There is no end in sight to the rising oil prices, and it often feels like there is price manipulation in the market place. Is there a cheaper energy source available today that we can use instead of gasoline? Can I run my car on Water?
The consumption of gasoline in the USA is dropping as prices skyrocket. And yet gasoline prices continue to rise. Why?
Who controls gas prices is a question that many consider. Looking at market forces, Supply and Demand, provides a partial answer.
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.
Looking at the Demand side, the increasing consumption of oil by emerging industrial countries is a significant factor. The two fastest growing consumers of oil are India and China. Rapid urbanization, industrial growth, and the rising standard of living have all contributed to soaring energy needs. Over the last decade, China has doubled its oil consumption. At the current annual consumption rate of 8%, China's oil consumption will double again in less than a decade.
Transportation accounts the largest share of oil consumption, reflecting the growing rate of vehicle ownership. China and India are experiencing rapid growth in vehicle ownership which now accounts for 75% of total oil consumption. This compares to the USA at 70% consumption by vehicles.
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.
So, who controls gas prices? Perhaps OPEC by controlling exports. Or the large integrated oil companies like Exxon Mobile and ConocoPhillips who are making record profits. Or even the companies in the distribution chain: the refiners and gas station owners.
Who controls gas prices? Many would respond that it is the large integrated oil companies. Why? Because the oil companies sell their oil to the highest bidder, and then repurchase the oil from the lowest cost supplier.
The control of gas prices today is clearly with the Institutional Investor, who sets the spot price for oil. Michael Masters, a Hedge Fund manager, recently testified (in May 2008) before Congress. He stated that "What we are experiencing is a demand shock coming from a new category of participant in the commodities futures markets: Institutional Investors...". However, what is often cited in the media is the rise in oil prices over the last five years is due to the explosive demand of both China and India. Little is mentioned about the Index Speculators whose demand for oil in the spot market over the same period has equaled that of China.
Rampant speculation in the spot market for oil is responsible for the sharp rise in oil prices, says OPEC Secretary General Abdullah al-Badri. In June '08, he presented his findings showing that the 'paper market' for oil has reached 1.36 billion barrels daily. This is 15 times the 87 million barrels per day that is consumed worldwide.
Institutional Investors face very little oversight regulation with regard to manipulating the spot price of oil. As a result, they truly do control its price.
So, what can we do about it? Short of waiting for Congress to implement legislation, or the Chairman of the SEC to take action, we can take action and effectively be the one who controls gas prices. How? We can effectively control prices by dramatically improving the gas mileage of our cars and trucks.
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 the next generation of the Hybrid car, slated for 2010, will be pluggable (enabling the batteries to be recharged on ordinary household current). With advances in battery technology, the new Hybrids are expected to average over 100 mpg.
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.
Like the Hybrid car, this system relies on capturing wasted energy and reapplying it as needed to improve gas mileage. Wasted energy occurs when the vehicle is at a standstill or coasting down a hill, and the engine is not contributing to moving the vehicle forward. Unlike the Hybrid car which stores wasted energy in batteries, this technology stores the energy by converting water to a highly combustible gas called oxyhydrogen (HHO). It is like running your car on Water.
Fight back against the oil companies. A simple inexpensive system will show
HOW TO RUN YOUR CAR ON WATER
With gas prices reaching $5 people are looking for ways to improve gas mileage as a means to reduce their annual expense. Surprisingly, water has provided cheap energy for decades through electrolysis. This is a technique in which the water molecule (H2O) is broken down into a gas called oxyhydrogen (HHO), also known as Brown’s gas. This highly combustible gas is then introduced through the intake manifold or the carburetor to mix with the gasoline. The improvement in gas mileage can be dramatic based on driving conditions and the vehicle.
