From ‘Gas’ At the Pumps To ‘Gas’ In the Air, by Al Martin

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by Al Martin

From ‘Gas’ At the Pumps To ‘Gas’ In the Air

(10-10-12) Bloomberg reports that “gasoline closing in on a record $5 a gallon prompted Governor Jerry Brown to direct California regulators to relax smog controls so oil refineries could increase supplies of cheaper fuel…

“The California Air Resources Board yesterday granted refineries permission to make an early shift to winter-blend gasoline, typically not sold until after Oct. 31. Due to the composition of the gasoline, refiners can produce more of the winter blend than the summer blend.” (bloomberg.com)

The rise in California gas prices, however, is a one-off event due to refinery shut down. The price of gas in California two weeks from now will be where they were two weeks ago and Brown was just making a political move.

People who are smart enough to know what a barrel of crude oil was compared to the price of gas at the pump understand what adds so much to the price of a gallon of gasoline. The cost of refining a barrel of crude oil is actually pretty small – about $2. However there is the cost of meeting government regulations with these endless additives that makes gasoline prices twice what it should be.

And then there’s the ethanol scam. This was an attempt to shift corn farmers away from government subsidies and force people wearing their hats as purchasers of fuel to pick up that subsidy. But that is a typical response from government. In other words, THE people are still paying for it. It’s just that they are not paying for it wearing their hats as taxpayers anymore; now they’re paying for it wearing their hats as consumers.

Some people consider it to be corporate welfare for agribusiness giants like Cargill and Archer Daniels, but corn is not a big enough piece of any one corporation’s business. It is simply a politically convenient mandate.

Both Republicans and Democrats complain about the cost, which is about $30-40 billion per annum, to the American taxpayer of maintaining agricultural subsidies. So one way to reduce that subsidy is to shift the burden of the subsidy off the American people’s backs, wearing their hats as taxpayers, and then put it back on their backs, wearing their hats as consumers because they don’t realize that they’re still paying to accomplish the same goal.

This event in California is just a short term event. California’s Governor Jerry Brown just capitalized on it and it gave him a little political fodder. He said that they could bring in the winter blend early which would knock about 70 cents a gallon out of the price. However that isn’t going to have any long term impact.

Oil is the planet’s biggest business. That’s why nobody politically will attack it. They will get around the edges of it with this supposed alternative energy packages and loans, but that’s just feel-good pabulum to the political left and the “environmentally-conscious” It’s actually meaningless because the percentage of alternative energy consumed in the United States as a percentage of total consumption hasn’t increased. Certainly not in this century. Because you can’t touch the oil business. Everyone has a vested interest in it. That’s something the governments don’t like to tell the people, but it’s the truth.

If governments wanted to make a serious effort at producing alternative energy, they could build more thermonuclear power plants based on thorium, which is what the Japanese wanted to do, but even that doesn’t sell well to the public because of the word “thermonuclear.” Therefore they come up with all sorts of unworkable energy like solar and wind.

So what about the cold fusion technology? It has been officially suppressed because it would be the greatest challenge to hydro-carbon energy ever. Cold fusion is a technology that must be suppressed.

Bloomberg also reports that “U.S. Senator Dianne Feinstein, a Democrat from California, sent a letter to Jon Leibowitz [the brother of the Daily Show’s Jon Stewart], chairman of the Federal Trade Commission, yesterday asking for an immediate investigation into whether supply was being manipulated for profit.

“’California commuters are facing the highest gas prices and the longest commutes in the country,’ Feinstein said in a statement. ‘Paying hundreds of dollars to fill your tank every time you go to the pump is untenable, particularly because it does not appear the price spike and supply disruption are in any way related to supply and demand.’”

And she’s right to a certain extent, but she’s trying to twist it. It’s not related to supply and demand, but it is related to temporary disruption in refinery capability. This happens across the country all the time, where you see spot increases for two or three weeks due to refinery shutdowns for whatever reason. There’s nothing new about this. The only reason it got hyped so much is because of the unusually large spike in gasoline on a percentage basis because California already has the highest prices.

And the reason California has the highest prices in refined petroleum product at the retail level -- and Dianne Feinstein and Jerry Brown aren’t reminding the Californians –is because the state of California taxes it more than any other state.

California also has the most onerous regulatory burden for hydro-carbon energy usage. According to Bloomberg, “Gas prices in California have risen to their highest levels ever, with unacceptable cost impacts on consumers and small businesses,” Brown said yesterday in a statement. ‘I am directing the Air Resources Board to immediately take whatever steps are necessary to allow an early transition to winter-blend gasoline.’”

It’s really disingenuous to say that, but once again it sounds good to the Unwashed – but it will have very little actual impact on the price of gasoline in California, which would be coming down over the next couple weeks as refinery capacity is restored -- anyway.

When they substitute the gas with a winter blend which is cheaper to produce, you don’t see gasoline prices fall by 70 cents a gallon to reflect the reduced cost of manufacturing…

The oil business is unique and it’s unlike any other business on the planet because every facet of it – from governments on down – governments, business and industry, the oil companies themselves, the producing countries, the importing countries – everybody involved in the so-called hydrocarbon energy pipeline has a vested interest in keeping the prices as high as possible.

That’s why there will not be – at least in this century since there is enough hydrocarbon energy on the planet to last through this century – any serious challenge to it because it is economically untenable – and thus politically impossible to substitute hydrocarbon energy – even though the technology now exists to substitute it.

Then you get into what’s called the Technological Conundrum, which politicians have always faced, but which people are not really aware of since they’re not smart enough to understand it this way – that if you replace let’s say 70% of hydrocarbon energy with cold fusion, you would lose about 13.5 million jobs globally out of the hydrocarbon energy business and about $230 billion per annum in tax revenue.

If you built the cold fusion business from the ground up, that would only soak up one out of every ten jobs that were lost in the hydrocarbon energy business and it would generate only 1/10 of the tax revenue of the hydrocarbon energy business.

This is the Technological Conundrum that governments always have to grapple with and form back-door confederations with corporations in order to suppress certain technologies. It has to be done, and the people by and large are too stupid to understand it.

Bloomberg also reports that “while the waiver and restored production may ease supply, prices may not immediately fall as refineries hold onto gasoline and wait until the highest price to sell, said Bob van der Valk, an independent fuel pricing analyst in Terry, Montana. “The majors have product,” van der Valk said Oct. 5 by telephone. “But they’re not selling to fuel distributors, they’re not selling spot-market barrels, at any price.”

And that’s complete nonsense... If you’re making ARBOB, which is regular blend gasoline, and you’re buying and selling it at the spot price now which is about $2.70 a gallon and you have a chance to sell it for $5 a gallon wouldn’t you think you’d be selling every drop of the stuff you had?

This idea that the majors hold back on production or hold back on inventories in order to see prices rise is nonsense. It doesn’t exist. Gas prices rise because either the price of a barrel of oil increases, which is actually the smaller component of price rises – but more so by ever increasing government taxation of retail hydrocarbon energy combined with an ever more onerous regulatory burden and the cost of that burden.

This comes down to a more fundamental question which we have talked about before. When decisions were made in the immediate post-war (WWII) environment not to control global population growth in the industrialized countries, you couldn’t be all things to all people.

If you want clean air and clean water, then you’ve got to reduce the number of people that are creating the pressure on the resources, which in turn create the pollution. More people keep increasing the demand for more resources, the exploration, production and manufacturing, refining and distribution of which creates the environmental problem.

After all, even the United Nations in its Agenda 21 and Earth Charter posits a population of 9 billion globally by the year 2054 – a projection from a current population of about 7 billion -- in order to frighten governments into doing something about reducing population growth.

But that’s really nothing to worry about, since there is going to be an intervening factor that will reduce population rates globally and that is economic stress. Why? Because people don’t reproduce as much during times of economic stress. That’s why the population growth was actually a negative during the Great Depression.

The reason why the UN reports are a fantasy is because since the planet cannot produce the resources to support 9 billion people, there’s going to be an intervening factor caused by overpopulation and that intervening factor is going to be a global economic collapse which will give governments the cover to take more draconian measures to reduce population.

When there are economic collapses on the planet, what types of governments are the first to collapse? Democracies. That’s what ends the so-called democratic cycle, which is a historical 236 year cycle. The factor that causes that cycle to end is economic collapse, wherein democracies are suddenly replaced with more dictatorial forms of government which are necessary to manage the consequences of that economic collapse.

Governments that are more dictatorial will take whatever measures are necessary to reduce the size of the population. All governmental policies in the G-7 nation-states have been designed to do just that. This has been going on since the 1970s. That’s why they came up with the forced population reduction program.

This was the 1975 agreement which the United States and the Soviet Union made during the Cold War because they understood the problems of population growth and the Soviet Empire had a greater surplus population than existed even in Africa at the time.

South Africa, by the way, was one of the first to sign onto it wherein countries would begin to construct controllable alternative weapons that could be used on their own soil for the purposes of population reduction. That’s why neutron weapons were developed. Also it’s the reason -- and you don’t hear this publicly – why VX gas weapons were developed.

It should be noted how many weapons systems were developed, which have actually never gone into any country’s strategic inventories. Why? Because they were developed for another purpose -- not a geo-strategic or theater-strategic military purpose. They were developed for another purpose altogether and that is population reduction.

These weapons always move in the same direction – to make them ever more containable, with ever less “collateral damage,” which also means forced population reduction. It doesn’t simply mean destruction to buildings or infrastructure. It also means how much harm the weapon would do to the biosphere, in terms of biosphere contamination.

That’s the reason why VX gas was invented but very little of it was ever deployed or put into a theater weapon form that could be delivered against an enemy because it was never designed to do that. They didn’t “test” VX gas in Iraq for instance. They used an older Sarin gas derivatives because the United States and the Soviet Union have a lock on the production of VX gas since they are the only two countries that know how to make it. Any country that has it only has it because one of those two countries wanted them to have it and no other country has it, particularly an unstable client state of either power, where the weapon could potentially be used against the host nation.

The Joes don’t understand what this planet is going to look like in 20 years -- nor would they necessarily want to understand. The reason why nobody writes about this stuff isn’t because governments try to keep it a secret. The forced population reduction program – no government ever really attempted to keep it secret. They don’t write about it because the Joes don’t want to hear about it since it would force the Joes to change their way of life which they have always believed in. There’s no profit in doing that.

Why tell people that global collapse is coming and that a forced population reduction program is likely in your future? What useful purpose would it serve? They can’t protect themselves from it because they don’t know how. People’s reaction is to form these survivalist groups in underground tombs with 700 cans of tomato soup. And that’s all nonsense because that isn’t going to protect them from what’s coming.

The only way to protect yourself from what’s coming is to be able to make money make money every day by trading the planet’s stocks, bonds and commodity futures markets and converting trading profits into gold. This is the reason we formed Insider Intelligence and the reason we maintain a teleconference trading recommendation service…

* AL MARTIN is an independent economic-political analyst with 25 years of experience as a trader on NYMEX, CME, CBOT and CFTC. As a former contributor to the Presidential Council of Economic Advisors, Al Martin is considered to be a source of independent analysis for financially sophisticated and market savvy investors.

After working as a broker on Wall Street, Al Martin was involved in the so-called "Iran Contra" Affair as a fundraiser for the Bush Cabal from the covert side of government aka the US Shadow Government.

His memoir, "The Conspirators: Secrets of an Iran Contra Insider," (http://www.almartinraw.com) provides an unprecedented look at the frauds of the Bush Cabal during the Iran Contra era. His weekly column, "Behind the Scenes in the Beltway," is published weekly on Al Martin Raw.com, which also publishes a bimonthly newsletter called "Whistleblower Gazette."

Al Martin's new website "Insider Intelligence" (http://www.insiderintelligence.com) will provide a long term macro-view of world markets and how they are affected by backroom realpolitik.

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