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Friday, December 21, 2007

From Oil to Energy

For the last few months, I have gone on a search for as much information as I could to figure why, if everyone wants it, we as a nation can't seem to find anything near energy independence. We all know that everytime we fill up our cars we fund the very enemies that wound up hitting us on 9/11, and yet as a nation we can't seem to rid ourselves of our "oil addiction". The answer begins with one word, oligopoly (more on this later)

In order for our nation to achieve energy independence the major oil companies must transform themselves into energy companies. Next to regular, super, and diesel, your local gas station would also need to have natural gas, ethanol, hydrogen, and all sorts of other fuel sources we don't even know about yet. Anyone who has seen a BP Amoco commercial knows that is exactly what they are trying to sell the public on, but anyone who studies the facts also knows this is pure rubbish.

In 2006, BP Amoco made about 22 billion dollars in pure profit, after every expense including taxes. What does there commercial say they will spend on alternative fuels...about 700 million dollars over the next ten years. Comparing those two numbers, the amount that BP will spend on alternative fuels is a drop in the bucket. It is done purely for the sake of public relations. The company walks away with 20 billion and we are suppposed to be impressed because they spent 70 million this year. This way while we continue to spend obscene amounts on petroleum at their stations, we will also be led to believe that they are serious in producing alternative fuels. They aren't. They could spend ten or a hundred times on alternative fuels and still have plenty left over. They could but then they would be serious about producing alternative fuels. It would be something more than a slogan to increase their brand.

That said, is there anyone reading this that blames anyone at BP for doing anything different. If you were making money hand over fist in petroleum, why in the world would you do anything to shake things up. Why reinvent the wheel when the wheel is well so profitable.The problem lies in this word, oligopoly. There is very little difference from the big oil companies of 2007 and Standard Oil of the early nineteen hundreds. We broke up standard oil and produced a handful of companies that act pretty much exactly the way standard oil did on its own.

Some may question why in a market such things could go on. That's because petroleum is no market. When we have six companies, what happens is a quick game of chicken. One company sets the price and then the rest follow. All of them get fat, very fat, and we the consumer get hosed. Worse yet, our addiction to oil continues, because that is what is making them fat. None of them have any motivation to change because as it stands now there is plenty of money for all of them, as long oil is the only game in town. Does PB really have any motivation for introducing a natural gas tank next to their petroleum tank? For what. Someone might actually like it and ask for more tanks and then their whole windfall profits may even get threatened.

The system is rigged and I don't know if there is anything we can do about it. I don't know enough about anti trust to know if it is even possible to break them up, which in my estimation, is the only way to create the kind of competition necessary to transform oil companies into energy companies. I certainly know there is absolutely no will even if there is legal standing. The oil companies will continue to get fat while preaching to us about change. We will continue to get hosed, and the Saudis they will continue to profit and send that money to madrassas all over the world so that new UBL's can be created. As for me, I will continue to see the hair on the back of my neck stand up everytime I see BP claiming to be transforming itself.

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