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Affluent Investor | May 28, 2017

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Don’t Get Fooled Again: OPEC in Reverse

President Barack Obama and King Abdullah of Saudi Arabia at the White House. (Photo by Saul Loeb/AFP)

President Barack Obama and King Abdullah of Saudi Arabia at the White House.
(Photo by Saul Loeb/AFP)

The British rock band The Who gave us a great warning with their 1971 hit “Don’t Get Fooled Again.” The wisdom of that title has its roots in the very wise adage, “Fool me once, shame on you; fool me twice, shame on me!”

I received my Pennsylvania driver’s license and the responsibility to fill up the gas tank in 1973, just in time for the OPEC (Organization of the Petroleum Exporting Countries) oil embargo. The embargo resulted in the 1973 Oil Crisis and the cost of a gallon of gas quadrupled.

OPEC’s stated mission is to “coordinate and unify the petroleum policies” of its members and to “ensure the stabilization of oil markets… [resulting in] a steady income to producers and a fair return on capital.” In other words, it is a cartel organized as a monopoly to limit competition. In this way, OPEC is able to manipulate the supply of oil and to receive profits that are not achievable with open and free market competition.

Starting in 1973, OPEC has looted much of the world’s wealth by artificially controlling the supply of energy and has redirected the loot to such dubious efforts as international terrorism. They have been aided in their efforts by a lack of competition from their largest customer, the United States. They are so important to us that we, as a country, overlook their many shortcomings. Our leaders literally bow down and kiss up to them.

President Barack Obama bows to King Abdullah of Saudi Arabia. (Photo by Getty Images)

President Barack Obama bows to King Abdullah of Saudi Arabia.
(Photo by Getty Images)

President George W. Bush kisses King Abdullah of Saudi Arabia.

President George W. Bush kisses King Abdullah of Saudi Arabia.

Recently, new technologies have reduced the costs of US domestic energy extraction while increasing the yield per drill site. In addition to these new technologies, energy rich states from the past (like Pennsylvania — home of the first oil well in the US in Titusville and the first US oil refinery facility in Pittsburgh, both in the 1850s) have enacted reasonable regulations for energy exploration. The combined results have resulted in a boom in domestic energy production, primarily from natural gas hydraulic horizontal fracturing (“fracking”) of shale.

While this industry is less than 10 years old in Pennsylvania it has increased the world supply of clean, efficient energy. It is an industry that is in its infancy and has at least 100 years to go. This is a direct and serious threat to OPEC and its largest member, Saudi Arabia, the home of many enemies of our country and of our way of life. 15 of the 19 September 11th hijackers were citizens of Saudi Arabia.

OPEC is threatened by our good fortunes and must destroy our energy production as soon as possible in order to remain profitable. The only real tool they have in this effort is the same one they used in 1973, the valve. In 1973 they turned the valve off to achieve their goals and now they are trying to fool us again by reversing the valve to full blast in an attempt to flood the world with cheap energy that they hope will derail our successful energy production due to oversupply. They understand that if we can be persuaded to temporarily slow down our own energy production it could eventually result in our production stopping altogether, giving their cartel a monopoly position once again.

So take Roger Daltrey’s advice to heart, don’t be fooled again. Don’t be fooled by OPEC or others who know that their worst nightmare is a North America that not only has a stockpile of energy for its own needs, but also has a supply large enough to export. Let’s keep our eye on the long-term prize of energy independence: no more funding our enemies and their lavish lifestyles; no more need to kiss up to a Saudi King (is there nothing more un-American than a king and the need to kiss or bow to him?); no need to send our troops to the Middle East over energy stabilization.

Allan Edwin Wampler is President and Founder of Synergy Real Estate Corporation; a commercial real estate and economic development firm. He has more than three decades of experience as a real estate developer and over 20 years of experience as a consultant. His developments include shopping centers, retail, hotels, and commercial land development. As a consultant he has worked throughout the country for airports, universities, transit agencies, all types of public sector governments and agencies, as well as private developers.

Allan has authored articles in numerous real estate and economic development periodicals. He has instructed college level courses in Finance and Real Estate. Allan has presented keynotes and served on panel discussions on various real estate and economic development topics.

Allan holds a MS degree in Finance and a BS degree in Real Estate Finance both from the Pennsylvania State University. He has earned numerous professional licenses and designations. He also served as Allegheny (Pittsburgh, PA) County’s first Economic Development Director.

Allan makes his home in Pittsburgh and Miami. He enjoys traveling and spending time with his wife and two adult daughters as often as possible.

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  • bdkern

    “In other words, it is a cartel organized as a monopoly to limit competition.” In simpler terms it’s called “price-fixing”, which is illegal in America, but tolerated when it’s them.

  • Joe Mertens

    Fracking wells only last an average of three years and if Colorado and their current predicament is any indicator what will happen when they go dry is the fly by night fracker companies will declare bankruptcy and tens of thousands of wells will have to be decommissioned at TAX PAYER expense just like in Colorado.
    Be smart find your own energy solution for your household like biogas anaerobic digester, solar, wind geothermal or some combination.

    • speedle24

      Three years of production is well worth the cost of drilling and fracking. If you want to get by with your silly alternative fuel ideas knock yourself out. Most of us don’t wish to regress to the middle ages in lifestyle.

      • Joe Mertens

        Sure as long as the price of oil remain at or above 100 dollars a barrel it is a viable option for oil at the cost of continuously polluting hundreds of millions of gallons of water and destroying the local roads with massive trucks.
        Alternative fuels are not silly the diesel engine was created to run on oils made from plants and the government grant hogs will never produce viable products as to keep the tax money flowing so I don’t expect anything from them the free market can produce the needed infrastructure as the tech is all ready well understood.

        Your assumption that using alternate fuels will render us to a middle ages life style is just a scare tactic and nothing more as jets trucks and cars can operate perfectly with fuels made from algae and that algae once processed for oil is excellent cattle feed stock or anaerobically digested to produce methane IE the major component of propane or natural gas to be bottled or burned for electrical generation and after all that it is wonderful food crop fertilizer.

        • speedle24

          The BS is piling up so high here that we may indeed be able to use it as a biofuel. On the other hand, your “algae” fuel experiments are going to be realized about the same time as we land a man on Jupiter. It just isn’t going to happen anytime in the near future.

          “Scare tactic”? Scare tactics are the climate change nutbags trying to convince the great unwashed that the surf is going to be in their living rooms next week unless they stop driving their cars and farting. That’s “scare tactics”.

          No, it doesn’t have to be $100 per barrel to be profitable, and those roads can be repaired. I hope you have some better reasons than that for ruining the economy and destroying jobs.

          • Joe Mertens

            Yes if government runs the programs no “Algae Experiments” will reach fruition as that would upset the status quoe.

            I am not advocating anyone stop driving or saying anything about sea levels rising of that other nonsense I am just pushing for a better way to get fuel that is nontoxic and does not subsidize at taxpayer expense the crony crapitalist petroleum industry.

            If you were correct about oil not needing to be priced at 100 dollars a barrel then the current fracking businesses would not be going bankrupt with oil currently being priced much lower than 100 dollars.

            Sure roads can be repaired but the counties who have too can’t afford to do so and have to switch them to gravel roads instead of paved roads entailing the problems of slow speeds massive dust clouds on heavily trafficked areas and so on.

            The economy does not have to be ruined the government just needs to let entrepreneurs build what they need to too supplement and then eventually replace current systems.

          • speedle24

            That is the problem. The oil price is less than half of that $100 per barrel. They could do nicely at $60, but not less than $50.

          • Joe Mertens

            A ten dollar window in price difference is not a nice position to be in as any increase in costs makes such a margin quickly vanish any minor price drop due to over production or new sources means you have to operate on reserve cash or borrow money till that re-stabilizes to 60 leaving you vulnerable to an extended low price or interest payments.

          • speedle24

            It’s called business risk Joe, and it is part of the economic structure. People take risks. Sometimes they win and sometimes they lose. No amount of Monday morning analyzing will ever change that. The economy cannot be effectively managed. “Chaos” is necessary at all times to keep things going. This is something that Keynesian theorists cannot seem to grasp.

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