Tags: Diamond | Free | Market | Oil

Robbie Diamond: There's No Free Market for Oil

Tuesday, 20 Mar 2012 11:05 AM

By Forrest Jones and Kathleen Walter

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There are no short-term fixes to combat high gasoline prices, so the U.S. government would be better off working on long-term solutions by drilling more oil at home and encouraging the use of alternative fuel sources, says Robbie Diamond, CEO of Secure America’s Future Energy, which seeks to cut America's dependence on oil via policy reform.

U.S. gasoline prices have been soaring thanks to high global crude prices, largely the product of ongoing tensions between the West with Iran over the latter's nuclear ambitions and increased demand in general.

Drilling in presently off-limit areas in the U.S. might send a positive signal, but it won't solve the problem in the near future, as demand from rising emerging economies like China and India will quickly devour new crude coming onto the marketplace.

"Oil markets are global in nature, and it's really about the global supply and demand that determines the price ultimately, and most importantly we need to understand there's really no free market for oil," Diamond told Newsmax.TV in an exclusive interview.

"There's really nothing we can do in the short term."

Gasoline prices are currently averaging $3.87 a gallon nationwide and are on pace to continue rising as the summer approaches.

Driving increases in the U.S. during the spring and summer, while refineries switch over to more expensive inputs as the warmer weather approaches.

Should tensions with Iran escalate into military conflicts, oil prices could skyrocket and take gasoline prices up with them.

"Not only do we have these high prices now at roughly $110 in the United States and $120 for Brent crude in Europe and we haven't really seen a crisis yet," Diamond says.

"We could see much higher energy prices at $180 or $200 if there was a confrontation with Iran."

Energy policy needs to involve both more drilling and more encouragement to develop alternative energy sources.

"You should produce as much oil as possible and opening up more areas, and for that oil to come online it will take many years but at least it's a signal to the market," Diamond says.

"While you are doing that one has to continually to implement aggressive fuel economy standards so oil is less important for our GDP, and we must aggressively start transitioning to alternatives."

Electronic automobiles can ease the country's dependence on oil.

"We believe the electrification of transportation is really important," Diamond says.

"The real threat is here is that there is one fuel source that drives our transportation sector."

In the meantime, the country's economy will remain vulnerable to swings in oil prices and to political events in countries that supply the U.S. its oil, such as Nigeria, Venezuela and Russia.

"That's really the problem. All this oil comes from really unstable places, many of them hostile to the United States and in many cases practicing collusion, and that's what we face in this country and in the western world."

That leaves the threat of global recession constantly hanging over the head of the global economy.

"Every modern-day recession has happened concurrently with oil price shocks, and when one looks at the loss of GDP, the loss of consumer spending and the loss of jobs, it's all on the horizon based on much higher oil prices," Diamond says.

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