What Happens When You Break Up a Monopoly

Sunday, September 29, 2013

The following has been condensed from an article on Fuel Freedom by Zana Nesheiwat:

Before 1984, only AT&T could sell long-distance telephone service, making a long-distance call cost $3.00 a minute. That monopoly and unfair pricing ended when a federal judge required AT&T to grant access to any carrier that wanted to sell long-distance services. Within three years, the price of a long-distance call decreased from $3.00 a minute to 30 cents a minute. Today it’s 3 cents a minute, thanks to competition and an open market.

Without the breakup of that monopoly, which brought forth industry competition and consumer choice, we wouldn’t be enjoying rapid advancements in the communication industry and the ability to watch, listen, play, tweet and stream from one device.

Economics 101: A monopoly has the power to set the price on a commodity. Although there is more than one oil company (Shell, Exxon, BP, etc.), the only fuel they sell to consumers is petroleum. The lack of fuel competition allows “big oil” to set the price. The wide-scale adoption of abundant, domestic fuel supplies (natural gas, methanol, ethanol and electricity) will boost competition and innovation, resulting in a wider fuel selection for consumers and lower prices at the pump. This is not to mention protection against resource and price volatility and improved air quality.

Beneficiaries of an oil-addicted population and economy, or, as many call it, an oil monopoly, will do everything in their power to maintain a situation where they have sole custody over the transportation fuel market. Recent actions from the American Petroleum Institute (API) demonstrate this. Group Downstream director, Bob Greco, announced that API is “strongly considering” asking the U.S. Supreme Court to hear a case regarding the sale of a high-ethanol fuel blend. Soon after, a press conference ignited news headlines with something along the lines of, “Ethanol destroys cars.” The claims that warn of the dangers of ethanol are based on a research study funded by — you guessed it — the API and automakers.

Clearly, API is threatened by the “competition” and has good reason to be! The competition – natural gas, methanol and, in this case, ethanol, or any combination of alternative fuels, could cause the oil industry to lose profits, market shares and eventually, their dominant control over the fuel market.

The breakup of AT&T brought forth a new era of technology — multi-functioning phones and affordable long-distance phone calls. Breaking the oil monopoly would give us far more than that — relief at the pump and a thriving future for years to come.


Does the Oil Industry Create Many Jobs?

Saturday, September 28, 2013

The following are excerpts from an article originally published in UCUSA, entitled, Drivers Spend Almost as Much on Gas as They Paid for Their Cars:

Filling up with gasoline does not do much to feed money into communities. In fact, just 81 cents of an average $50 fill-up goes to the local gas station owner. “In the end, gas stations make more money off the bottled water, beef jerky, and other things you buy inside than off the fuel you buy outside,” says policy analyst Joshua Goldman.

According to data from the Department of Labor’s Bureau of Labor Statistics, extracting oil and gas produces less than one job per $1 million of output, and is among the least job-intensive industries in the United States. When consumers reduce spending on gasoline, they spend more money in areas of the economy such as retail, which employs about 12 people per $1 million of output.

When we have fuel competition in America, consumers will cut their spending on fuel at least in half, greatly boosting employment in the U.S. And you can help make this happen. Start here.


Four Trillion Dollars

Saturday, September 21, 2013

The following was written by the American business magnate and financier, T. Boone Pickens.

There's a legitimate debate right now about what America should do about things in Syria. Personally, I don't want to see American troops put in harm's way until we know how we're going to get them out — not just out of Syria, but out of the Middle East entirely.

The problem is no one in Washington wants to talk about the real reason we're there in the first place: oil. We're dependent on foreign oil and OPEC has it, so keeping peace in the Middle East has been our top foreign policy priority for over 30 years.  Over the last decade alone we spent more than $4 trillion and lost thousands of American men and women on military missions to protect Middle East oil.

The cost is just too much.

We can't let folks in Washington get away with talking about Syria while ignoring the importance of energy. America will never free itself from fighting in the Middle East unless we break our addiction to foreign oil, so any real exit strategy needs to include greater use of our vast domestic energy resources.


Methanol and Ethanol Achieve Better MPG Than Originally Estimated

Friday, September 20, 2013

Here's the latest from Fuel Freedom: How much do you know about replacement fuels? According to Fuel Freedom's co-founder Eyal Aronoff, “Alcohol fuels are not getting a fair treatment.” His recently published white paper shows that EPA’s method of approximating the gasoline gallon equivalent (GGE) mileage of methanol and ethanol fuel blends underestimates the true performance of those fuels. In other words, methanol and ethanol are not only cheaper and cleaner-burning than gasoline, they can also achieve better mpg than originally estimated.

The significant findings, which were highlighted in a Bloomberg article, can have far-reaching implications for the use of American-made replacement fuels in lessening our nation’s appetite for oil, including the over $300 billion we spend each year on foreign oil.

Eyal, who is leading the development of Fuel Freedom’s next study on “The Myths and Realities of American Energy Independence,” will be presenting the details of his findings on Wednesday, Oct. 2, in an online seminar. Once again, he will highlight Fuel-Freedom-authored research to clarify the facts about oil usage, its harm to the American economy and how we can end this dangerous dependence.


OPEC's Massive $1 Trillion Used to Promote Jihad

Saturday, September 14, 2013

By Raymond J. Learsy, originally published in the Huffington Post.

With the price of oil hitting a year-long all-time high, averaging over $111 barrel for Brent crude, OPEC's benchmark, the OPEC oil cartel led by Saudi Arabia will glom more than a $1,000,000,000,000 (trillion) in net oil revenue, a record windfall in 2012. This, in spite of weak economic growth worldwide.

Back in January 2012, with barely a touch of irony nor shame, the Saudi Oil Minister, Ali al-Naimi, pontificated "If we are able as producers and consumers to average $100 I think the world economy would be in better shape." This from the very same oracle who instructed us some two years before that "You must understand that the purpose of the $75 price is a much more noble cause" (please see "'Noble' OPEC Criticizes the International Energy Agency")

This torrent of money flowing into OPEC, especially into the Persian Gulf States, raises the question how this massive windfall is being put to use other than providing fresh capital for the world's largest sovereign wealth funds, as those of Saudi Arabia, United Arab Emirates and Kuwait.

A troubling and emblematic answer can currently be found in Zanzibar. Zanzibar?? Well just two days before featuring OPEC's triumphal results in 2012, the FT ran a depressing article, "Radical Islam Puts Zanzibar's Relaxed Way Of Life In Jeopardy" reporting that Zanzibar, home to some 1 million people and with more than 2,000 Muslim schools that draw on a long tradition of moderate and Sufi forms of Islam.

Frighteningly, the article reports, "Increasingly parents are sending their children to better financed alternatives in a process that is beginning to mirror what is taking place across a swath of sub-Saharan Africa — from Somalia to Mali — where the growing influence of more radical forms of Islam can be felt." Those needing instruction on how that plays out in nations such as Mali need only read "Islamist Harsh Justice Is On Rise in North Mali" in The New York Times.

In Zanzibar organizations such as the Al-Noor charity, set up some four years ago with money emanating from Saudi Arabia and Dubai, has established a nationwide network of Madrassas and every year pays for students to study in Sudan, Abu Dhabi, and Saudi Arabia — where Wahhabi Islam is practiced. A teacher from Zanzibar, one Indrissa Ahmad Khamis, is quoted, "people who go to Saudi Arabia, when they come back they want to change everything." Unsettling to say the least, given a telling observation in the article, "Al Qaeda and other terrorist organizations draw their thinking from Wahhabism."

The malign influence of oil money through the support and influence of Wahhabism extends far beyond Zanzibar and the sub-Sahara. It has engulfed the entire Middle East, be it the extremists joining the Syrian uprising, to the very sinews of the destabilizing influences in Afghanistan and Pakistan where many of the Taliban were educated in Saudi financed madrassas that teach Wahhabism. Its reach extends to Europe where the London Times reported ("Saudis Fund Balkan Muslims Spreading Hate of the West" 03.28.10):

"Saudi Arabia is pouring hundreds of millions of pounds into Islamic groups in the Balkans, some of which spread hatred of the West and recruit fighters for Jihad in Afghanistan...Islamic fundamentalism threatens to destabilize the Balkans ...Fundamentalist Saudi organizations are clashing with traditionally moderate local Muslim communities."

All this being said, a number of further questions remain:

- Given the enormous liquidity held in their sovereign wealth funds, is any portion of these vast holdings being used to influence the traded price of crude oil/oil product futures thereby forcing prices higher in the commodity exchanges to the enormous benefit of OPEC? That the commodity markets trading in "paper" oil future contracts could be manipulated was made evident, as but one example, in The New York Times article "BP Loses Trading-Floor Swagger in Energy Market" citing BP's cowboy antics on the oil trading floor:

"Its market wagers on crude oil, gasoline or natural gas can use both physical supplies as well as paper petroleum — in the form of futures contracts and other derivatives."

- What portion of these funds are being used to influence government policy by subsidizing Beltway think tanks and public opinion by the likes of Abu Dhabi Media, financing such propaganda vehicles as the film Promised Land, denigrating shale gas and depicting fracking in a hysterical light in order to derail our efforts to achieve energy independence? (Please see "Yoko Ono, Matt Damon and OPEC Versus American Energy Independence.")

- What portion of their cartel-derived bounty are the Persian Gulf States prepared to reimburse U.S. taxpayers who are being tapped for some $100,000,000/day in order to keep a naval task force in the Persian Gulf to shield Saudi Arabia et al from Iranian aggression and to keep the sea-lanes through the Strait of Hormuz open to their profit and at our expense? Our fleet is leased facilities in places such as Bahrain, docked in the metaphoric dog house playing the role of watch dog, while the local pooh-bahs play in their mansions and yachts.

- One last question. What is keeping the Obama administration and Congress from passing a NOPEC law that would authorize the Justice Department and the Federal Trade Commission to take legal action against OPEC national oil companies? They have run roughshod over our anti-trust laws, hiding behind tenuous and faulty judicial rulings granting these companies sovereign immunity and especially such as Aramco, the Saudi national oil company, and PDVSA the Venezuelan national oil company who have significant refinery operations on American soil. (please see "NOPEC (No Oil Producing and Exporting Cartels Act): A Presidential Issue and a Test of Political Integrity.")

Is anybody listening?!

Follow Raymond J. Learsy on Twitter: www.twitter.com/raymondLearsy


Fuel Competition Within a Car is Far Better Than Competition Between Cars

Friday, September 13, 2013

As soon as possible, we need to break oil’s monopoly on transportation. The fastest, least expensive, most immediately effective way to strip petroleum of its strategic status is with flex fuel cars — by making the cars themselves a platform upon which fuels can compete.

Even though we have CNG cars (compressed natural gas) and electric cars and others, that is not good enough — fuels are still not really competing. Not many of us can afford to have four or five cars (each powered a different way) so we could choose on any given day how we will power our day’s commute. When people have few choices at the pump, the logical course of action is to buy a car that runs on the most available fuel, which is why most people are still buying petroleum-only cars.

When you arrive at the pump to fill your tank on any given day, if your car is capable of burning multiple fuels, those fuels are in immediate competition for your dollar. That kind of competition will drive fuel prices down. If your vehicle can only be powered by one fuel, those multiple fuels are not really competing with each other for your business. The car manufacturers are competing, but not the fuel.

In other words, the competition needs to happen within each vehicle (not between vehicles) or it’s not true fuel competition.

To bring about fuel competition as quickly as possible, we should all stop burning petroleum fuels and spend as much of our transportation money as we can on anything but oil. Right now, ethanol is the most available alternative, so we can start there. It might be easier than you think. Ethanol can be the thin edge of a big wedge with which we can open the fuel market. 

And we should pass the Open Fuel Standard to speed up the process of making this a flex fuel nation. It will change the world.


Saudi Oil Minister Thinks High Gas Prices Are Good For the World Economy

Friday, September 6, 2013

The Saudi Gazette says that last year was a great year for OPEC. Led by Saudi Arabia, the illegal, price-fixing cartel made over a trillion dollars. And it was deliberate. As the article explains:

In January of 2012, Saudi Oil Minister Ali Naimi said that the Kingdom aimed to keep oil prices at the triple-digit level throughout 2012.

“If we are able as producers and consumers to average $100 I think the world economy would be in better shape,” he told CNN at the time.

The record run of $100-plus oil prices, coupled with strong production in the first half of the year, lifted OPEC’s net oil export revenues to a peak of $1.052 trillion in nominal terms, up 2.5 percent from last year, according to the US Energy Information Administration, the statistical arm of the US Department of Energy. A decade ago, OPEC countries made just under $200 billion selling their oil.

In real terms, adjusted for inflation, OPEC’s revenues in 2012 were also the highest ever, surpassing the peaks set during the oil crises of 1973-74 and 1979-81.

In 2011, OPEC raked in more than $1 trillion in net oil export revenues for the first time ($1.03 trillion), the US Energy Department said.

Because of OPEC's deliberate constriction of their oil production (to raise the world price of oil), Americans paid the highest average price ever for gasoline last year. The consequences of this unprecedented transfer of wealth are significant. Do you want it to stop? The Open Fuel Standard can stop it.


U.S. Consults Oil Experts As It Weighs Action Against Syria

Tuesday, September 3, 2013

In a recent article in Reuters, the authors wrote:

Oil analysts have said a quick strike against Syria could push prices up to $125 to $130 a barrel, with Societe Generale saying prices could reach $150 a barrel if the crisis were to spill over into larger oil producing countries.

Even though the United States is in the midst of its biggest oil drilling boom in decades, with production at the highest level since 1997, prices would still likely spike if there was a major supply disruption in the Middle East.

The North Sea Brent crude benchmark that helps set the majority of world oil prices traded around $114 per barrel on Thursday, near the $120 level that analysts say could push the White House to begin considering using the SPR (the Strategic Petroleum Reserve).

Syria has not exported any oil since late 2011, when international sanctions came into force. Prior to the sanctions Syria produced 370,000 barrels per day (bpd), roughly 0.4 percent of global supplies, and exported less than 150,000 bpd, mainly to Europe.

But there are concerns that a U.S. strike could cause the Lebanese militant group Hezbollah, which is backed by Iran (an OPEC nation, using oil revenues) and has been involved in fighting in Syria, to carry out retaliatory attacks in Turkey, Jordan, or oil-producing Iraq.

One of the sources who has spoken with U.S. officials said there is a concern that Iran, which has supported Syrian President Bashar al-Assad, may walk away from talks on its disputed nuclear program (also paid for with oil money made artificially expensive by OPEC's illegal price fixing).

The unpredictability of what action the United States will take, and what happens afterwards, has helped push markets higher, said Charles Ebinger, head of the energy security initiative at the Brookings Institution. (Read the rest here>>>)

Are you tired of worrying about the economic and political consequences of events in the ever-tumultuous Middle East? Then join us in getting the Open Fuel Standard Act passed into law. Within three years, this bill will begin stripping oil of its strategic status, which means it will strip the Middle East of its strategic status. We need your help. Start here.


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