I just read a news article this morning about the small town of Hercules using eminent domain to keep Wal-Mart out of town. Now I'll be the first to say I hate Wal-Mart. I wish they'd pay their employees better and work harder for the social good of the world, but I can also give them credit where credit is due: They're damn good at what they do which is providing low prices on everyday items. Wal-Mart has always been about making profit, and that's not a bad thing. Every non-profit company is out to make a profit--that's hardly unusual. They're just so darned good at it, but that's capitalism for you. If you think that's bad, try supporting a company like Enron instead--they didn't do so much for their employees either. All things considered, those working at Wal-Mart were probably better off in the long run. Wal-Mart didn't take anyone's life savings and flush it down the marble toilet.
But I find the use of eminent domain very disturbing. In fact, I find any law, ordinance, or protest that hits directly at Wal-Mart disturbing. People want to kick Wal-Mart because they're the biggest competitor out there. They want to kick Wal-Mart because it's popular to kick Wal-Mart. And that's just plain stupid.
Let's focus on the real issues here. Such as low-paying jobs. How do we fix that? We can't demand that Wal-Mart pay better than minimum wage. No other companies are required to pay better than that, so if Wal-Mart were expected to do that, it would put them at a competitive disadvantage. They couldn't provide everyday low prices, customers stop coming, they go out of business, and--well, since when is it good in capitalism to allow the poorly run companies to survive while the best run ones to wither and die?
And, Wal-Mart's not really the problem in this case. Almost every store you walk into starts paying their employees minimum wage. Such jobs require no specialized knowledge or training that a high school dropout could master. Not to pick on high school dropouts, but they aren't exactly known for getting good paying jobs to being with. Walk into a McDonalds, Barnes and Nobel, Pizza Hut, Gap, or even most of those local stores everyone goes on about that gives a town 'character'--they're all paying out minimum wage as well. But when Wal-Mart does it, it should be criminalized. That's just unfair. If minimum wage isn't enough to live on, our government should step in and force a minimum wage increase.
Force Wal-Mart and every other company in the United States to pay a livable rate. The reason Wal-Mart can pay such low wages is because our elected officials LET them. And Wal-Mart has to pay low rates to compete against other companies that pay minimum wage rates. Yes, it's not Wal-Mart at fault here, the fault lies square in the face of our elected officials.
A while back, Maryland passed a law that requires any employer with over 10,000 employees to provide health insurance for their employees. Not surprisingly, the only employer this effects is Wal-Mart. It was a sad day for capitalism. I heard Wal-Mart was looking to open a new distribution center in Maryland at the time. If I were running that company, I'd start looking for a new distribution center just outside of the state line. I'd immediately look into closing any underperforming stores. And I'd shorten hours until I got the employee count under 10,000. I have no inside information on Wal-Mart, but when you pass a law that targets one, individual company to its detriment, it makes strong business sense to skirt that law.
The biggest irony, of course, is that it's the smaller mom-and-pop stores that actually have a higher percentage of employees who are still on welfare--not the Wal-Mart employees.
Massachusetts recently passed a law requiring all residents to have health insurance. The poorest of the poor will get it for free from the state coffers, but this makes a lot more sense. It insures all people will get health insurance, not just those folks who work at Wal-Mart. The reason Wal-Mart has been able to get away with having employees that are still on welfare or have no health insurance is because, once again, our elected officials allow it. Requiring all companies to provide health insurance makes a whole heck of a lot more sense than just requiring Wal-Mart to provide it. That's just stupid.
And now, eminent domain is being used to bully Wal-Mart. If I were Wal-Mart, I'd fight that tooth and tail because it sets a bad precedent. What happens if you decide you want to open your own donut shop in your town, but the city council decides that donuts have too many calories and wants to run your little business out of town for the health of its citizens? What if you want to open a bookstore but the city decides that selling books with things like wizards and magic (i.e. Harry Potter) is un-Christian and decide bookstores should be banned? Extreme? Absolutely! And it's no less extreme to use eminent domain to keep Wal-Mart out of town.
I understand that many town want to keep the 'character' of their town by keeping big box stores out. In fact, my home town of San Luis Obispo managed to keep Costco out for decades by passing all sorts of ordinances, but they finally managed to get their foot in last year. (And frankly, if it's the choice been a Wal-Mart or a Costco coming into town, I'd pick Costco any day of the week.) But it's a bad precedent to pass laws meant to target an individual company. Pass laws for what you really want.
I've never been to Hercules, California--at least I never remember being there--but why didn't they pass some sort of law about what type of businesses they want in town. Perhaps something with less than 10,000 feet of selling space. If Wal-Mart wants to open such a small store, they should have that right. Banning any business that's owned by Wal-Mart from entering the market--that's just un-American.
Other option--this is my favorite idea and I wish more cities would consider it--perhaps close their main street so it's for pedestrian traffic only--which would certainly discourage big box stores because you know nobody is going to be riding around on a bicycle with a huge 32-roll block of toilet paper from Costco. It could give their town more 'character' than ever with countless small, interesting store to show for the effort, but no, instead, Hercules uses eminent domain to keep out Wal-Mart--a sad day for capitalism, indeed.
Wal-Mart is an extremely well run company that has succeeded wildly, and it should be criminal to punish them for that. We should want well-run companies to proliferate. We can raise minimum wage, we can require health insurance for all employees, we can require small stores that fit with the character of a small town, and Wal-Mart would still do well. Don't blame Wal-Mart for their success, blame the politicians who don't have the backbone to stand up for poor people. Kicking down Wal-Mart won't solve any problems, but raising minimum wage and establishing minimum health insurance standards will.
Sunday, May 28, 2006
Saturday, May 27, 2006
Big Oil Continued....
After my rant about artificially low gas prices and why I thought investing in oil several years ago was such a great idea, you might be curious where I think oil prices will go and if they'd make a good investment today. Or maybe not, in which case you can stop reading right now and save yourself wasted time. =)
Oil is cyclical. It always has been and always will be. Prices go up, and they'll come down again. I can't predict when they'll come down, and they might very well continue to go up for years to come before they start coming back down. Remember that Internet bubble? I have no doubt this is an oil bubble, and at some point, it will pop. With oil at historically high prices today and raking in record profits, I'd bet that when the bubble does pop, it'll probably fall well below the rate it's at today. The people who made money on Internet stocks are those who got in early. The people who lost their shirts were the ones who got in late. When it comes to investing, that's always the case. If you want a safe bet, oil isn't it. You might get lucky, you might not. Just depends on if you can resell that stock to a bigger fool than yourself which is always a dangerous game to play. Kind of like musical chairs--someone's going to be the last man standing, and you never know who that might be until after the music stops.
I'd also like to educate people--oil gets all the headlines, but all these so-called oil companies would probably be better called energy companies. They're in the business of providing energy, not necessarily oil. Oil, historically, has been cheap and plentiful, so it's not surprising that makes up a large part of their business, but when that last drop of oil is extracted from Mother Earth, rest assured, these companies will not go out of business. They'll be working on solar power, or wind power, or tidal power, or other fossil fuels such as coal. All of which pale in comparison to oil.
I read one article that the governor of Montana wants to start converting coal into fuel. This was very interesting to me--I had no idea that coal could be turned into fuel for cars. Apparently the technology has been around for about a hundred years now, but it's never been economical to convert coal into fuel since it costs about $3.00 to create a gallon of fuel. Now that gas prices are up there, it's actually becoming economical to do this. And, according to this article, there's enough coal in Montana to supply the entire country's energy needs for the next 75 years. Including the coal in West Virginia, Pennsylvania, Kentucky, and the rest of the country, we've really got enormous amounts of untapped energy in this country.
Then there's nuclear power. Yes, the N-word. This country has access to enormous quantities of radioactive materials for use in nuclear power to last thousands and thousands of years. The catch, of course, is what to do with the leftover materials. But I can tell you something--as oil prices go up, a lot of people who are very opposed to nuclear power will suddenly find it preferable to $5/gallon in gasoline. As an added benefit, it doesn't contribute to global warming either. As Mr. Burns from The Simpsons might suggest, better to cause an environmental catastrophe in a small part of the world instead of doing it for the entire world. I'm not suggesting that nuclear power is a good thing, but I don't think it's any worse than oil. Just different, with different problems.
Add to all that coal and nuclear power the energy from the sun which could be very effective in desert areas with lots of sun, energy from tides which could be very effective along coastal areas, wind harnessed from locations known to be particularly windy, and, well, there's a lot of alternative energy sources out there.
Despite what I said earlier in this post--high energy prices may be here to stay, but that's not to suggest oil companies will continue profiting greatly from it. Exploration costs will increase as oil becomes more scarce, and it'll cost more to extract each drop of oil from the earth. They may resort to converting coal into fuel with the resulting higher costs invovled. When all is said and done, high energy prices might be here to stay, but large profits are not. As such, I wouldn't invest in any energy companies. They're cyclical, and when it comes to investing in them, you don't want to end up as the last man standing.
Nope, the time to busy was when oil was trading at $10/barrel and people were running around saying idiotic things like "cheap oil is here to stay." If history is any guide (and it is), that was a sign that oil companies were struggling, profits were hurting bad, and they only direction they had left to go was UP. Today? I wouldn't bet on it.
Imagine a world that runs out of oil, though. That's still a long, long way off, so we have plenty of time to develop alternative energy sources during this time, but without the complications that oil brings to the Middle East or even countries such as Venezuela, maybe a lasting peace can finally be hashed out. The area really is fucked up bad--far beyond just our reliance on their oil--but let's face it, oil isn't helping matters either. Imagine a day when the United States will provide for it's own energy needs through renewable resources (wind, water, solar, etc.) and non-renewable resources (coal and nuclear, though not as preferable to those renewable resources). That would be a great day, indeed. And it'll happen as soon as there's no more oil to be extracted from anywhere around the world.
Oil is cyclical. It always has been and always will be. Prices go up, and they'll come down again. I can't predict when they'll come down, and they might very well continue to go up for years to come before they start coming back down. Remember that Internet bubble? I have no doubt this is an oil bubble, and at some point, it will pop. With oil at historically high prices today and raking in record profits, I'd bet that when the bubble does pop, it'll probably fall well below the rate it's at today. The people who made money on Internet stocks are those who got in early. The people who lost their shirts were the ones who got in late. When it comes to investing, that's always the case. If you want a safe bet, oil isn't it. You might get lucky, you might not. Just depends on if you can resell that stock to a bigger fool than yourself which is always a dangerous game to play. Kind of like musical chairs--someone's going to be the last man standing, and you never know who that might be until after the music stops.
I'd also like to educate people--oil gets all the headlines, but all these so-called oil companies would probably be better called energy companies. They're in the business of providing energy, not necessarily oil. Oil, historically, has been cheap and plentiful, so it's not surprising that makes up a large part of their business, but when that last drop of oil is extracted from Mother Earth, rest assured, these companies will not go out of business. They'll be working on solar power, or wind power, or tidal power, or other fossil fuels such as coal. All of which pale in comparison to oil.
I read one article that the governor of Montana wants to start converting coal into fuel. This was very interesting to me--I had no idea that coal could be turned into fuel for cars. Apparently the technology has been around for about a hundred years now, but it's never been economical to convert coal into fuel since it costs about $3.00 to create a gallon of fuel. Now that gas prices are up there, it's actually becoming economical to do this. And, according to this article, there's enough coal in Montana to supply the entire country's energy needs for the next 75 years. Including the coal in West Virginia, Pennsylvania, Kentucky, and the rest of the country, we've really got enormous amounts of untapped energy in this country.
Then there's nuclear power. Yes, the N-word. This country has access to enormous quantities of radioactive materials for use in nuclear power to last thousands and thousands of years. The catch, of course, is what to do with the leftover materials. But I can tell you something--as oil prices go up, a lot of people who are very opposed to nuclear power will suddenly find it preferable to $5/gallon in gasoline. As an added benefit, it doesn't contribute to global warming either. As Mr. Burns from The Simpsons might suggest, better to cause an environmental catastrophe in a small part of the world instead of doing it for the entire world. I'm not suggesting that nuclear power is a good thing, but I don't think it's any worse than oil. Just different, with different problems.
Add to all that coal and nuclear power the energy from the sun which could be very effective in desert areas with lots of sun, energy from tides which could be very effective along coastal areas, wind harnessed from locations known to be particularly windy, and, well, there's a lot of alternative energy sources out there.
Despite what I said earlier in this post--high energy prices may be here to stay, but that's not to suggest oil companies will continue profiting greatly from it. Exploration costs will increase as oil becomes more scarce, and it'll cost more to extract each drop of oil from the earth. They may resort to converting coal into fuel with the resulting higher costs invovled. When all is said and done, high energy prices might be here to stay, but large profits are not. As such, I wouldn't invest in any energy companies. They're cyclical, and when it comes to investing in them, you don't want to end up as the last man standing.
Nope, the time to busy was when oil was trading at $10/barrel and people were running around saying idiotic things like "cheap oil is here to stay." If history is any guide (and it is), that was a sign that oil companies were struggling, profits were hurting bad, and they only direction they had left to go was UP. Today? I wouldn't bet on it.
Imagine a world that runs out of oil, though. That's still a long, long way off, so we have plenty of time to develop alternative energy sources during this time, but without the complications that oil brings to the Middle East or even countries such as Venezuela, maybe a lasting peace can finally be hashed out. The area really is fucked up bad--far beyond just our reliance on their oil--but let's face it, oil isn't helping matters either. Imagine a day when the United States will provide for it's own energy needs through renewable resources (wind, water, solar, etc.) and non-renewable resources (coal and nuclear, though not as preferable to those renewable resources). That would be a great day, indeed. And it'll happen as soon as there's no more oil to be extracted from anywhere around the world.
Thursday, May 18, 2006
The Truths and Myths About Big Oil
With national gas prices now averaging something close to $3.00 per gallon, I'm absolutely astonished at many people's lack of common sense. You hear terms like supply and demand thrown around like the newspapers its written on, but based on e-mails I've received, I think it deserves another look.
At any point in time, there are a finite amount of resources available for everyone. This is the supply side of the equation--oil. We, the consumers, who like to drive everywhere, are the demand side of the equation. As consumers, we don't have a whole lot of control on the supply side of things, but we have a huge impact on the demand side of things. If demand goes up, so does the price. If demand goes down, so will the price.
It's like a good old fashioned auction where the highest bidder wins, and don't be fooled--oil prices work just like an auction except on a much larger playing field. If you want proof, try selling a gallon of gasoline on eBay and see how much you can get for it. I'd be shocked if someone were willing to buy it for a price that is substantially different than current, local prices. You can't sell it for more--nobody would buy it and go to the local gas station instead. You could try selling it for less, but everyone wants gas for less and they'll eventually bid it up to near or at current local prices.
I've gotten e-mails from close friends who, until they forwarded me the e-mail, I thought were highly intelligent enough to grasp the concept of supply and demand. Take the 'gas-out' campaign that seems to rear it's head every time gas prices go up. The e-mail suggests that if everyone does not buy gas on a certain day of the year, that means demand goes down and therefore prices will follow. Two problems with that:
First, unless people STOP using those resources on a given day, it just pushes demand from one day to the days before or after the gas-out day. Overall, demand doesn't change at all.
Second, even if somehow the laws of supply and demand were somehow overcome and prices did drop a noticeable amount, everyone would start buying less fuel-efficient cars, drive more often (instead of carpooling, walking, biking, or using public transportation), and so forth. Demand goes up, and prices end up back where they were before.
It's ridiculous, and anyone who's taken an high school econ class could see the e-mail was created by someone who obviously flunked the class in spades.
Then I got an e-mail from another not-so-brilliant friend, forwarded around the world multiple times, saying that the gas-out idea was just plain STUPID since it doesn't really change demand and thus affect gas prices. No, instead we should boycott certain brands of gasoline. Those companies will be forced to lower prices to sell their product, then other gas stations will have to follow suit to stay competitive--ergo, lower gas prices.
Have you ever been to a gas station--take Arco, for instance, since I see this often at Arco stations--with lines around the block because the gas is two cents cheaper than the gas station across the street where there's barely a car in sight? Just because Arco has cheaper prices, do all of the other gas stations nearby automatically lower their prices to stay competitive? No. Do you know why? Because I get my gas at those other stations. Saving less than 50 cents for a tank of gas isn't worth the wait it would require for me to get to the front of an Arco line, and I'm willing to pay that little bit extra for the extra convenience.
Let's say the Shell station (and why not Shell?) is located across the street and decides to lower prices even lower than Arco. What happens? Everyone starts getting gas at the Shell and leaves Arco? Probably, but the Shell station probably won't stay in business for long because they're selling their goods at a loss. There is a lower limit to how low prices can go, and no business will deliberately price themselves out of business.
It's actually much more complicated than that. Many gas stations share gas. Companies like Costco will buy their gas from whoever will sell it to them the cheapest so if you boycott one company and they drop their prices, Costco will start buying from them and make up the slack. It's like one of those long balloons filled with air. You can squish one end, but then the air moves to the other side of the balloon. If you squeeze both ends, the air will pop out in the middle. It doesn't matter what you squeeze, the displaced air will always find somewhere else to go.
But is it really shocking that gas prices have gone up like it has? It's all about supply and demand. For years we've known that oil supplies are tight. New oil finds are becoming more and more scarce and existing oil supplies are drying up. Supply is going down. All the oil drilling in the world won't stop that. The US passed its peak production rate decades ago, and there's some debate that the world's peak production rate has already passed. If it hasn't passed already, it almost certainly will within the next decade or so. Supply IS going down and it will continue to go down, thus driving prices up.
And looking at the demand side of things--in the era of 'cheap gas', people became wreckless. We became a country of SUVs and Hummers and did not care about fuel economy. Demand for this increasingly scarce resource called oil continued to grow.
And now the public is irate that gas prices are so high? Well, DUH! I remember a few years back when gas prices were near $10 per barrel and I thought, "Now THIS is the time to invest in oil!" I actually did buy into a couple of oil companies which I held for a couple of years and they did quite well as oil climbed to $30 per barrel. I finally sold the stocks--not because I didn't think oil prices would continue going up (no, I knew oil prices were going to keep going up)--but rather because I felt guilty for owning oil companies. I hate their environmental track record and I hate oil. For those that know me, I like to walk. I walked from Georgia to Maine, and in 2008 I'm planning to walk from Mexico to Canada. I'm currently 'thru-hiking' the city of San Luis Obispo. I walk to get groceries, I walk to the movie theaters, and I walk, and I walk, and I walk. Often, months go by and I don't drive. I once filled up the gas tank in my car in November and didn't have to refill it again until four months later in March!
But I always considered oil a necessary evil and thought I could buy an oil company and not have any qualms of guilt. I was wrong, so I finally sold my stake for a rather large gain knowing full well I was leaving money on the table. It wasn't worth the guilt.
In regards to taxes--the government collects taxes on every gallon of gas that's sold, and I've heard talk about some states cutting the tax to help make gas more affordable. The problem is: It just won't work.
There's only a limited supply of oil, and the oil companies want to sell every last drop they have. If the taxes on gas are reduced, oil companies will HAVE TO raise prices so the retail prices stay the same. If they don't, people will start buying more gasoline (it's cheaper, after all!) and since supply hasn't changed, they'd run out of oil.
Instead of gas prices going down, a cut in the taxes by the government means that the government has less money to maintain roads and bridges which means they'll either have to raise taxes elsewhere or cut funding for other important programs like education or police to make up the gap. And, since retail prices must stay the same, the very oil companies being accused of price gouging will have to raise the price they sell oil and make even more profits!
I'm very disappointed in our government not taxing gasoline more than they do. Driving has been artificially cheap since Mr. Ford built his first cars and nobody seems to realize the true cost of the automobile lifestyle. Road, bridges, tunnels, street signs, and so forth cost a LOT of money, and it would make sense that the people who use them most should pay for the cost of creating and maintaining them. And the easiest way to do this with a tax on gas. Those who drive more use more gasoline, and therefore pay the most in gasoline taxes, and therefore pay a larger percentage of road costs. But most roads and infrastructure are not supported with gas taxes--they're supported though income taxes and property taxes and goes into some big black hole that nobody keeps track of where it ends up.
So the main cost of driving is just the gasoline. The cost of the roads, bridges, signage, and so forth are largely covered through other taxes. Do you ever wonder why the United States has gas that's so much cheaper than any other location in the world? It's because most of the world pays for their roads through a gas tax. The cost of a single gallon of gasoline in Europe (it was about $8/gallon when I was in England) is the full cost of driving. We're still paying that, but the taxes are hidden making the true cost of driving seem much lower than it really is.
I'd like to see gas prices reflect the true cost of driving and stop funding roads through hidden taxes. Sure, we'll be paying more for gas, but income and property taxes should be reduced accordingly so the total amount of tax being paid doesn't change at all. Somehow, I don't see any politicians having the courage to propose more than doubling the cost of gas, but imagine if this could happen!
Research into fuel-efficient technologies would be unprecedented. Companies like Ford and GM that relied so heavily on cheap fuel might now be kicking Toyota and Honda's butt after having developed the first hybrid vehicle instead of wallowing on the brink of bankruptcy.
If you want to lower your gas bills, though, your best bet is to do it the old fashioned way. Get out and walk, bike, or use mass transit to get around town. And as an added bonus, it's healthier too. =) (It's true--there's at least one study that shows that there is a direct correlation between a person's weight and how much they drive.)
At any point in time, there are a finite amount of resources available for everyone. This is the supply side of the equation--oil. We, the consumers, who like to drive everywhere, are the demand side of the equation. As consumers, we don't have a whole lot of control on the supply side of things, but we have a huge impact on the demand side of things. If demand goes up, so does the price. If demand goes down, so will the price.
It's like a good old fashioned auction where the highest bidder wins, and don't be fooled--oil prices work just like an auction except on a much larger playing field. If you want proof, try selling a gallon of gasoline on eBay and see how much you can get for it. I'd be shocked if someone were willing to buy it for a price that is substantially different than current, local prices. You can't sell it for more--nobody would buy it and go to the local gas station instead. You could try selling it for less, but everyone wants gas for less and they'll eventually bid it up to near or at current local prices.
I've gotten e-mails from close friends who, until they forwarded me the e-mail, I thought were highly intelligent enough to grasp the concept of supply and demand. Take the 'gas-out' campaign that seems to rear it's head every time gas prices go up. The e-mail suggests that if everyone does not buy gas on a certain day of the year, that means demand goes down and therefore prices will follow. Two problems with that:
First, unless people STOP using those resources on a given day, it just pushes demand from one day to the days before or after the gas-out day. Overall, demand doesn't change at all.
Second, even if somehow the laws of supply and demand were somehow overcome and prices did drop a noticeable amount, everyone would start buying less fuel-efficient cars, drive more often (instead of carpooling, walking, biking, or using public transportation), and so forth. Demand goes up, and prices end up back where they were before.
It's ridiculous, and anyone who's taken an high school econ class could see the e-mail was created by someone who obviously flunked the class in spades.
Then I got an e-mail from another not-so-brilliant friend, forwarded around the world multiple times, saying that the gas-out idea was just plain STUPID since it doesn't really change demand and thus affect gas prices. No, instead we should boycott certain brands of gasoline. Those companies will be forced to lower prices to sell their product, then other gas stations will have to follow suit to stay competitive--ergo, lower gas prices.
Have you ever been to a gas station--take Arco, for instance, since I see this often at Arco stations--with lines around the block because the gas is two cents cheaper than the gas station across the street where there's barely a car in sight? Just because Arco has cheaper prices, do all of the other gas stations nearby automatically lower their prices to stay competitive? No. Do you know why? Because I get my gas at those other stations. Saving less than 50 cents for a tank of gas isn't worth the wait it would require for me to get to the front of an Arco line, and I'm willing to pay that little bit extra for the extra convenience.
Let's say the Shell station (and why not Shell?) is located across the street and decides to lower prices even lower than Arco. What happens? Everyone starts getting gas at the Shell and leaves Arco? Probably, but the Shell station probably won't stay in business for long because they're selling their goods at a loss. There is a lower limit to how low prices can go, and no business will deliberately price themselves out of business.
It's actually much more complicated than that. Many gas stations share gas. Companies like Costco will buy their gas from whoever will sell it to them the cheapest so if you boycott one company and they drop their prices, Costco will start buying from them and make up the slack. It's like one of those long balloons filled with air. You can squish one end, but then the air moves to the other side of the balloon. If you squeeze both ends, the air will pop out in the middle. It doesn't matter what you squeeze, the displaced air will always find somewhere else to go.
But is it really shocking that gas prices have gone up like it has? It's all about supply and demand. For years we've known that oil supplies are tight. New oil finds are becoming more and more scarce and existing oil supplies are drying up. Supply is going down. All the oil drilling in the world won't stop that. The US passed its peak production rate decades ago, and there's some debate that the world's peak production rate has already passed. If it hasn't passed already, it almost certainly will within the next decade or so. Supply IS going down and it will continue to go down, thus driving prices up.
And looking at the demand side of things--in the era of 'cheap gas', people became wreckless. We became a country of SUVs and Hummers and did not care about fuel economy. Demand for this increasingly scarce resource called oil continued to grow.
And now the public is irate that gas prices are so high? Well, DUH! I remember a few years back when gas prices were near $10 per barrel and I thought, "Now THIS is the time to invest in oil!" I actually did buy into a couple of oil companies which I held for a couple of years and they did quite well as oil climbed to $30 per barrel. I finally sold the stocks--not because I didn't think oil prices would continue going up (no, I knew oil prices were going to keep going up)--but rather because I felt guilty for owning oil companies. I hate their environmental track record and I hate oil. For those that know me, I like to walk. I walked from Georgia to Maine, and in 2008 I'm planning to walk from Mexico to Canada. I'm currently 'thru-hiking' the city of San Luis Obispo. I walk to get groceries, I walk to the movie theaters, and I walk, and I walk, and I walk. Often, months go by and I don't drive. I once filled up the gas tank in my car in November and didn't have to refill it again until four months later in March!
But I always considered oil a necessary evil and thought I could buy an oil company and not have any qualms of guilt. I was wrong, so I finally sold my stake for a rather large gain knowing full well I was leaving money on the table. It wasn't worth the guilt.
In regards to taxes--the government collects taxes on every gallon of gas that's sold, and I've heard talk about some states cutting the tax to help make gas more affordable. The problem is: It just won't work.
There's only a limited supply of oil, and the oil companies want to sell every last drop they have. If the taxes on gas are reduced, oil companies will HAVE TO raise prices so the retail prices stay the same. If they don't, people will start buying more gasoline (it's cheaper, after all!) and since supply hasn't changed, they'd run out of oil.
Instead of gas prices going down, a cut in the taxes by the government means that the government has less money to maintain roads and bridges which means they'll either have to raise taxes elsewhere or cut funding for other important programs like education or police to make up the gap. And, since retail prices must stay the same, the very oil companies being accused of price gouging will have to raise the price they sell oil and make even more profits!
I'm very disappointed in our government not taxing gasoline more than they do. Driving has been artificially cheap since Mr. Ford built his first cars and nobody seems to realize the true cost of the automobile lifestyle. Road, bridges, tunnels, street signs, and so forth cost a LOT of money, and it would make sense that the people who use them most should pay for the cost of creating and maintaining them. And the easiest way to do this with a tax on gas. Those who drive more use more gasoline, and therefore pay the most in gasoline taxes, and therefore pay a larger percentage of road costs. But most roads and infrastructure are not supported with gas taxes--they're supported though income taxes and property taxes and goes into some big black hole that nobody keeps track of where it ends up.
So the main cost of driving is just the gasoline. The cost of the roads, bridges, signage, and so forth are largely covered through other taxes. Do you ever wonder why the United States has gas that's so much cheaper than any other location in the world? It's because most of the world pays for their roads through a gas tax. The cost of a single gallon of gasoline in Europe (it was about $8/gallon when I was in England) is the full cost of driving. We're still paying that, but the taxes are hidden making the true cost of driving seem much lower than it really is.
I'd like to see gas prices reflect the true cost of driving and stop funding roads through hidden taxes. Sure, we'll be paying more for gas, but income and property taxes should be reduced accordingly so the total amount of tax being paid doesn't change at all. Somehow, I don't see any politicians having the courage to propose more than doubling the cost of gas, but imagine if this could happen!
Research into fuel-efficient technologies would be unprecedented. Companies like Ford and GM that relied so heavily on cheap fuel might now be kicking Toyota and Honda's butt after having developed the first hybrid vehicle instead of wallowing on the brink of bankruptcy.
If you want to lower your gas bills, though, your best bet is to do it the old fashioned way. Get out and walk, bike, or use mass transit to get around town. And as an added bonus, it's healthier too. =) (It's true--there's at least one study that shows that there is a direct correlation between a person's weight and how much they drive.)
Monday, May 08, 2006
Where's the DUH in Da Vinci?
I'm starting this blog because there are things I read and things I see that get under my skin and make me want to slap people silly until they're thinking straight again. And today, the thing that irritates me are the religious zealots who seem to think the Da Vinci Code was written by Satan himself.
It's a WORK OF FICTION, people! Do people walk into a bookstore, browse the fiction section, pick up this book, and HOLY JUMPING JUNIPERS have a stunning realization that the book was incorrectly shelved and really belongs in the true crime section?
Now Catholic groups are demanding that the movie coming out soon have a disclaimer to inform the public that the movie is a work of fiction.
Is this really necessary? Was there also a disclaimer on Mission Impossible III--just in case someone might accidentally think the movie was true? Perhaps we should include a disclaimer on Ice Age 2: The Meltdown. Oh, drats, that's actually based on a true story. There was an ice age, after all, and it did melt, so let's label that one 'based on a true story' since accuracy is more important than facts,
When you walk into the typical movie theater, do people really think they're watching real life? Perhaps with the exception of United 93--a movie I haven't seen but rumor has it it might be the most true-to-life story ever created for the theaters. Even those 'based on a true story' movies usually have more fiction than fact in them.
Maybe I'm not giving the Pope enough credit. Perhaps he wants to stir up controversy regarding this movie. When the Pope tells the world that you should boycott the movie, well dog gone, I want to see why I'm not supposed to be seeing it! It could just be a conspiracy to drum up a little business for the movie. And of course, everyone knows it's a work of fiction because they've turned it into a controversy. And therefore they can educate the non-Christians of the world and seduce them with the power of their faith. What a wickedly clever idea.
It's a win-win situation. The Catholics have gotten tons of publicity out of the deal, and so has Dan Brown. Now Dan Brown I think is smart enough to realize that a bit of controversy is going to help sales. I don't really think the Pope is smart enough to realize this, however. If he were, he'd have gone into business school instead.
I, for one, am sick of hearing about the controversy. Only an idiot would believe the film was true, and for you idiots out there, there's a bridge in New York I'd like to sell you.....
It's kind of surprising that the other religions of the world don't seem to care about a disclaimer. Certainly Muslims and Hindus of the world also agree that the book and movie are fiction. Do Catholic groups demand movies about the history of Muslims come with a disclaimer? Of course not--we believe in the freedom of religion. We believe everyone has the right to pray to the god or gods of their choice. So let's assume some people really do believe this book is based on fact. There's a huge mass of people out there that believe Jesus got married and popped off some particularly mobile sperm. I'll be the first to say those people are idiots, but idiots have rights too and if they want to believe the descendents of Jesus are still walking around today, then by golly, let them. Stop persecuting these idiots.
I hope, someday, that the Pope will diss me. I'm writing a book too--about my Appalachian Trail adventures. Oh, the wicked sinners I met along the trail. *shaking head* No, I cannot imagine my book would please the Pope at all. Probably call it mean names and say it should be boycotted. People should spend their time reading the Bible instead of the filth I'm writing. Please, please, please, Mr. Pope, give my book a dreadful, scathing review. I could use the money. I'll even cut you in for some of the profits.
It's a WORK OF FICTION, people! Do people walk into a bookstore, browse the fiction section, pick up this book, and HOLY JUMPING JUNIPERS have a stunning realization that the book was incorrectly shelved and really belongs in the true crime section?
Now Catholic groups are demanding that the movie coming out soon have a disclaimer to inform the public that the movie is a work of fiction.
Is this really necessary? Was there also a disclaimer on Mission Impossible III--just in case someone might accidentally think the movie was true? Perhaps we should include a disclaimer on Ice Age 2: The Meltdown. Oh, drats, that's actually based on a true story. There was an ice age, after all, and it did melt, so let's label that one 'based on a true story' since accuracy is more important than facts,
When you walk into the typical movie theater, do people really think they're watching real life? Perhaps with the exception of United 93--a movie I haven't seen but rumor has it it might be the most true-to-life story ever created for the theaters. Even those 'based on a true story' movies usually have more fiction than fact in them.
Maybe I'm not giving the Pope enough credit. Perhaps he wants to stir up controversy regarding this movie. When the Pope tells the world that you should boycott the movie, well dog gone, I want to see why I'm not supposed to be seeing it! It could just be a conspiracy to drum up a little business for the movie. And of course, everyone knows it's a work of fiction because they've turned it into a controversy. And therefore they can educate the non-Christians of the world and seduce them with the power of their faith. What a wickedly clever idea.
It's a win-win situation. The Catholics have gotten tons of publicity out of the deal, and so has Dan Brown. Now Dan Brown I think is smart enough to realize that a bit of controversy is going to help sales. I don't really think the Pope is smart enough to realize this, however. If he were, he'd have gone into business school instead.
I, for one, am sick of hearing about the controversy. Only an idiot would believe the film was true, and for you idiots out there, there's a bridge in New York I'd like to sell you.....
It's kind of surprising that the other religions of the world don't seem to care about a disclaimer. Certainly Muslims and Hindus of the world also agree that the book and movie are fiction. Do Catholic groups demand movies about the history of Muslims come with a disclaimer? Of course not--we believe in the freedom of religion. We believe everyone has the right to pray to the god or gods of their choice. So let's assume some people really do believe this book is based on fact. There's a huge mass of people out there that believe Jesus got married and popped off some particularly mobile sperm. I'll be the first to say those people are idiots, but idiots have rights too and if they want to believe the descendents of Jesus are still walking around today, then by golly, let them. Stop persecuting these idiots.
I hope, someday, that the Pope will diss me. I'm writing a book too--about my Appalachian Trail adventures. Oh, the wicked sinners I met along the trail. *shaking head* No, I cannot imagine my book would please the Pope at all. Probably call it mean names and say it should be boycotted. People should spend their time reading the Bible instead of the filth I'm writing. Please, please, please, Mr. Pope, give my book a dreadful, scathing review. I could use the money. I'll even cut you in for some of the profits.
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