Access to Oil
It Is Not Only Demand
By Daniel Muniz

In addition to the insatiable increasing global demand of oil, there are a number of other underlying domestic reasons for the spike of gasoline prices in this country that happen to be self-inflicted. These self-inflicted wounds, which are not well publicized in the media, have made overall energy in the United States more expensive. A short list would include:

● Refusal to use more coal (for power plants)
● Refusal to build new nuclear power plants
● Refusal to drill in Alaska and off the East and West Coasts
● Reluctance for new hydroelectric power plants
● Refusal to allow new refineries (for over 30 years)
● Refineries only in certain parts of the country
● Costly blends of gasoline in certain parts of the country

And remember, we have complete control of the above actions because each item is government instituted either at the local, state, or federal level.

As a result, instead of using less foreign oil from the unstable parts of the world, these self-inflicted problems have made this country even more dependent in importing oil. In addition, certain environmental considerations have also prevented us from taking advantage of alternative fuels for the generation of electrical power. Even so-called green power like wind farms in Massachusetts have fierce opposition from Liberals like Ted Kennedy.

Of course there are many more self-inflicted problems but the intent of this short list is to demonstrate that moving oil from Point A (that is from the ground) to Point B (into your gas tank) is already an intricate and complicated process especially when the federal government is involved. And any interference from the domestic front can easily cause a spike in gas prices.

On the foreign front, the world’s oil supply is even more volatile and uncertain with circumstances that are completely beyond our control.

However, the global demand for oil is not the chief cause for the overall enormous rise in fuel prices.

I agree that “demand” in of itself is an incomplete reason, mostly because it has to run in tandem with supply in order to cause the price increases for the long term. In addition, certain oil producers are simply not available, like Iraq, whiles others are often temporarily disrupted because of internal problems.

But a more encompassing view is our “access to oil” in the world market. And oftentimes, that access is greatly limited due to political reasons.

In addition to the absence of Iraq’s oil from the world’s oil supply disruptions from all over the world impact us. It doesn’t take much for civil unrest to interrupt our oil supply in countries like Iraq, Nigeria, Venezuela, and others. However, Iraq is more long term while the other disruptions are fairly short term.

In addition, it is unfortunate that some of the best oil reserves lie in either rogue states or in unstable regions of the world. And because of our own geopolitical position, we do not have complete access to all of the world’s oil. Simply put, we do not do business with certain oil rich but rogue states. In addition, there are other countries that are itching to pull the plug on oil shipments to us like Venezuela and now Bolivia (which just nationalized its oil and natural gas industry).

And when we are dealing with some of the shady oil rich countries, our own oil companies are prohibited by federal law from engaging in bribes, kickbacks, and other forms or racketeering even though everybody else does it.

Some countries want more than our money for oil. They also want access to our arms and weapons.

Meanwhile, a populous country with a growing thirst for oil like China can do just about anything it wants with few if any ethical considerations. For instance, China is establishing a firm partnership with Iran as well as with other countries that we do not do business with.

And with countries that hate us like Venezuela, China is becoming such a big customer that losing the United States as a client may some day in the future be worth it to them.

Corrupt officials in third-world countries often use bribes and kickbacks as part of its business environment. Again, China has no problem greasing a palm here and there especially for better access to oil. And lots of other countries do it too.

In addition, many of these unstable regions also want arms deals tied in with oil purchases. When it comes to weapons, the Chinese government will do business with just about anybody.

And we saw such similar behavior with France and Russia when both countries attempted to use to their clout in order to safeguard their investments with Saddam Hussein. China is doing the same, especially with its muscle in the United Nations.

And finally, there are oil rich countries who abhor free market principles. Instead of using their vast natural resources to transform their failing economies, they are still just as impoverished as they were before any discoveries were made.

For instance, Mexico has nearly depleted its entire oil reserves and has almost nothing to show for it. Fortunately, a vast new oil field in the Gulf of Mexico was discovered but its socialist policies prevent it from extracting it in the most efficient means possible. That is, by using competent third party oil companies from other countries that already have the technology, equipment, and expertise.

Instead, Mexico will use its state run oil company to do the work. The result will be a far greater cost and delay.

As a whole, supply and demand go hand in hand. And for the time being, we do not have the most favorable access to the world’s oil supply.

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