Debunking the conspiracy theories behind the price of oil

With recent comments among colleagues and friends and corresponding paranoia on every news show from MPR to the O'Reilly Factor finally going over the brink into outright conspiracy theory, I thought I'd try to explain in simple terms how the market and Federal Reserve policy and not "big oil corporations" are deciding the price of oil.

Over the next three years to six months, oil will be the best investment you can make. Here's why.

An oil producer, "Party A", produces X number of barrels of oil per day, and places this supply on the local market. At this marketplace, buyers from the United States (population 301,139,947) line up beside buyers from China (population 1,321,851,888), India (population 1,129,866,154), Europe (population 490,426,060).

Party A decides to put the X barrels on the market at price P1. Conversely, the buyers from these respective populations place bids for Y barrels of oil at price P2. There can be a large gap between what people are willing to pay for oil, and what producers are willing to sell it for. In this case, no barrels of oil are sold.

However, in non-oil-producing nations, especially industrialized nations, there is no option but to consume oil, or face immediate starvation and collapse. Further, there are far more consumers than producers. In the past, when there were fewer consumers (the U.S. and Europe alone), the buyers had more leverage on the market. When there are only a handful of parties producing a commodity, it is called a production cartel.

In short, we need their oil more than they need our money. And China and India need the oil as well, because their economies are growing at rates that dwarf the economies of the U.S. and Europe.

Further, the U.S. Dollar is worth less every day than the day before. Our rate of monetary supply inflation is about 17% per year. This means that for every 100 dollars that exist in the world in 2007, there are $117 in 2008, $137 in 2009, $160 in 2010, $187 in 2011, and so forth. The Federal Reserve controls all aspects of monetary policy in the United States. It is not answerable to the United States Congress. The President has no control over it, aside from appointing the Fed Chairman.

Further still, in addition to there being more dollars in existence, there is declining supply of oil. There are very few discoveries of new oil fields in the world today. There are few new refineries being built. Because of well-intentioned environmental concerns, many known oil fields such as those off of the coast of Santa Barbara California and Anwar Alaska are being ignored.

Finally, consumers from industrialized nations are using more energy each year. In the United States, this equates to bigger vehicles, more air travel, bigger houses, fewer marriages (which imply the need for more dwellings and more heating requirements), more computers, big screen televisions, etc. One gulp of the atmosphere in Beijing is proof that China is quickly industrializing and using greater amounts of energy each year than the year before. Finally, especially in the United States and Europe, existing nuclear fission plants are being left to rot while no new fissile plants are being built, and there is little to no funding for serious research in advanced fission or groundbreaking (nonradioactive) fusion technologies such as that being conducted by Lawrenceville Plasma and Physics.

Wind and solar power do not have enough energy flux density to perform the heavy labor needed in the real world. Here are several examples:

1. Solar powered airplanes do not and will never exist.
2. Wind powered airplanes do not and will never exist.
3. Solar powered cars and trains are not viable technologies.
4. Solar power cells produce no energy at night.
5. Wind power doesn't work when there is no wind.
6. You cannot melt large quantities of steel with the electricity generated from solar panels.

How long does it take for a wind-power generator to generate the energy needed to replace the energy needed to mine the iron ore and cobalt needed to make the steel its made out of? How about the energy needed to smelt that ore, process it, shape it, and the sum combined energy needed to move the ore and the finished products to the generation site? Consider the same question for solar cells. Solar and wind power are net loss technologies.

Hydrogen fuel cells suffer from a related problem. Fuel cells are batteries. They do not produce power, but only store it in a chemical reaction. So, fuel cells are not the answer to the world's energy needs.

In other words, all forms of "clean energy" are actually just as filthy as burning oil and coal and using nuclear fission, because they all, without exception exist as derivatives of the real energy market. So, solar power isn't self supportive. Neither is wind power. They're nice ways to light up a home and provide widespread lightweight offsets to energy consumption, but they don't offset their requisite manufacturing cost. Industrial society is not currently possible without oil, coal and nuclear power. That's reality. The oil is running out, and every new dollar makes it more expensive. Every new mouth to feed in the world increases its price.

So, let's review.

1. The price in dollars of oil is a function of:
   • international supply of oil
   • international demand for oil
   • the supply of dollars available with which to purchase the oil
   • the supply of other currencies available to purchase the oil
   • the availability of other forms of usable energy
2. The United States congress does not control the price of oil.
3. Hillary Clinton, Barack Obama and John McCain do not control the price of oil.
4. There is no conspiracy to hike up the price of oil.
5. In order to halt US Dollar price increases in energy in the U.S., we would need to either increase our own production of industrially usable energy by 17% per year, or reduce the rate of dollar inflation. In addition to this, we'd need to be 100% self-sufficient in energy AND either eliminate world economic growth, OR forbid energy exports.

What the United States as a technologically advanced society and a leader of the world should do is heavily invest in clean (non-radioactive) fusion technologies to replace aging nuclear fusion technologies such as the dense boron-hydrogen plasma fusion reactor, and move aggressively to render oil and fissile energy production obsolete. In the meantime, we should alter our weak dollar policy, make effective use of our native coal and oil resources, and probably invest in intermediary clean fission plants. We should build more railroads, get trucks off of the freeways, and live closer to where we work. More people should ride bicycles for jaunts around town. And we're going to have to do all of these things in concert in order to survive the energy reality of the 21st century. The 20th century is over, and we can't pretend otherwise or legislate our way out of our problem.

The parties most capable of making many of these needed advancements are "Big Oil" and "Big Corporations". Punishing these parties for helping keep us alive is suicidal. Solar and wind power are only a small part of the solution. We should get out of the way of U.S. energy companies and do what we can to help them move the ball forward. Foreign producers have the most to lose from a new energy revolution in the United States, and that would be sweet justice, wouldn't it?