This leaves 33 percent of the crude oil, using present technology, of no value to consumers.
Where does worldwide production of crude oil come from? The top 10 crude oil production countries are listed as follows:
Country- Oil production*
Saudi Arabia - 17.3
Russia - 15.1
United States - 12.3
Iran - 8.0
China - 7.1
Mexico - 6.9
Venezuela - 6.5
Norway - 6.4
Iraq (pre-war) - 5.2
Nigeria - 4.8
*Oil production amounts are in quadrillion BTUs (British Thermal Units).
Based on the data in the above table, the United States produces 13.7 percent of the top 10 crude oil production countries. However, when all oil-producing countries are included, only a small fraction of oil is extracted in North America. The U.S. has very little influence on crude oil prices which, in turn, means it has has very little influence on gasoline prices.
The major influence on crude oil prices is OPEC (Organization of Petroleum Exporting Countries). The following excerpts are taken from the Wall Street Journal, Dec. 12, 2005. "Crude oil price pushes past $61, fueled by concerns over supply. Crude-oil futures settled above $61 a barrel, up nearly $2."
Futures are what oil price speculators are willing to bid to hold large amounts of crude oil for their own re-sale. In most cases, the purchasers of "futures" will result in significant profit when their holdings are re-sold to the highest bidder. This practice, by itself, increases the price of gasoline. President Bush has no control over these "free enterprise" transactions.
Let's stop for a minute. OPEC, which extracts more than half of worldwide crude oil, meets periodically to determine how much oil its countries will produce. If OPEC decides to cut back on production, the supply of crude oil drops. Virtually in a panic, countries try to outbid other countries to gain access to a limited supply of oil. OPEC profits rise up like a tsunami wave, resulting in a jump in U.S. gasoline prices. President Bush has no control over OPEC and its decisions to do whatever it wishes with its vast oil supply.
From the Wall Street Journal, Dec. 13, 2005; "OPEC indicates it will seek to maintain high oil prices. In a signal that it will seek to keep oil prices high, OPEC decided to continue pumping oil at its current volume, but called a special meeting for next month to review output, with a view to throttling back ahead of the second quarter."
Throttling back means cutting production. Cutting production reduces the supply of oil. Reducing the supply increases the demand. Increased demand increases the price. The increased crude oil price increases the price of gasoline and on and on we go. So, is the increased price of gasoline Bush's fault?
Richard R. Squires