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Oil, Let's Make A Deal

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Rob Mixon

Published: July 6, 2008

Information from official sources, like the CIA World Book of Facts and the U.S. Department of Energy, as well as Gunter Karger, who has appeared on FNN, CNN, radio shows and Editor of The Discovery Letter, indicate some interesting information about our "oil shortage."

The current world oil demand is 82 million barrels per day, supplied by the current world's production of 85 million barrels per day of oil available to be pumped. This does not include the vast reserves at various stages of development.

Recently, President Bush went to Saudi Arabia, and the OPEC cartel, to "bargain" for lower oil prices. The world wide cost for producing, including finding, pumping, and storing oil is about $25 per barrel.
The differential between the costs of revenues generated by $100 per barrel of oil resulted in record net profits exceeding $100 billion just for the 2007 fiscal year. During this period of January-March 2008 vs. 2007, gasoline demand in the U.S. decreased by 0.2 percent. During this same period prices rose by about $1.80 per gallon from $2.30 to $4.10, representing an 80 percent increase! The six leading oil producing nations averaged only 92 cents per gallon with Nigeria the lowest at 38 cents.
Most important Saudi Arabia has the current reserve capacity to meet today's demand for oil. Commodity Futures Exchange is basing oil prices on what they can receive thus being manipulated by investors. Let's not even explore the monetary gain being received by some of the countries known to promote terrorist activities.

Let's see what Gunther Karger suggests as a solution to the gross mismanagement of "Washington," allowing the energy situation to reach this crisis.

He suggests "Overhaul current federal oil futures regulations to address self serving acts and manipulation by traders. The U.S. has the Strategic Petroleum Reserve created to deal with national oil emergencies. This reserve presently has the capacity to store 727 million barrels of crude oil and is presently nearly full at 97 percent. By law, it can supply a maximum of 4.4 million barrels per day representing 22 percent of the daily U.S. consumption for nearly half a year.

"It is likely that the oil futures would dramatically drop if the U.S. simply announced it would release just one million barrels per day from this reserve." Another factor would be "If it announced the authorization to develop known domestic oil reserves." This plan, presented by President Bush, to develop domestic oil has been rejected by Congress.

"Oil should drop to the $75-85 dollars per barrel level because the current price is simply unsustainable by reasonable economic justification." If this all seems too far fetched, on June 14, Saudi Arabia announced that they will release more oil, fearing that the high increase in per barrel price will hurt the global economy, but most of all reduce the demand for their oil! Something to think about.

Rob Mixon
Lake Placid

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