Today we wrap up our series on rising oil prices with a solution.

Instead of leaving ourselves vulnerable to so many variables–foreign imports, speculation, value of the dollar–why not develop new sources of domestic energy? It’s a proven fact that the energy market is not a truly free market. And our use of foreign oil only empowers those in the Middle East who are not our friends.

What if we invested in renewable energy sources like biomass, solar and wind? These sources can be re-produced. And even better, they can all be produced right here in the United States.

Ronald Reagan said that America is the “country of tomorrow.” Let’s prove it by finding tomorrow’s energy sources today. That’s the real solution to high gas prices.

A simple rule of economics is the law of supply and demand. When there is too much of a product and not enough need from the consumer, the price goes down. So why are gas prices going up?

http://www.reuters.com/article/GCA-Oil/idUSTRE59R3SL20091028

As I have often written on this blog, the oil market is not a truly free market. It doesn’t follow the law of supply and demand. As the article notes:

“Oil prices have risen in recent weeks as the global economy has shown signs of rebounding….Still, demand for gasoline, diesel and other fuels suffered as businesses and consumers tightened their purse strings, more than halving margins at plants that process crude oil.”

First, I’m not sure the economy is really rebounding. We now have unemployment of 10%. I bet those who are unemployed don’t think the economy has rbounded. Second, with businesses and consumers spending less on gas, why are prices high?

Because the oil market doesn’t respond to market pressures as it should. What can we do about it? We’ll close out our week-long series by discussing that question tomorrow.

Today we are continuing our series on the rise in gas prices. Another major factor is the declining value of the dollar:

http://www.google.com/hostednews/ap/article/ALeqM5i4_q7DtiEHvUTVNlJoaJ9ufkd1kgD9BJMHB80

As the article notes:

“…prices are on the rise and it is the crumbling U.S. dollar that is sending them there. The dollar has lost more than 15 percent of its value since March. Because crude is bought and sold with dollars, investors who hold euros or other currencies that have strengthened against the dollar can essentially buy more crude with less.”

So to fight high gas prices, Washington needs to strengthen the dollar. And that means lowering taxes, lowering spending and getting the economy moving again.

But since Washington isn’t doing much of that, the dollar is likely to continue to be weak…and gas prices will continue to be high.

This week the blog is focused on the rising cost of oil. What can explain this since peak drive season is gone, demand is down and inventories are up? In a word: speculation.

http://www.investmentu.com/IUEL/2009/October/oil-prices-heading-higher.html

As the article notes:

“With the perception that the U.S. economy is finally moving out of the doldrums, all the hedge fund and speculative money that has sat on the sidelines for months is finding a home in the oil market. Depending on which report you read, world demand for oil is expected to pick back up, and this is adding fuel to the fire.”

In other words, speculators are guessing that the economy is coming back and therefore are pushing prices up. That’s crazy. Why should we pay more at the pump just because some speculators think the economy may or may not be improving? Shouldn’t the price of gas be based on facts, not forecasts?

When it comes to oil, the facts often don’t matter.

This week we’ll be blogging about the rising gas prices. Why are they on the way up?

http://www.pennlive.com/news/patriotnews/index.ssf?/base/news/1256420408258870.xml&coll=1

As the article notes, there really are no reasons why the price at the pump should be high.

“There haven’t been any destructive hurricanes in the Gulf of Mexico shutting down or destroying offshore drilling rigs, as was the case last year at this time. The peak summer driving season ended weeks ago. There’s plenty of crude oil in storage, too. It’s at above-normal levels for this time of year.”

So why are gas prices high? We’ll be talking about that all this week.  Check back on the blog each day to find out more.

Jerry Jones has a history of some narcissus tendencies. And the word “tendencies” may be a bit soft. In the early 1990s the Cowboys were on a winning streak which was a result of the October 12th, 1989 trade of Herschel Walker to the Vikings for some 18 players and/or draft picks. The end results of that single trade was a few guys you may have heard of….Emmitt Smith, Russell Maryland, Kevin Smith, Darren Woodson and Clayton Holmes.

Add in Troy Aikman who had been drafted the year before and whom the media and every other local considered to be the next Cowboys quarterback when he was in Dallas playing in the Cotton Bowl for UCLA. Tom Landry who planned to draft him, watched Troy practice at Texas Stadium weeks before Jerry bought the team and fired him.

My point is this… Jerry didn’t like Jimmy getting the credit for the teams success so he ran him off. Barry coached one more winning season but since then Jerry’s Team has been a bust.

In 1989 they had nothing but a stack of Tom Landry’s scouting reports and Herschel. They rolled the dice and got lucky…real lucky.

Someone once told me that Luck is where preparation meets opportunity.

Jerry’s luck ran out in February19 94 when he ran off Jimmy.

Here is a hypothetical for you.  What would you say about the leader of an organization who had the following track record:

His organization hadn’t won a big award in years;

He consistently hired the wrong people who were unable to do the job right;

His competition consistently outperformed him in the marketplace;

He occasionally hired people with either criminal backgrounds or a history of causing problems with their coworkers;

And he spent an amount equal to the value of the entire company on a new corporate headquarters.

You would say that leader should be fired, right?  So would I.  Only the person I just described isn’t a hypothetical leader with a hypothetical organization.  It’s Jerry Jones of the Dallas Cowboys.  Did you realize:

His team hasn’t won a playoff game in 13 years?

He has presided over some of the worst drafts in franchise–if not league–history?

The Cowboys routinely lose games, especially toward the end of the season?

He has brought in low-lifes like Terrell Owens and Pac Man Jones?

And he just opened up a new stadium that is roughly equal to his entire franchise?

If this were any other business, Jones would be fired.  But since this is football and he owns the team, we’re stuck with a man who doesn’t know what he’s doing running the team.

It will be a long time before this team wins another Super Bowl.

Hey all you Cowboys fans. Remember when Tony Romo was the future of the franchise? What happened? Could it be 2006 was a fluke?

Three years ago, we all marveled at his improvisation and playmaking ability. But with the departure of Bill Parcells after the 2006 season, Romo lost an important check on his freestyle method. That’s because Parcells believed that you don’t win games, you lose them. And the way to start winning them is to not beat yourself with turnovers.

Sadly, in the three years since then, we’ve seen Romo become increasingly careless with the ball. And what does NFL history tell us about other quarterbacks who turn the ball over? Remember Quincy Carter? Or how about Drew Henson? Or Ryan Leaf? Or Chad Hutchison? The Cowboys have not had an accurate passer since Troy Aikman. Any wonder Aikman won three Super Bowls?

It may be that Romo’s luck has run out. I hope I’m wrong. I fear I’m not.

Advanced Trailer Launches 3rd

Project Using Trailer to Remove

Moisture from Biomass to be

Torrefied

FOR IMMEDIATE RELEASE

Today we end our series on the dangers of financial institutions not lending money.

Essentially, banks are the lifeline of our entire economy. We tend to think of the Fed as the supplier of money. But really, it’s banks who dole out the money that fuels the purchases of homes and property. The Fed requires a certain percentage (anywhere from 3 to 10) be kept in reserve. But otherwise, if a bank gets a million bucks from a wealthy investor, it can then turn around and loan that money to people wanting to buy property. When you look at it that way, banks are there to help the little guy more than the big guy.

So when financial institutions stopped lending money, guess who it hurt? Not the big guy. He’ll be okay. No, it hurts the little guy.

For this recession to truly end, we need banks to start lending to the guy who works on the shop floor, not just the the guy who works on the top floor.

One year ago, the federal government took steps to keep the credit market open. Billions of dollars in money were delivered to Wall Street in the hope that the money would then be lent to borrowers.

Instead, most of the financial institutions receiving the money simply paid down their own debt. You and I didn’t get any of it.

This week I’ve been writing about how banks are now only financing projects that are revenue-producing. Yet your taxdollars were sent to financial institutions precisely so that they would lend it back to you. What an outrage that financial institutions aren’t doing that.

This is another example of how government solutions are often worse than the problems. And it’s another example of how the recession we are in is nowhere near being done.

Here is why bank financing is so important: because most of us don’t have the money to buy land or property.

Bank financing allows regular people to improve their standard of living and help the overall economy. When you take out a 30-year mortgage on a $200,000 house, you are doing it not only because you don’t have $200,000 in cash. You are doing it because you gamble that the value of the property will grow overtime and more than cover the cost of the interest you are paying on the loan. This in turn benefits the broader economy as property-purchasing creates greater economic growth for everyone.

So when banks start investing only in property that produces revenue (such as land with oil wells on it) there is cause for concern for all of us. Most of us need financing to buy property. And our economy needs it too.

A few months ago, I warned about the coming commercial real estate crash. This week, I want to warn you about another crisis that’s already here: banks are not financing real estate that is not revenue-producing.

As a ranch and real estate investor, I’ve met with several banks during the last few months. And they all say the same thing: in these challenging economic times, they are not willing to finance land that doesn’t immediately produce revenue. In other words, unless there are oil wells or cattle on the land, you can’t get financing for it.

This is a problem because financing is how real estate deals are made. And real estate is a huge part of economic growth. If the sources for financing for real estate are drying up, you can be sure that we are nowhere near the end of the recession.

PRESS RELEASE

October 12, 2009

RANDY HILL RELEASES NEW VIDEO SHOWCASING THE POWER OF THE ADVANCED TRAILER FOR BIOMASS

Exclusive video details the progress and potential of trailer in drying, storing and transporting biomass material

ABILENE, TX—Texas Entrepreneur Randy Hill today released a new video that shows the history of his Advanced Trailer for Biomass and how it has the unique ability to dry, store and transport the wood chips that fuel biomass. This video proves that the Advanced Trailer is the solution to handling the wood chips that are needed to create biomass.

“We have always known that biomass works” Hill said. “But we haven’t known how to store, dry and transport the wood chips that fuel it.  Now we do.  Since we announced the project at the University of Idaho to experiment with the trailer, we have been flooded with inquires about how the Advanced Trailer works and what it looks like. This video will be a valuable tool in discovering how the trailer can work for you.”

The video is available exclusively at Advanced Trailer. Call 325-676-8585 to order one today.
ABOUT RANDY W. HILL: Randy W. Hill is a Texas entrepreneur who is best known for his endeavors in real estate and transportation. He now serves as president and chief executive officer of APT Advanced Trailer and Equipment LP, as well as president and chief executive of a number of privately held real estate holding companies. Hill is credited with the discovery of using semi trailers to procure and dry various agricultural products. In April 2009, Hill announced plans to provide research funding and equipment to the University of Idaho to explore the use of the Advanced Drying Trailer to remove moisture from wood chips that are used to fuel the university’s biomass steam boiler plant in Moscow, Idaho. More recently, he announced plans to provide researching funding and equipment to Iowa State University to dry corn residue. For further information please contact Advanced Trailer at 1-800-860-1360 or on their web site at www.advancedtrailer.com

As readers of this blog know, I am not a fan of big government. However, I do favor government incentives to help the private sector to create economic solutions. And I have especially supported the administration’s efforts to encourage biomass. It seems to be working already:

http://seattletimes.nwsource.com/html/localnews/2010026290_apwabiomassplant.html

“Officials like an Olympia man’s proposal to build a plant in Longview that would turn wood waste into a hot gas to generate electricity and produce ethanol. The state Department of Commerce selected Marc Rappaport for a $1.5 low-interest loan from federal stimulus money. And The Daily News of Longview reports the Cowlitz PUD lists his plan at the top of several possible biomass projects.”

This project would not have happened with the federal stimulus money.  So when it comes to biomass incentives, I say that this is money that is well spent and will produce big results for our country.

One of the arguments sometimes used against biomass is that it can’t generate enough power for enough homes.  That’s another argument that doesn’t hold up:

http://www.earthtimes.org/articles/show/akeida-capital-finances-biomass-plant-in-blue-lake-california,987062.shtml

As the article notes:

“Akeida Capital Management, LLC, an environmental asset management firm focused on originating and investing in sustainable energy projects, today announced it has closed on senior secured financing for a biomass power generation facility located in Blue Lake, California. The facility has a capacity of 12.5-megawatts and can generate enough electricity to power 25,000 homes.”

One biomass generation facility can provide enough power for a small city.  Imagine how many cities could be powered by biomass if we created even more biomass generation facilities.  And that’s exactly what is about to start happening.  Change isn’t just coming; change is already here.

Here is more proof that the biomass revolution is sweeping the nation:

http://www.forbes.com/feeds/ap/2009/09/30/business-energy-us-nrg-biomass_6950395.html

“Power generator NRG Energy Inc. said Wednesday that it is testing whether switchgrass and high-biomass sorghum could be used to replace some of the coal used at the company’s Big Cajun II power plant in Louisiana. NRG said the project could lead to commercial-scale projects using biomass fuels to reduce carbon dioxide emissions from other coal-fired plants.”

This new development in Louisiana shows that even traditional power companies are looking for non-traditional ways to fuel the economy.  Biomass is building momentum.  It is here to stay.

Advanced Trailer adds second U.S. University to its team to research biomass drying, storage and handling

Advanced Trailer selects Iowa State University for second research grant to test the benefits of using Advanced Drying Trailers to remove moisture from biomass. Iowa State to dry multiple biomass products during fall semester.

Abilene, TX, October 7th, 2009: Texas entrepreneur Randy Hill today announced he has selected Iowa State University as the recipient of a grant to study the use of his patent-pending Advanced Trailer to remove moisture from another potential biomass source, corn residue.

“The goal of this grant is to explore the possibility of the Advanced Trailer for drying freshly-harvested cobs and corn stover,” Hill said in making the announcement. “This grant will provide research funding, along with the use of two Advanced Drying Trailers and a dryer during this year’s corn harvest. The research will measure load weight, load depth, propane and or natural gas consumption, electrical energy use, ambient temperature and relative humidity, drying air temperature, and airflow rate. We believe this testing will conclusively demonstrate that the Advanced Trailer for Biomass is the key to drying and transporting corn residue that can help fuel biomass.”

ABOUT ADVANCED TRAILER: APT Advanced Trailer and Equipment LP is best known for their trailers which are used to procure (dry) various agricultural products. Currently Advanced Trailer has over 3,000 drying trailers in service in all 10 U.S.  peanut producing states. Additionally Advanced Drying Trailer’s are used to dry almonds in California and grass seed in Kansas. In April Advanced Trailer founder and CEO, Randy Hill announced that the University of Idaho had been selected as the recipient of a grant to implement the use of Advanced Drying Trailers to remove moisture from woody biomass used to fuel the universities steam boiler plant at their campus in Moscow Idaho. Texas Tech has also used an Advanced Trailer to dry manure for bio fuel-methane gas conversion. Advanced Trailer is Headquartered in Abilene Texas with a semi trailer conversion plant located in Vienna Georgia. Patent applications are currently pending in the U.S. Patent and Trademark Office covering various aspects of the Advanced Trailer and including over 50 patent claims.

So President Obama went to Europe and got some bad news about the Olympics. Now he will return home to get some bad news about the economy:

http://finance.yahoo.com/news/US-Sept-nonfarm-payrolls-rb-589941939.html?x=0&.v=1

Looks like the economy is not only not getting better, it’s getting worse:

“U.S. employers cut a deeper-than-expected 263,000 jobs in September, lifting the unemployment rate to 9.8 percent, according to a government report on Friday that fueled fears the weak labor market could undermine economic recovery. The Labor Department said the unemployment rate was the highest since June 1983 and payrolls had now dropped for 21 consecutive months.”

This is an ominous sign.  After hundreds of billions of dollars have been spent and new government programs have been created, we are losing jobs and have the highest unemployment rate in 26 years.

As readers of this blog will remember, I have long predicted this.  This is all part of the business cycle.  We need companies to fail to make room for other companies to succeed.  I think that process is still going on.

So fasten your seatbelts.  We have a bumpy road ahead of us as we try to navigate through these difficult economic times.  Just like the Olympics, an economic recovery won’t be coming to America for a while.