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The Manipulation of Oil Prices and What Can Be Done!

As oil prices continue to rise with no end in sight, we blame manipulation and ask who controls gas prices? Can we fight back?

With gas prices rising and gas consumption in the USA dropping, one would expect that prices would stabilize and eventually drop. Yet this is not the case.

The question on everyone's mind is who is controlling oil prices. In a perfect market, the forces of Supply and Demand would prevail. Let's briefly review the market to determine why the market is not working.

What are the factors affecting the Supply side? The disparity between the growth in new sources of oil and oil production has been on the rise since 1980. That was the year when production outpaced the discovery of new oil resources, and we realized that oil supplies are finite. Until equilibrium in the global marketplace is reached, economists predict that oil prices will continue to rise. And the violence in the Middle East and the instability in West Africa have led to lowered oil exports.

On the Demand side, the most significant factor affecting oil prices has been the increasing demand worldwide by emerging industrial countries: India and China, specifically. These two countries are becoming huge oil consumers as rapid urbanization, growing industries, and higher living standards dramatically increase energy usage. China has seen a doubling of oil consumption over the last 10 years, and expects another doubling in less than a decade, as oil consumption has been increasing by 8% per year since 2002.

Transportation has seen the highest growth in oil consumption as the ownership of cars and trucks for personal use grows. In India and China, consumption due to the growth of personal-use cars and trucks will account for 75% of the consumption increase. In the USA, personal-use vehicles account for nearly 70% of oil consumption.

Also, as world population increases, so will the demand for oil. Production per capita peaked in 1979 when population growth exceeded oil production. Since then it has been declining. World population in 2030 is expected to be double that of 1980.

Given the above, who controls gas prices? Is it OPEC by limiting oil exports? Is it the large integrated oil companies making huge profits, such as Exxon Mobil and ConocoPhillips? Or maybe the distribution sector, including refiners and gas stations.

Most would answer who controls gas prices by pointing to the large integrated oil companies. The production units of these companies actually sell their oil to the highest bidder, and purchase oil for their refineries from the lowest cost sources. And there's the problem.

Who controls gas prices today is predominantly the Institutional Investors. Hedge fund manager Michael Masters testified before Congress in May of 2008 about his belief that "What we are experiencing is a demand shock coming from a new category of participant in the commodities futures markets: Institutional Investors...". While the press generally cites the increase in demand over the last five years from China for the rise in prices, it fails to mention that the during this same five year period Index Speculators' demand for petroleum futures has increased nearly equal to China.

Abdullah al-Badri, OPEC's Secretary General, indicated that there is rampant speculation in the spot market for oil. He provided data that the 'paper market' for oil is 15 times larger at 1.36 billion barrels per day compared to the 87 million barrels per day of worldwide consumption.

Without proper oversight (most of the oil market remains unregulated), Institutional Investors are free to manipulate the market by pushing prices higher. Hence, they are the group who controls gas prices.

What can be done about this? Congress could investigate and pass legislation to ban the manipulation of the spot price of oil by the Institutional Investor. The SEC Chairman could more aggressively apply existing laws to stop the manipulation. Or we could act directly to reduce our consumption of gas in our vehicles today.

Within the near future the auto manufacturers will be providing high mileage vehicles. GM will introduce an electric (EV) car with a small engine for recharging the batteries. This technology reflects a radical change in design, eliminating the big engine and drive train (transmission, driveshaft, and rear axle). Introduction is scheduled for 2010, and its expected to get approximately 150 mpg.

There is also the Hydrogen Fuel Cell car, which is at least a decade away (I don't hold much promise for this design).

And, there is the current Hybrid car which augments the engine with electric motors. By 2010, advances in battery technology will enable the car to run on electric power only for up to 40 miles before the gasoline engine kicks in. They will also be pluggable, which means that the batteries can be recharged from an ordinary a/c outlet.

However, there is something we can do today to dramatically increase gas mileage (up to 50%) with existing technology. It is inexpensive and easy to install on our vehicles. It is not harmful to the engine and will reduce emissions.

The system improves gas mileage by capturing wasted energy from the engine and then reintroducing it to the engine as needed. This is same approach that Hybrid car technology applies. Wasted energy occurs when the engine is idling, usually when the vehicle is at a standstill or when it is coasting down a hill. The system captures the wasted energy by converting water to a highly combustible gas, oxyhydrogen (HHO) through electrolysis. It's like running your car on Water.

Article Source: http://www.particlearticles.com

Stop the relentless rising price of gas. A simple inexpensive system will show HOW TO RUN YOUR CAR ON WATER

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