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Oil

May 31st, 2006 | by Dr. Forbush |

I just finished the first part of reading Kevin Phillips book, “American Theocracy: The Peril and Politics of Radical Religion, Oil, and Borrowed Money in the 21stCentury.” He has divided the book into three parts, each of which deals with Oil, Religion and Finance in that order. Obviously I haven’t read the entire thing yet, so I wouldn’t be able to comment on the Religion or Financial parts of the book, but there is plenty to write about in the Oil section.

It is quite interesting to hear people say that Oil is the lifeblood of the American economy. Obviously this statement is technically true, but it is also biased at the same time. The point that this statement is missing is that energy is America’s lifeblood, but oil is the current carrier of that energy. Kevin Philips points out that coal was the lifeblood of the British economy in the 1800s and when they failed to make the switch to oil in the early twentieth century America was able to surpass the British as a world power. Well, I am not certain that the failure to make this switch was clearly the only reason, because there were also two world wars that may have had some impact, but it is clear that the British continued to play catch up from the 1940s on.

It is also very important to know when to change and grow with new technology. If we still used coal for our energy, we may still be using steam engines for transportation, heat, and heavy industry. But, oil made it possible for individuals to live in the suburbs and drive into the city to work every day. The suburbs would look at bit different today if everyone used the steam powered train everyday instead of the automobile. But, just because oil works for us today does not mean that we should be considering other means of energy for the future.

The point is not just energy, but cheap energy. Or, from an environmental concern cheap clean energy would be the main point.

The average American has no idea how they get their energy. They also have no idea how they get their food either, and the people selling food and energy like it that way. Just like the snake oil salesmen of the Old West you can’t pull a scam when people know what you are doing. But if you can make enough people believe what you tell them, then you can swindle a lot of cash and get out of Dodge before they know what’s hit them. We only have to look as far as ENRON to know that this is true. Enron was able to swindle the state of California by artificially raising the price of energy by buy up all the energy available and selling it back into the market before any money or energy actually changed hands. If the government leaders knew that Enron was able to do this they never would have let it happen, but the market was unregulated and Enron could do as it pleased without being watched.

Well, the oil industry works the same way. When oil is scarce the price goes up. If oil was the only way to get energy, then oil producers would have a monopoly on the energy market. But, coal, nuclear energy, wind, solar, hydrogen and alcohol all play a part in the energy market. But oil currently plays the biggest part in the market. Since the oil producers control so much of the market they are able to spend money to grease the wheels of government in ways that the other energy producers could only dream of greasing. In fact, the oil producers have someone from their industry at the head of the most powerful nation in the world. And Dick Cheney has used his power to protect American oil producers around the world.

One interesting thing about oil production is that not all oil wells produce oil for the same cost. New oil fields have oil at higher pressure, therefore requiring less energy to actually extract the oil from the ground. The more oil that is removed from the wells the more expensive it is to retrieve more oil from those fields. And, it turns out that Iraqi oil is some of the cheapest oil to produce in the world. No wonder that Dick Cheney was so eager to attack Iraq before 9/11/2001 when he met with American oil company executives. He was already deciding how to divvy up the Middle East oil, before Iraq or Iran was invaded. Imagine the smiles of glee when Dick Cheney proposed that American oil producers could sell the $1.00/barrel oil in Iraq for $30/barrel on the open market. But, now with oil over the $70.00/barrel mark these guys still believe that Iraq invasion was worth it. After all, it wasn’t like they had to spend their own money. Maybe a few of them did have to risk their own lives though, but they charged the government for the work.

Let me stop for a minute and look at the energy situation from the point of view of an average American who wants to drive a car at will and wants electric power when he/she flips on the switch. They want cheap energy at any cost. If the oil producers were to run people off their land and steal the oil the average American wouldn’t have a problem with it as long as it doesn’t cost more at the gas pump or when the electric bill comes due. Americans don’t seem to care how they happen to get their energy.

Now, we know that corn is grown cheaply and alcohol may be made from the corn mash. This alcohol may be burned in an alcohol-powered engine. It has been burned in Indy racecars since the 1970s. In fact, in Brazil Ford has created cars that burn both alcohol and gasoline allowing competition between two different forms of energy. When alcohol is cheaper the consumer may buy alcohol. When gasoline is cheaper the consumer may buy gasoline. Would anyone like to guess why Ford hasn’t sold these cars in the United States?

Similarly, hydrogen is another fuel that burns cleaner than any hydrocarbon, because hydrogen and oxygen burn to produce water and energy. Hydrogen may be created by using solar panels and water. Maybe hydrogen isn’t the instant answer to the energy problem, but certainly hydrogen could be one answer for the future. People could personally create hydrogen during the daylight hours with solar panels on their roofs and use the hydrogen as a type of storage reservoir for energy needed in during the evening hours. This technology has been demonstrated to work in a house set up on the Mall in Washington last year. Imagine producing hydrogen for your home and your car in the future. But what would the energy producers think of this kind of individual energy production? And, would a government with the concerns of the oil producers ahead of the average American help to get this technology jump-started?

Of course, oil producers have been able to hijack the Republican mantras of “government waste” and “no new taxes” in order to prevent people from getting this type of research off the ground. Only small scale demonstrations have any hope, as long as the oil companies have the possibility to buy the technology and develop it at the proper time. Of course this is code meant to delay the technology until the oil producers have been able to burn as much oil as possible before new energy carriers win the advantage over oil.

Kevin Phillips tells us how this didn’t work for Britain. Coal was superseded by oil as the new technology and Britain suffered by loosing status as world power. He argues that just because the United States wants to hold on to oil as its technology, which won’t prevent other countries from marching forward and displacing the United States as the world power. Imagine China or India being closed out of the oil markets and developing hydrogen as the obvious next step in energy distribution. Suddenly two fifths of the world is making their own hydrogen and developing the infrastructure for this entire industry. Who ever is first to market will certainly file patents and control this type of energy for many years securing their economic domination for the next century. The United States will continue to be tied to old energy as it runs out and Asia becomes to new world power.

Obviously when I get to the third part of the book Kevin is bound to tell me about the United States debt that China holds. It certainly seems sad that we are basically handing over the reigns of power to China and the average American has no idea that this is happening. When will the average American wake up from his electronically induced feeling of euphoria and realize that the people in charge know what they are doing and they are doing for themselves and not the common good of the average American?

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Don’t forget what Stephen Colbert said, “Reality has a well-known liberal bias.”

Cross Posted @ Bring It On, tblog, Blogger and BlogSpirit

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