Posted by: kevinfortruth | April 16, 2011

Bad to the Last Drop

I remember those commercials like they were on television yesterday. The “singing” coffee pot with that catchy tune and the commercial that always ended with “good to the last drop” and “Maxwell House coffee – it doesn´t matter who makes it, it is always good”. Those were the good ´ol drops, right?

Now lets talk about “Bad to the Last Drop” – I am talking about Black Gold, Texas Tea, also known to commodity traders as West Texas Intermediate Crude.

We have had a love hate relationship with this indispensable source of energy for decades.

The Clampetts sure benefited from the stuff, they discovered it in their backyard, cashed in on it, and lived like country royalty from then on.

Things were fine years ago when anyone could literally poke a shovel in the ground in Texas or Oklahoma and out would spurt black gold. Oil was everywhere and it was cheap. Unfortunately, it got cheaper and without the profit margin to make removing it from the ground worthwhile, the shovels stopped digging in Texas and Oklahoma and the hunt for petroleum shifted about 7,800 miles east as the crow flies to Saudi Arabia.

Flash forward three to four decades, oil is now at a premium – no, I am not talking about the grade, just the price. In addition to the price per barrel steadily going up, the oil coming up out of the ground is getting dirtier because countries have to dig deeper and deeper to get at it. As a result, it has to be further refined, which increases the price at the pump. Equate it to drinking the last cup of coffee from that old-fashioned 100-cup coffee maker – the last cup was almost like drinking mud but because it is the last cup out of the urn you will pay dearly for it even though it tastes like mud.

Our government and the media blame OPEC for all the problems such as availability and price at the pump. Our government must love it when our citizens go along with the assumption that all oil producing companies have a stranglehold on us – it then makes it okay for us to attack these countries one by one because collectively, as members of OPEC, they are trying to destroy our comfortable way of life – the nerve of those guys, right?

Large multi-national oil companies also must love it when OPEC is portrayed as the bad buys. They are making record profits while we are paying dearly at the pump. Not only are we paying more for gas, we are paying more for all products affected by fuel price increases, such as food, clothing, and airline travel.

To get Americans on the anti-OPEC bandwagon, the media also implies that some of OPEC´s profits supports various terrorist groups like Al Qaeda.

I am not a supporter of OPEC but I believe in their right to make a reasonable return on a diminishing resource, just like American natural gas companies and American coal companies are expected to make a fair rate of return on their diminishing resources – natural gas and coal.

Sometimes the bad guys are the ones who are pointing the fingers. Sometimes there is more than one group of bad guys. Are we, as Americans, also part of problem? Can we also be considered the bad guys because we are purchasing gas and pumping it into our SUV´s and other fuel inefficient vehicles? I believe so.

Oh, I almost forgot another group of “bad guys”, the commodity traders that trade futures on the NYMEX and the International Petroleum Exchange in London. Their collective greed also contributes to the increased price at the pump. In fact, everyone involved in the petroleum process from the oil fields until it is pumped at the gas stations plays a role in the price at the pump.

We Americans want it all and we also want it both ways. We want gas to always be readily available and we want it at the cheapest price possible.

There is a wonderful saying first recorded in 1772 that applies here: “Waste not, want not” – the meaning is quite obvious. That saying comes from an older saying coined in 1576, “Willful waste makes woeful want”. describes the latter as: “This means that if you purposely waste something, you will need what you wasted one day”.

I do not believe that the latter describes what is going on today. Many American´s do not believe they are wasting this precious resource. Some people believe they are simply exercising their right to shop when they want, drive what they want, and use whatever resources necessary doing so in the process.

After all, we are Americans, and we have a sense of entitlement. If any country does not provide our country with the resources we, as a nation need, we simply find reasons to either invade that country or participate in the overthrow of that country´s government. While doing so, our country labels the other country´s government as a regime, which somehow justifies our actions.

Recently, President Obama gave a speech on American “exceptionalism”. Many countries, like England, France, Germany, Israel, and China, have also bragged about their exceptionalism but the Israeli´s have taken it one step further. They feel they are God´s chosen people and as such can control as much property as they want.

There is no doubt that we have helped many countries in need, but I feel we do so with many strings and conditions attached. Simply stated, we want a return on our investment – a big return.

Now, back to the title of the blog, “Bad to the last drop”.

There is a diminishing supply of easily accessible, cheap oil in the world. To what degree this supply is diminishing is an unknown – unknown to the general public, but obviously known to the power brokers.

It is a given that outside of the Middle East there are tremendous supplies of oil embedded in tar sands, especially in North America, but it is and will continue to be extremely expensive to process, so our energy companies are focusing on where it is easier and cheaper to extract – namely the Middle East.

The infrastructure that supports the petroleum industry is vast – refineries, petroleum farms for storage, tankers that transport the oil across the oceans, a delivery system consisting of pipelines as well as gasoline tankers, and the final point of purchase – a network of gasoline stations from coast to coast.

If the energy industry shifted its focus en masse to newer green technologies, the infrastructure mentioned above would diminish in value. Hundreds of thousands, if not millions, of workers would be out of work. Many of these workers would need to be retrained to work in industries supporting these new technologies such as wind, solar, hydro, geothermal, tidal energy and even biomass energy that represents sunlight stored in plants. To support this shift to new energy technologies, billions of dollars would be required to develop new infrastructure for each of the developing technologies.

The major energy companies that currently depend on fossil fuels as their main source of income will continue to gradually shift to alternative fuels but at a snail´s pace, until they become acutely aware that the last drop of oil is in the near future – only then will the proverbial snail pick up speed and travel more economically by adding a solar panel to his shell.

The price we all pay for energy will never be as cheap as it is now, regardless of its source, whether these sources are renewable or non-renewable. Fasten your belts because the amount of money we spend on energy will become a higher percentage of our monthly expenditures.

If you are so inclined to invest in energy, doing so will be like throwing darts at a dartboard – unless you are in the know regarding trends, innovations, and where the elite themselves are investing.

All in all, energy is a complex beast. Multinational corporations, along with organizations such as OPEC and the American Petroleum Institute and even governmental entities have a say in how and when the world transitions from fossil fuel.

The best we can do is to roll with the punches by doing our best to conserve and to be savvy consumers. It doesn´t matter if we believe that the cup is half full or half empty – we just need to develop an appreciation for what is left.

Get ready – it´s going to be a bumpy ride – and an expensive one at that!


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