Energy and Oil

Rahim Charania of American Fueling Systems

from my interview with Rahim Charania ……

A Semi-Finalist at the Metro Atlanta Chamber Business Person of the Year!

Rahim Charania“After the collapse of the real estate market in 2008, we really had to do some soul-searching. The market was in chaos and our real estate value holdings had devalued by over 40%, in just six months a period of time. Our in-line retail portfolio that we had in July 2008 had an 11% vacancy. In July of 2009, it had a 79% vacancy.

The recovery is definitely there. I think through economic and personal disaster, the most important thing any business owner can do, especially a business owner who has family and employees that are depending on him or her to do something, is always to be prepared to do a ask the hard questions of themselves. At the time we asked ourselves the question, “What can we do that meet our two core criteria of any business that we get into?” Number one, does it make money and number two, can we create some kind of environmental, or social impact by the work that we do?

In 2008, we could no longer provide a yes to either one of those answers questions in the real estate sector, because there was no real estate sector in 2008. It is only in 2012 and beyond where we have started to see a bit of a turnaround. But we still have a little ways to go to get back to our values that we were at pre-2008.

We sat down and looked at our portfolio and we said what is worth fighting for, what is worth walking away from, and what is our next step. What we found was that there is a growing need in the transportation sector, besides labor, fuel is the biggest cost and it has gone up 350% in the last six years. But transportation pricing has not increased. So they were being squeezed like crazy. They were all looking at alternative fuel. Our idea was to find a way to provide alternative fuels in a manner that would create a seamless change.

Change is a difficult thing for any human being. Anyone who has tried to start new business, a new workout program, or to quit a bad habit knows that change is hard. If we want to get these fleets that are so accustomed to gasoline and diesel to switch to the cleaner burning, cheaper cost alternative like compressed natural gas, we had to create CNG facilities that mirrored the petroleum facilities that they were so accustomed to.”



Radio Highlight: Green Guru Jigar Shah

from my interview with Jigar Shah

Jigar Shah

Jigar Shah

“Oil prices are five times higher than they were in 1989 which makes a lot of solutions to save oil a lot more cost-effective. Electricity prices are 50% higher than they were in 2000. You’ve got water shortages around the West of the United States, as well as in India and other countries around the world. Just a lot of folks who are real optimizing for water solutions. And the last piece is a lot of folks are, including government, trying to figure out what to do with these huge populations of people who are out of work. A lot of the solutions that I represent our blue-collar heavy, so the company that I started has 70% of our employees who are doing jobs that did not require anything more than high school education.

I am not passionate about the government coming in and setting floor prices or ceilings for that matter, I’m a free-market guy. But I do think when you think about the late 1970s, the reason that the Department of Energy exists in the United States is because of the Arab oil crisis. Even now most Americans don’t believe that we have the solutions to be able to protect ourselves from hundred dollar oil. The fact of the matter is that we do have the solutions, and the fact that they haven’t been scaled is a lot of what I talk about in my book. And so instead of providing a floor price what I would do is say, ‘Hey look the largest user of fuel in the world is the United States military.’ So the government should create a floor price provide a long-term contract from the military for alternative fuels that are today cheaper than what they are currently buy.”

Learn more here…

Radio Highlight: Sustainability Expert Eric Lowitt

from my interview with Eric Lowitt about sustainability …..

Eric Lowitt

Eric Lowitt

“What is sustainability and what the heck are we talking about and I will drill that down for the entrepreneur, because I am one so I understand the daily pressures of making payroll. So let’s start on the sustainability side of things. We have a math problem, very simply put, we have a planet that is not expanding its land, we are not going to find more land to live on to use for farms, for energies,  for water, for landfills, for waste. Yet we have a population of 7 billion today and 9 1/2 billion by 2050. In the next 35 years, our population will increase by 33%. That population deserves to have jobs, deserves to be fed, have water, energy, a place to live, and frankly a place to to go. The math problem comes in, our planet is not expanding. How do you make that happen?

Let’s say you are one of the people making $20,000 a year as a farmer, and you are facing food bills, labor pills, and your income is nowhere near making those costs work. Now you have the US government, that for the long time provided subsidies, now the US government is in massive debt, and the GDP that is invested in healthcare continues to go up, the percentage of our GDP that is invested in infrastructure, like the roads, that you need to take your wares to market, that continues to go down.

In Iowa, it is the perfect microcosm of sustainability and the perfect microcosm of the entrepreneurial spirit and opportunity. If you ask farmers, like I have, ‘how are the roads town?’ people say we need help. But a massive part of the sustainability challenge is the social divide between the haves and the have-nots.”

Learn more from Eric here…

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I Still Love Nuclear Power

There is no doubt that the Fukushima nuclear disaster is Titanic is scope.  Except that no one died, yet.  One crane operator died, but he was killed in the tsunami.  Thousands will die from radiation poisoning, or we will be told that they did.  But, still the worst nuclear disaster ever died kill anyone.  Nor did Three Mile Island.  And no hole to China was to created, as the movies predicted.  Wait, a hole from Japan through the center of the Earth wouldn’t hit China anyway…..

Airplane wreaks and other horrible things happen when two systems fail.  Usually, when one system fails, you can recover.  At Fukushima, there were 5 independent catastrophes, and the plant did not blow a hole to Africa.  First, Japan was crazy to allow this plant to remain open.  Like Chernobyl (where people did die), authorities knew in advance it was old technology and old parts.  Second, the earthquake.  Third, the tsunami. Fourth, the backup power lines to keep the place safe were destroyed.  And, fifth, human error.  Having withstood all that, the plant remains a mess, but not the worst case scenario.

We must continue to use all forms of energy, even nuce

And this great article


Small Business Numbers Round-Up
Oil Spill Numbers and Small Business

– According to official US government figures, more than 270,000 barrels of oil (11.3 million gallons) have been burned in controlled operations since the start of the spill in April.

– That is more than all the crude that spilled into the seas off Alaska in the Exxon Valdez disaster in 1989.

– 270,000 Barrels of Oil Burned – at 78.90 a barrel that’s $21.3 million  up in smoke

– The US government also said that some 34.6 million gallons of oil water had been recovered from the Gulf since the BP-leased Deepwater Horizon exploded and sank in April.

– $65.2 million saved in oil recovery

– $3.12 billion spent on cleanup by BP

– $20 billion commitment by BP for damages controlled by Oil Spill Czar, Kenneth Feinberg.  (Great article here – must read

Other Interesting Numbers on Small Biz and Entrepreneurship

– Small Business among highest rated institutions in which Americans have confidence – Ranked 2nd behind the military

– Congress and HMO’s at the bottom

– Loans to small business down 5.6% – $40 billion in 2 years (from $710 billion to $670 billion)

– House votes to spend $34 billion to extend jobless benefits

Tax Numbers:

(**Must Read Article – Tax Tsunami Coming)

– Tax increases starting in 2011 “the lowest bracket moves up 50% — to 15% from 10%. The next lowest bracket — 25% — will rise to 28%, and the old 28% bracket will be 31%. At the higher end, the 33% bracket is pushed to 36% and the 35% bracket becomes 39.6%.”

– Letting the Bush cuts expire will cost taxpayers $115 billion next year alone, according to the Congressional Budget Office, and $2.6 trillion through 2020.

– ObamaCare Tax – The Tax Policy Center, no right-wing group, says that the failure to index the AMT will subject 28.5 million families to the tax when they file next year, up from 4 million this year.

– ObamaCare Tax – “Small businesses can normally expense (rather than slowly deduct, or ‘depreciate’) equipment purchases up to $250,000,” says ATR. “This will be cut all the way down to $25,000. Larger businesses can expense half of their purchases of equipment. In January of 2011, all of it will have to be ‘depreciated.'”


Starting a Business amidst the Gulf Oil Spill

One of the concepts The Entrepreneur School teaches about creating a business idea is to look for opportunities created as a result of some change.  The change could be in politics, trends, new products, etc… Even disasters open doors for entrepreneurs.  Remember an entrepreneur is always looking to solve a problem or fill a need therefore change opens the door for just that.

Check this business out:  They are selling oil spill water as a way of keeping the topic relevant for people.  They are giving half of the sales dollars to different groups serving in the cleanup the oil spill.  The other half goes to covering their costs.  Basically they are offering something for a small “donation.”

This is a great business idea; it combines seeing opportunity in a time of difficulty, creating and maintaining awareness of the gulf oil spill, and providing funds to organizations working to help the environment.  If you want to read more here’s an article by NBC Miami: South Florida Brothers Selling Oil Spill Souvenirs

Boycotting BP

The music bands Korn, Creed, Backstreet Boys, and Lady Gaga have all made the headlines recently calling for a boycott of BP stations.  That’s interesting since these bands directly use a ton of gas each year for their tours and indirectly lead to the consumption of gas by concert-goers making their way to the shows.  That’s not to mention all the plastic drink bottles used at the shows.  Oil is necessary in the production of plastic bottles.  If t-shirts are sold that contain any portion of polyester, this is also derived from oil.

But on top of all of that, boycotting BP stations does very little to hurt BP.  That’s the conclusion from a NY Times article a few weeks ago.  Instead of punishing BP, these misguided bands are actually promoting the punishment of small business owners around the country who own and operate the BP stations.

If these bands truly cared about punishing BP instead of small business owners, they would start with looking in the mirror.  They would learn about ways that they themselves could decrease their oil consumption.  They would then challenge their concert-goers to make better choices in their lives, such as living in smaller houses closer to jobs so that they can walk or drive.  It’s easy to choose an Exxon station over a BP station but very hard to ride a bike to work instead of your car.

The hope is that these bands begin to realize that they are hurting small business owners instead of BP.  We welcome your comments below…

BP's Lack of Responsibility

I can’t believe what I am hearing from BP regarding the oil disaster in the Gulf of Mexico. It’s not their fault because they hired a contractor to do the work and it was the contractors, not BP, that made the mistake. So what can we small biz people learn from this corporate fiasco?

You shouldn’t run away from responsibility. Ever.

If it is your company and you hire someone to do a job, you can’t head for the hills and forget about supervising to make sure the job is being done the way you want. And if that person (or contractor) makes a mistake, you need to look at yourself first:

Photo: Reuters

– Did you teach them what they needed to know to do the job well?
– Did you check in to see if it was getting done as expected?
– If you noticed any slip-ups, did you address it immediately?
– Did you set up clear consequences if they continue to mess up?
– Did you communicate all this to them?
– Have you been slack with other employees and not followed through – so now no one takes you seriously?

Fine, BP’s contractor made a BIG, BAD mistake. But it is sad that BP is not stepping up and admitting their responsibility – they either hired a contractor that was under-par or they failed to supervise them well enough so that a disaster like this wouldn’t happen. A small business owner would not have the luxury of doing so, they’d just have to fold.

The Oil Myth or We Will Have Oil Forever (Part 5)

This lecture is entitled “The Scarcity Myth.”  Today, we’re going to do Part Five, which is our final piece, discussing the thesis, “How we will never run out of oil.”

We’re on agenda item 9 today, which is “Proven Resources Are Undercounted.”  Proven Resources is a phrase that has a definition, which is “oil deposits that there are current plans to extract.”  In other words, if we know of oil, but have no plans to extract it at that time, if no oil company has announced that they are going to go drill and get that oil right now, that oil does not count as part of our proven reserves.  This gives us billions and billions of barrels of oil that are not counted.  Roger Bentley from the Association for the Study of Peak Oil and Gas said, “Proved reserves (43 years worth) have been very conservative (counted) indeed.  They do not reflect the total oil that has been discovered, but only that small portion for which definite plans are in place for current access.”  The SEC, the Securities Exchange Commission, which is part of the United States government, has very strict rules about what type of oil can be counted as part of your reserves.  Of course, a company like Exxon is worth more the more reserves that they have.  But the SEC does not allow you to count tar sand, polar oil, coastal oil, ANWR or deep-sea oil.  Some of our best resources are not counted by the SEC, which severely limits how much proven reserves the U.S. has.  Our proven reserves are vastly undercounted.

Remember, that Canada has three times as much oil as Saudi Arabia and none of that is counted!  The United States has even more oil than Canada and of course it’s not counted, because most of it falls into the categories that are not counted, such as coastal oil and tar sands.  The G7, the group of economic superpowers in the world, has pushed for greater transparency and has requested that the oil-producing super nations like Saudi Arabia be more open in their actual reserves.  The Saudi response was very predictable; they said, “Western nations are not dealing with the oil producers as partners why should they have the advantage of knowing details of oil producers reserves data on reserves is information and information is power.”   It makes sense that the Saudi’s would not want us to know how much oil they have.  If we knew how much oil was really available, the price would fall dramatically.

Let’s look at undercounting of proven reserves on a country-by-country basis, Saudi first.   One of the huge advantages that Saudi Arabia has is that oil only cost one or two dollars per barrel to produce.  It’s almost like you could stick a straw in the ground and have oil come out.  They have 80 known reservoirs with about 261 billion barrels, but that data is over 40 years old, which makes me wonder two things. Remember yesterday when we discussed how reserves are almost always undercounted at first?  And secondly how the technological factor surely would allow us to find more oil than the 261 billion barrels that they quote?   Currently Saudi Arabia is just using 11 of their 80 known reservoirs.  Why would they use all of their reservoirs?  The market would literally be flooded with oil and the price would plummet. In December of 2004, the Minister of Petroleum and Natural Resources announced that in fact that the 261 billion barrels was really 461 billion barrels!  Even Saudi Arabia has been dramatically underestimating the amount of oil that they have.  And the final kicker: there has been no exploration in Saudi Arabia for the last 35 years, because they don’t need to find any more oil.  Why spend the money to find it when that would suppress the market price?

Other countries are also dramatically underestimating how much oil they have.  Iran claims to have about 125 billion barrels, but outsiders believe that it is actually closer to 500 billion barrels.  Iraq was thought to have 115 billion barrels in reserve and after the United States oil companies entered after the war that number was determined to be 467 billion barrels.  The Gulf of Mexico was originally estimated to have around 6 billion barrels, and it’s already produced 13 billion barrels, and it’s still going. Yesterday we said that it may have as many as 1 trillion barrels of oil, but again they’ll were not counted because of the regulations of the United States government.  Prudhoe Bay in Alaska originally was estimated at 9 billion barrels, but so far it’s produced over 15 billion barrels and is still going.

Tupi field in Brazil was originally estimated at 5 billion barrels (in 2007) and when drilling began they discovered that it really had closer to 30 billion barrels.  The same is true in Italy where they underestimated by 400%, and the United States Geological Service estimated that in North and South Dakota there were 151 million barrels of oil.  They changed their estimate to over 3 billion barrels of oil.

Agenda item number 10: proven reserves are uncounted.  We just gave you a definition of what proven reserves are and obviously we’re not counting a lot of things.  We’re not counting the 1.6 trillion barrels of Canadian oil shale.  We’re not counting any of Venezuela’s heavy oil, because it falls outside of the definition the United States rules.  Western states oil shale of several trillion dollar barrels is not being counted.  Trillions of barrels that are not counted.

Agenda item number 11: oil is being priced in the depreciating commodity, the dollar.   For every barrel of oil that you sell today you get less dollars than you did say 2001.  As the dollar continues to weaken, the cost of oil goes up and it becomes more expensive, in dollars, to buy a barrel of oil.  So when people say that the price of gas is going up, it is not because of Saudi Arabia, it is not because of the war in Iraq. The price of oil is going up is because President Bush and Pres. Obama, both Democrat and Republican, have let the dollar become so weak, which makes our gas more expensive.  If you’re at the pump and you’re upset about the cost of gas, get mad at both political parties.

Finally, I want to sum up with a discussion of in whose interest it is to tell us the truth.  This is agenda item number 12.   Who has a reason to tell us how much oil that we have?   If it were common knowledge that there were trillions of barrels of oil, we wouldn’t pay four dollars a gallon.  Europeans wouldn’t pay seven dollars a gallon.  The price would plummet.   Governments also make a tremendous amount of their revenue based on taxing gasoline, and it is usually based on a percentage of the sales price.  The governments of the world like it when the price of oil goes up, as they make more money. Pres. Obama has even announced that he hopes that the price of gasoline doubles.  This is for environmental reasons, but is also for tax reasons.

Interestingly, OPEC doesn’t want the price to get too high, because if the price of oil gets too high, then the Western industrialist entrepreneurs are encouraged to start looking at other energy alternatives.  So Saudi Arabia and OPEC will work very hard to keep oil somewhere within the $50 to $100 per barrel range.   This brings up one of the most interesting points, that the oil industry’s biggest worry is over abundance, not scarcity.  In the 1980s, oil prices plummeted.  One of the reasons is because for the first time ever we instituted conservation programs.   As I said at the very beginning of this, five days ago, I am an environmentalist.   I’m in favor of conservation.   I’m in favor of cars having high miles per gallon. Conservation makes oil prices plummet.

Our final vested player is the oil industry.   Judging from their profits, it is clear they are doing well. There’s no incentive for them to do anything except to support high cost of gas.  They also generally make a percentage of sales price, meaning high prices help them as well.

OPEC wants the price to be high.  Governments want the price to be high.  Oil companies want the price to be high.   Everyone makes more profit because of the supposed looming shortage.  It justifies high prices.  High prices will only be paid if you think you’re going to run out of oil.

We have come along way in the last five days.  The number one thing that I hope I’ve opened your eyes or is a possibility that we may never run out of gasoline.  Clearly, we are playing games when it comes to counting the amount of gas that’s available, but more importantly I think it’s safe to say that my grandchildren’s grandchildren’s grandchildren’s grandchildren will have plenty of oil to run their cars and they heat their houses.

In about an other month, I’m going to have another lecture series, this one on global warming, which I’m sure will be just as controversial as this oil scarcity myth lecture series.

Have a great day.

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The Oil Myth or We Will Have Oil Forever (Part 4)

This is part four of our lecture series, “The Scarcity Myth.”   Last time we were together, we were speaking about abiotic oil, and the possibility that oil is not a fossil fuel.   Today,  I’ll present some of the most exciting evidence that supports this theory.

We’re on agenda item 6 if you’re following along on the slides.  Oil fields are renewable!   One of the most interesting things that I’ve learned in my study of oil is that  oil fields  that are declared empty frequently all of a sudden full again.   Of course, this doesn’t make much sense, especially if we believe in a fossil fuel theory, where old swamps and dinosaurs are compressed over time and turn into gas.  But if we believe the abiotic oil theory, that oil is simply seeping out of the middle of the earth, this theory becomes much more believable.  Take for example the Eugene Field in the Gulf.  It began production in September of 1972, but by 1989, production had fallen to about 4000 barrels per day.  Suddenly without any explanation that jumped to 13,000 barrels per day and scientists were called in to re-measure the field.   It was estimated to have 400 million barrels of oil left, up from only 60 million barrels a year earlier.  The Wall Street Journal reported that Eugene “is rapidly refilling itself.”  Since then,  the field has produced over 1 billion barrels of oil, all from  an oilfield that at one time was almost empty.

This was confirmed by the Woods Hole Oceanographic Institute (WHOI).  For those of you who do not know about WHOI, it is the organization that discovered the Titanic (Dr. James Ballard).  Of course, they’re one of the preeminent geological and oceanographic  groups in the world, and one of their scientist Dr. Whalen declared,  “I believe that there is a huge system of oil migrating deep underground” that explains how these types of fields could refill themselves.  This phenomenon is not limited to the Eugene Field, as it has been seen all around the world, in the North Sea, in the Niger Delta, in Indonesia, in the Trinidad basin, the Taiwanese basin, and in the Alaskan North Shore.  Amazingly fields that are declared empty are refilling and of course this only goes to support they abiotic theory.  Nothing else could explain how this could happen.

Moving onto agenda item number seven, depleted fields. We have many examples of fields that are declared empty, and all of a sudden have oil.  My favorite example is the Kern River, California example. That field was discovered in 1899 and in 1942 it was declared empty with 54 million barrels remaining. Sometimes, technology does not permit a field to be entirely drained and that’s what happened with the Kern River field.  Since 1942, 736 million barrels, that’s three quarters of a billion barrels of oil, have been pumped out, and now they estimate that there are 970 million barrels left.   How can this be possible?  The only way that makes sense is if the field is refilling itself from underneath!  This is also happening in the South China Sea off of Vietnam.  The field was declared empty their 1981 and it is still producing.  The White Tiger field off the continental shelf, where they dug a little bit deeper and went down to 2.5 miles, is now producing 280,000 barrels per day.  The Black Island field was producing 80,000 barrels per day, but that recently increased to 200,000 barrels per day.  In all of these fields, they are drilling in a granite base, not in sedimentary rock.   How do we explain this?  Well, the only explanation of course is that the oil is coming from someplace other than fossil remains.

Agenda item number eight; the fields that we have are also growing in size.  This is an incredibly unintuitive thing to realize and to discuss, but it’s true.   For example, we have the Kashagan field in Afghanistan, which was discovered in 1996.  At that time, it was estimated to have 2 to 3,000,000,000 barrels of oil.  Wells were dug.  They discovered that it actually had 13 billion barrels and now they estimate that it has 38 billion barrels.  In other words the amount of oil in a given field is increasing as we technologically learn how to extract it.

From 1981 to 1996, the volume of the largest 180 oilfields of the world went from 617 billion barrels to 777 billion barrels, and this does not count any of the new discoveries that we were talking about couple of days ago.  For 15 years, while we were taking oil out of these fields as fast as we possibly could, the amount of oil in those fields increased by over 150 billion barrels!   Again, I ask how is this possible?  The only possible way is that oil is coming from the center of the earth, and somehow being released to the surface areas.

The recovery rate 20 years ago was around 20 or 30%.   Today, we’re getting closer to 40% of the available oil out of each field.   A good question is, “How much higher will that go in 30 years?  Is it safe to say that we’ll be able to get 50%?”

In the 1990s, we were starting to believe that the Gulf of Mexico oilfields were drying, but in 2006 geologists announced that there were 1.5 trillion barrels of oil left in the Gulf of Mexico.   The Wall Street Journal reported on April 30, 2009 that the northern Louisiana fields, also declared empty at one point, now had about 200,000,000,000,000 ft.³ of natural gas, which is the equivalent of 33 billion barrels of oil!

Tomorrow, we’re going to finish up in this talk with a little bit about the political reasons for all this.   I hope that at this point you’re fairly convinced that the abiotic oil is at least a possibility.   Have a good day.

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