Thirty years ago, Jimmy Carter was warning us that the world would run out of oil by the end of the century. A few years earlier, commemorating the first earth day, we were warned that our greed would lead to global cooling and a new ice age. Of course, somehow the solution to that crisis was the same that now is going to solve global warming - more government and more governmental control over our lives, and reduced standards of living. Such primitive accumulation by coercion is one of the common denominators that not only make radical Islam fascist, as that is one of the tenants of corporatist regimes, but it also is the missing link that conjoins the left and fascism in the west. But, the issue to be addressed here is the flawed premises upon which such pseudo economy is premised. Not only have we not run out of oil, but there is more today than there was three decades ago. One reason that is the case is simply that we need to revamp our entire notion of oil as a fossil fuel of which there is an absolutely limited supply.

 

Only in the most limited sense is oil a fossil fuel by any stretch of the imagination. If it were, how would it be possible to find it eight miles below the surface of the earth? No dinosaurs lived down there, and geological dislocation could not account for the amount of it that is that far down. Ditto as to swamp vegetation or other biological sources as the source of oil. Although such organic material can be one of the building blocks of oil, it is crucial to understand that the process by which it is made, while it may utilize organic material to create oil, produces it as a geological phenomenon and does so out of organic and inorganic compounds geologically. The earth is constantly producing oil geologically. It is as if were we to cease harvesting it, as it did with Jed Clampett, up from the ground would come a bubblin' crude. We would be awash in crude oil as the earth continually produces it geologically, although it is likely that the earth cannot produce it as fast as we are using it, oil is abiotic, not strictly organic in origin. That would suggest that we develop to economy of scale levels, the capacity to manufacture hydrocarbons and thus, petroleum substitutes. And while it is a bit unconscionable to utiliize food products such as corn to make ethanol in a world which

does not have adequate food supplies, it can be made from garbage, too. We also need to push the development of alternative technologies such as hydrogen cell powered vehicles.

 

This is a fairly new realization. There is little recognition of this reality even within scientific communities, let alone outside of them. And the forces of science move slowly in coming to such realizations. Paradigm shifts are themselves almost on the clock of geological time. Political realization is perhaps even more retarded in its growth, and both are too often rooted in agenda.

 

 

Economic reality taking precedence in human events, how can it be that the supply of oil is less than limited given the huge increases in prices we must pay for gasoline? There are many answers to that question. The price at the pump seems to have climbed dramatically over the last decade.

 

The best answer to the question is a reality check. Oil is not that expensive. In fact, it may be a huge bargain by historical standards. It certainly is by world standards. Fifty years ago, a gallon of gas cost in the neighborhood of 35 cents. Sometimes it would go lower, but rarely much higher than that. At the same time, although some products have come down in cost, such as color tvs, the general price level has risen dramatically during that time, as well. For example, a new middle line car was less than $2000 and a $10000 annual income would have been the mark of affluence. Today, a similar level car would carry a price tag of over

$20000, and a family of four would be judged affluent were it to bring in $100000 per year.

By such standards, and adjusting for the rate of inflation would back this up by any statistics, in order for gasoline to be priced at the same level it was in say 1966, it would have to be selling at over $3.00 per gallon. It has reached that level since the storms of 2005, but it is headed back down in mid 2006. Thus, the highest gasoline prices we have seen are no more than they were fifty years ago, when gas guzzling rods were the toast of the town.

And as it moves toward the $2 level, it again becomes a tremendous bargain. Realize, too, that barely half of the oil supply is headed to the pump. There are a multitude of other places it goes, from jet fuel to home heating oil, to plastics and fertilizer, and fueling the power grid and more. 

 

It should not even be that high, however. With mid term elections of 2006 approaching, the left in America is busy blaming Bush for the high price of gasoline. There is some resonance with the population which does not like the 'high' price of realize the bargain it has. But, the fact is that the price is tied to supply and there are political elements in the United States which have been limiting the supply for decades. We have not build a new refinery since Carter was in office. The government will not allow it. Environmental regulations prohibit this.

Nor can we drill for available oil we know exists, in ANWR or in the Gulf off the coast of Florida - as if any oil company would allow one ounce of black gold to be wasted. But it is the same politicos who have created the prohibition and now block it that wish to blame Bush who has fought them, unsuccessfully to date, to untie the binds. Kerry and Carter and Gore and Kennedy and Clinton caused the higher price they wish to put on Bush!

 

Of course, these politicians play their class warfare card well, too. Big oil makes unconscionable profits (what is it, 10 cents per gallon? - a separate issue indeed from the vital matter of return on investment which dictates investment in firms with massive capitalization) and would pass windfall profits taxes for them. Of course, that would reduced

profits and raise costs, and prices!

 

There are other factors in the 'high' price of gasoline. While big oil 'reaps' ten cents a gallon, big government collects seven times that in taxes per gallon. There are seasonal fluctuations on the price, especially more pronounced given the slim margin of productive capacity we operate under, and that is complicated further when storms shut down refineries and wells for prolonged periods. Higher demand for oil worldwide on developing economies worldwide and particularly in China and India factor in also, and although we are the largest producer of oil in the world, since we are also the largest consumer we have to be the largest importer as well.

Market fears impact on prices at the pump, too, as turmoil in the middle east (compounded by politicians who play on the situation for political gain even when it gives aid and comfort to the enemy to try to win votes and elections) can push price upward.

 

Gasoline prices are a political matter even while they are a matter or market forces.

It bears repeating. Paradigm shifts are themselves almost on clock of geological time. Political realization is perhaps even more retarded in its growth, and both are too often rooted in agenda. Kerry and Gore and Kennedy and Clinton and Carter would do well to remember what happened to the dinosaurs in the face of geological time and reality.

 

One paradigm shift that has barely come over the horizon is the abiotic nature of the product.

Look it up - see how difficult it is to find any reference to it. That will change, with time, but it mid 2006, it is a tough research project.

 

August 2006