Common Sense

By “Doc” Gary Johnson

(Ed. note: This column was submitted by my friend Doc Johnson and I decided to run it. Trying to fix the coding that comes from copying and pasting was quite a bother, so you’ll see changes throughout. It’s not my fault, blame WordPress. If you wish to contact him for comment or query, send me an email with “Doc Says” in the subject line and I’ll forward that on to him.)
Energy Prices, Terrorism, and the Headlight of the Oncoming Train GWJ/4-28-06
Think $3 /gallon gasoline is bad? You ain’t seen nuthin’ yet. Tired of Middle Eastern terrorists? You still ain’t seen nuthin’ yet. Can’t believe those two evils are connected? You better think again!

My biggest “beef” with the national media is that they will not tell the public the truth about those two evils, or the intimate connection between them. I don’t know whether this is out of ignorance or fear, or maybe it is a bit of both.

Energy Prices
Big oil is not a freely competitive market in the sense we would normally think. It has not been, since OPEC formed in the 1960’s. Not long after, the oil companies became international corporations, which put them beyond effective regulation.

Since then, US reserves have mostly been depleted. Even the Alaskan field peaked 5 years ago, and it was never big enough to supply this country for even just 1 year.

Planetary reserves are also now peaking in production, since the great Middle Eastern oil fields are peaking right about now. The Middle East represents at least 60% of all known remaining reserves on earth.

New discoveries are ever less frequent and ever smaller. That’s really why no new refineries are being built: there will never be any more oil to refine than there is right now. It would be rather stupid to build expensive facilities that would never be fully utilized.

Meanwhile, the Chinese and the Indians (half the global population) are industrializing, throwing away their bicycles, and demanding petroleum fuels. The fastest selling car in booming China is a gas-hog Buick, and that gasoline has to come from somewhere. The Chinese, rich as they now are, are willing to pay any price for oil.

The major oil companies (and there are only 5 of them) are now nothing without OPEC, who has the oil. OPEC (with about 6 nations as major players) is nothing without the major oil companies, who own every last tanker, pipeline, and refinery. They all profit together when prices are high. In effect, they are all one collective entity, and thus a de facto monopoly.

The “free market”, that the oil executives repeatedly invoke when testifying before Congress, is actually nothing of the sort. It is a deliberately-staged arena where agents for the various nations bid for the oil those countries need. The disparity between skyrocketing Chinese and Indian demand and the stable (peaking) production is the excuse to get the Chinese to bid up the price of oil to new record levels just about every day.

Continue reading after the jump
It has been rigged this way since the 60’s. Any adverse geopolitical event, weather disaster, or war has been a convenient excuse for this staged bid-up of prices. But the new element (Chinese demand) is so much more effective, that profits are now routinely setting records.

Who are the agents buying oil for the US? Why, the big offshore oil corporations, of course. Talk about the fox guarding the chicken coop!

Don’t get me wrong, capitalism is the greatest engine for the production of good things that man has ever devised, bar none. Its driving force is man’s most powerful motivation: greed. That’s why capitalism is so powerful and works so well.

But over the last 2500 years of Western civilization, we have learned something about human greed. Left unfettered to seek its own ends, it invariably turns to selfishness and destructive behavior: benefiting only the already-rich at the expense of everyone else.

There have to be rules and regulations to lead greed to do good works, thereby benefiting all. Laissez-faire is definitely not the way to go, current political dogma notwithstanding.

The offshore big oil companies are beyond the reach of regulations. It kinda shows, don’t it? For example, Exxon Mobil posted record profits for 2005 of 36 billion dollars, the greatest part of it in the 4^th quarter. That last was the price spike where the Hurricanes Katrina and Rita added so greatly to the Chinese-induced oil price bidding war.

Those corporations did “business-as-usual” while a great American city was abandoned to snakes and rising water, and an entire American coastline was left in ruins without effective aid. And the US government stood by and let it happen. (That’s what we get for electing oil men, or men bought by oil men, to Congress and the White House for so many years.)

Terrorism

Oil was discovered in Saudi Arabia back in the 1950’s (and it is still the major player of OPEC, sitting as it does upon the 3 largest oil fields of all time). That was when money first became equal to political power in that region, in modern times.

Saudi Arabia has the two great holy cities of Mecca and Medina within its borders. In order to deserve to keep them, they had to appear “more devoutly Muslim” than their neighbors. Thus began the extremist fundamentalist creed known as Wahabbi Islam, which is officially the state religion of Saudi Arabia, although the ruling princes themselves do not practice it.

Since the 50’s thousands of billions of dollars have poured into the Middle East After the ruling princes extract their personal “cut”, and generally fail to spend the rest on improving life for their people, they donate to various Islamic “charities” and fund Islamic “schools” (the Madrassas) throughout the greater Muslim world, where there are no secular schools.

The bulk of these “charities have been found to be front organizations for Al Qaeda and other similar terrorist groups. The Madrassa “schools” do not teach reading or writing. Students are taught to recite the Koran by rote in a language they generally do not speak. The “teachers” tell them their holy book says to kill infidels, and that God wants them to die as martyrs doing so.

This violent creed actually bears about the same resemblance to what had been mainstream Islam, as devil worship does to Christianity. Check the descriptions of Islam in the comparative religion texts of about 50 years ago, versus today’s headlines. The contrast could not be more stark.

Because they cannot read it for themselves, and because of state-controlled media aiding and abetting the process, these people do not know of the deception. This has been going on for about 50 years in a belt stretching from North Africa through the Middle East, on around Southern Asia, and out into the Philippines: about 1.5 billions of mostly illiterate, desperately-poor people. Wahabbism has largely supplanted mainstream Islam in this belt.

This evil is now spreading into Europe and even America, among a poor underclass of marginalized Islamic immigrants. It also includes converts from the marginalized domestic urban poor.

This corruption of Islam into a cover, a “justification”, and a recruiting tool for the most unspeakable violence is the source of all the suicide bombers, hostage takers, murderers, and terrorists that we fight. It is funded primarily by the Saudi ruling families. (Most of the 9-11 hijackers were from Saudi Arabia!)

The Connection Between Monopoly Big Oil and Terrorism

60% of the world’s oil comes from the Middle East. Therefore, sooner or later, directly or indirectly, 60 cents of every American oil dollar goes to the Middle East. Because of the corrupt and opportunistic ruling princes, the bulk of that goes to the terrorist “machine” via the “charities” or the Madrassas.

We are thus quite literally paying those savages to kill us with every barrel of oil we import, and we have been doing it for over 40 years.

Our reserves are depleted. If we are to use oil, we must import it. Why not end this evil addiction and use another form of fuel? In fact, is it not treason during a war on terror to continue paying the terrorists to kill us? (I’d like to see THAT examined on the evening news!)

The oil companies tell us that we cannot survive on alternative fuels and energies. This claim comes from folk whose vested interest leads them to pick the last penny from your pocket , selling you oil at prices inflated by a staged bidding war.

They have no rules to follow that might prevent them from gouging you in this manner, and they have been doing it for a long time. Based on the 22 cents /gallon that I remember from 1958, and on the economists’ inflation factor of about 7.5 from then to now, gasoline ought to cost about $1.75 / gallon. That is, if oil really were a freely-competitive market.

So, do you really believe them when they tell you alternative fuel can’t be done? I don’t.

Our civilization is designed to use cheap energy. We have economic depressions when energy prices are too high. It doesn’t happen immediately: takes about a year for the “dead dinosaur” to actually fall over. But it does fall. (This does not affect big oil or OPEC, though.)

Wouldn’t it be nice if our economy were unaffected by international oil prices?

Wouldn’t it be nice if we no longer had to care about the geopolitics of the Middle East where the oil is, so our kids didn’t have to die in wars there?

Wouldn’t it be nice if the fuel we used put Americans back to work growing and processing it?

Wouldn’t it be nice if America’s energy suppliers were not a concentrated, price-fixing monopoly, but instead millions of mom-and-pop businesses?

Wouldn’t it be nice if America got rich again selling hardware and know-how to the rest of the world so they could do it, too? (We, alone of all the nations on earth, have the hardware, the know-how, and for a little while yet the money to do this!)

Wouldn’t it be nice if cash flow to the Middle East dried up, so that those savages would either have to civilize themselves and join us, or else slide back to a stone age oblivion?

Either way, their terrorists could no longer reach us. Would that not be final victory in the war on terror? Wouldn’t THAT be nice?

The Headlight of the Oncoming Train

$3/gallon this summer. $5 next summer. Maybe $10 the next. We do not have very much longer to get this thing done. As the oil runs out, nations will wage war over the remaining supplies. All the nations involved have nuclear weapons. Armageddon is in 20 years, max.

We cannot wait for unaided market penetration of the alternative technologies. It took 25 years to introduce hybrid cars. We need regulations NOW to tip the playing field in the right direction, and then let that market do the work in less than 5 years (it only took 3 years to complete the replacement of leaded gasoline with unleaded gasoline).

Specific Actions We Could Take

Like California, Texas is an enormous market. What we demand, business will produce. I suggest that we need some new state laws, especially since Washington DC seems so totally incapable of acting.

I suggest that it be a condition of doing business that, if you sell gasoline, you must sell E-85 ethanol and an E-22 gasohol.

I suggest that it be a condition of doing business that, if you sell diesel, you must sell biodiesel, or at least a B-70 biodiesel blend.

Further, service station owners must be free to buy the alternative fuels from suppliers of their own choosing, and not be locked into the major oil companies with which they are affiliated for their fossil fuels.

I suggest that if you sell cars in Texas, you get a big tax break for selling hybrid models with flex fuel engines, and a big tax penalty for selling non-hybrids and non-flex fuel engines.

I suggest that if you buy cars in Texas, you get a big tax break for buying hybrid models with flex fuel engines, and a big tax penalty for buying non-hybrids or non-flex fuel engines.

I suggest that if you make cars to be sold in Texas, you get a big tax break for making hybrid models with flex-fuel engines, and a big tax penalty for making non-hybrids and non-flex fuel engines.

I suggest that if you make cars to be sold in Texas, you get a big tax break for making retrofit kits to convert gasoline engines to flex-fuel engines,and a big tax penalty for not making those retrofit kits.

I suggest an even bigger break for those whose ethanol plant will convert cellulosic trash to ethanol, instead of converting edible grain.

On the electric generation side, I suggest we offer major tax breaks to those who install wind power, solar photovoltaic power, and/or solar thermal power to their homes or businesses.

I suggest that we require the net metering concept be used with appropriately-sized wind or solar electric generating equipment, at all levels of the electric power industry, including the co-ops.

I suggest it is a far higher priority state project to build the transmission lines from the windmill farm in far West Texas than it is to have a foreign contractor build a Trans-Texas Corridor toll road that may never be self-supporting.

I suggest we need coal-fired power plants, but that it be a state requirement that only the best emissions-control equipment be used.

I suggest that all new power plants be built with a design provision for ready conversion to the hydrogen economy, for the near future when a cheap form of that fuel finally becomes available.

I suggest that the emissions-grandfathering for existing power plants come to a definite and near-term end, and further, that when those emissions controls are upgraded, that the capability for ready conversion to hydrogen be added as well.

I suggest that the price-to-beat for deregulation be pegged to coal not natural gas, in the above suggested regulatory environment. This will provide a market incentive for conversion to cheaper but cleaner coal technology, and for eventual conversion to hydrogen. Consumers will also benefit from lower prices and cleaner air.

I suggest that the state invest in the West Texas windmill farm and transmission lines to promote electricity-for-export, as source of state revenue analogous to oil exports.

I suggest that the state invest in promoting excess agricultural production capacity for alternative fuels. This is for export of liquid fuels, as a source of state revenue.

Final Note

Before the oil boom, Texas had bad roads, worse schools, and the saying was “there’s always Mississippi”, because it looked good. During the oil boom, the state collected revenues on oil and oil exports. During this time we had great roads and great schools. The oil is now gone: our roads are going to hell, and our schools are pathetically under-funded again. The state needs an export. Without one, sustained good times will prove impossible. Why not export energy again, just not fossil energy?

Please talk to me if you like what you have just read.

This document was written by, and represents the opinion of, only:

Gary W. Johnson, PE, PhD

engineering consultant