Saudis speak out, they say their phone calls and emails are monitored and that they are tailed by security officers. The kingdom has aggressively monitored social media websites like Facebook and Twitter, where jokes about the aging monarchy are rife and anger over corruption, poverty and unemployment is palpable.

One female activist, who was recently put under house arrest and banned from Twitter for her criticism of the government, said people are terrified of the "security state."

"Everyone expects a revolution in the kingdom. We don't want one because the people are divided. The only thing uniting us is repression," she said. She spoke on condition of anonymity for fear of retribution against her family, saying security officials warned that her parents could face arrest for her activism.

The United Nations High Commissioner for Human Rights over the weekend voiced its "deep concern" about what it said was the "intimidation and prosecution of individuals in Saudi Arabia for exercising certain fundamental freedoms."

Human Rights Watch released a report last week saying Saudi authorities have redoubled their harassment of activists since early 2011.

The Saudi Association for Civil and Political Rights was formed in 2009 to challenge detentions of people held for years without trial or kept imprisoned far beyond their sentences. Since then, it became one of the most vocal organizations in the kingdom, though it was never given a license to operate. There are two licensed human rights bodies in the kingdom but unions and most independent civil society groups are not allowed to operate.

Two years ago, the Saudi Association for Civil and Political Rights and other rights advocates were strong enough to pressure the government to shelve a version of the anti-terror law that was recently approved by Cabinet. Last year, the group challenged a law that says citizens must pledge allegiance to the king in accordance with Islam and the Quran.

Now around a dozen members of the group are in detention, on trial or under investigation.

One of them, 23-year-old Umar al-Saeed, was sentenced in December to four years in prison and 300 lashes. The verdict came in a secret, surprise session of his trial without his defense lawyers or family present, and the court has not announced what charges he was convicted on, al-Saeed's lawyer Abdullah al-Shubaily said. Another activist got seven years and 600 lashes for "insulting Islam."

Separately, two founding members of the Saudi Association for Civil and Political Rights and icons of the reform movement, Mohammed al-Qahtani and Abdullah al-Hamid, were sentenced to between 10-11 years in prison, with a five- to 10-year ban on travel after that on charges of breaking allegiance with the ruler, inciting disorder, disseminating false information to foreign groups and founding an unlicensed organization.

Rights lawer Alhussan, who represented the two, was later interrogated by authorities and accused of trying to damage the reputation of the prison system because of tweets critical of his clients' treatment. Shortly after, he left to the United States as a visiting scholar at Indiana University.

Read the whole article here: Activists Say 2013 Dark Year for Saudi Rights.

Amnesty International has censured Saudi Arabia for not addressing the “dire human rights situation” in the kingdom. Amnesty published a report saying a paper was submitted to the United Nations detailing “an ongoing crackdown including arbitrary arrests and detention, unfair trials, torture, and other ill-treatment over the past four years.” 

And we haven't even mentioned the lack of women's rights in Saudi Arabia and the systematic use of Saudi oil money to spread misogyny around the world. Saudi women can't even drive cars!

And last but certainly not least, the Saudi government beheads and literally crucifies criminals.

If you would like to see this brutal and backward monarchy collapse due to lack of funding, and if you'd like to see America's economy thrive, support the Open Fuel Standard with all your might. Start here.