Saturday, February 25, 2012

Pump prices don’t have to give you gas

This week’s sign the apocalypse is firmly set upon us was the story of rising gas prices, the one and only story seemingly capable of getting our focus off of the New York Knicks’ Jeremy Lin. Reading the papers (remember them?) and watching news programming, you would have thought that the very essence of American life was being forcibly pried from our hands, sealed and locked in a steel oil barrel, and dumped deep in the Pacific with all the other toxic unmentionables.

My favorite stories were the “searches” of the local news crews, where they drove around town looking for the least expensive places to buy gas. Come on, is the suggestion really there that I should drive out of my way to save a few pennies on the gallon when filling my tank? Seriously?

When gas prices rise by a few pennies, we seem to lose all rational thought. If prices increase by a dollar, forget thought at all, much less rational thought. It’s all base instinct and outrage.

A dollar?

Take a deep breath and let that mull in the back of your mind for a minute - a dollar.

Reminds me of my parents a decade ago, who drove from Kansas to visit my sister in Boston. Their plans were to drive back via Canada, a place they had always wanted to see, but had never found the occasion. Fuel prices increased in the weeks preceding the holiday, leading them to cancel the Canadian portion of their trip and returning home the most direct – and inexpensive – route. To this day, they still haven’t seen Canada, and while hardly a huge loss (c’mon, it’s Canada, for chrissakes), for what, savings of $70?

I’ve spent more than $70 dollars this month on wine alone, and keep in mind February is a short month and I buy very cheap wine.

How many people change vacation plans over $70? Probably not many, and I’m certain my parents, in a form of rather selective memory, would say they wouldn’t either. Ah, but mask the inquiry in another question – How many people have knee-jerk reactions to rising gas prices? Answer: apparently everyone.

Do you think our gasoline prices are high? It’s a question that’s worth exploring relative to gasoline prices around the world. Are you ready for this? Sit down. Prices for gasoline in Europe are about double that of the United States.

Gasoline usage in this country is ridiculous, and probably based in our collective culture. The latest statistics available are from 2005, but they are staggering – Americans are the world’s largest consumer of gasoline and burn an average of 386 million US gallons (1.46 gigalitres for you metric-obsessed) of gasoline each day.

Sometimes, numbers are so big it’s best to draw comparisons through an illustrative metaphor. Take each of those 386 million US gallons used daily and put them into 55 gallon oil barrels. If you stack each of those over 7 million barrels end-to-end, you will roughly have the height of our indignant outrage over fuel prices.

Americans love their space. That’s why our ancestors moved here and stole all this land. Land represents liberty, at least our liberty, and freedom is represented by our ability to travel the land. In the “old days,” that was by horse, and it was taken so seriously that the penalty for horse theft was … death. Yes, stealing a horse was dealt with more severely than sometimes killing a human. The equivalent today would be the death penalty for grand theft auto. Now, we wouldn’t do that, would we?

No, of course not – car theft penalties in California (where we love our cars) for first time offenders are one to four years imprisonment and a fine. However, relative analysis is always important. Would it surprise you that the penalty for felony car theft is more stringent than felony domestic abuse (three months to three years imprisonment)? Yes, you just might serve more time for stealing a $950 car than for beating your spouse.

I won’t go so far as to say we Americans love our cars more than our spouses, but the raw data could, possibly, lead an objective mind toward some rather troublesome hypotheses.

Okay, back to that dollar from above. Remember that solitary dollar? Let’s assume the worse of the predictions for the summer come true and gas prices increase about 25%, or a dollar a gallon. Filling your 15 gallon tank every two weeks means another $15 every two weeks, or a whole $390 a year.

Is it okay to take the suicide watch off yet? Can we turn some collective attention to anything more pressing?

I know! How about attention to saving fuel and money? Maybe there’s even a way to save so much we actually make money?

Redirect public outcry and make decisions to cut driving by 10 to 25%. At the low end, you’ll incur less of an increase in your total costs. At the high end, you won’t incur any additional costs at all. Moreover, you’ll save maintenance costs for your automobile, including longer periods between oil and filter changes in the short-term, and longer periods between purchasing tires over the long-term.

Cutting driving takes only a little imagination and some good old fashioned persistence. Determine if you can work from home occasionally, thereby eliminating some commuting. Group your errands into one trip from home instead of several. Trade your car trip for a bike ride or a walk whenever possible, and on those occasions you have to drive, try to walk between stops instead of moving your car from stop to stop.

Saving money from limiting your fuel consumption is one thing. How about profiting from other’s consumption of fuel? Give up the thoughts of investing in retail fuel stations, for believe it or not, they don’t make much money off selling gasoline. Their margins come through over-priced convenience items like soda and chips. Rather, you want to find a way to invest in “Big Oil.”

Oh, c’mon now, 99 percenter, get off your high horse. Big oil is not the devil and it is not evil, as selling consumers the oil they consume – what they voluntarily buy - is no more evil than NBC Universal televising brain-dead programming to consumers who want to view that. Remember, no one forces consumers to buy fuel at the pump. The very essence of business is providing value to customers, where value is defined as a simple function of delivering goods or services at a price which consumers are willing to pay. High fuel prices don’t really matter if you don’t pay them, just like the high price of a Honus Wagner baseball card doesn’t matter if you don’t buy one.

“Big Oil” might be best exemplified by Exxon Mobil (NYSE: XON). It currently trades at $87.34 a share, at the high end of its 52-week range of $67.03 to $88.13. At its current price, the dividend yield is 2.2% ($1.88 per share annual dividend divided by share price of $87.34). If you have any money in a passbook savings account or short-term CDs – any money – take a note at the dividend yield, for it is much, much higher than the interest the bank is giving you every quarter.

Americans, it’s time to stop crying and complaining, for nothing is more un-American than that. First off, know the price you pay at the pump is half of what your Italian cousin pays, and while he probably eats better than you do, also revel in the fact you don’t live in his economy or under his government. Then, with your new rational, logical and wider perspective, cut the miles you drive and take the money saved on gasoline and invest in Exxon Mobil or another large international energy (read: “oil”) conglomerate.

More importantly, get on to something more important.

Of course, it’s entirely possible I’m full of gas as it’s just this guy’s opinion.

Pump me up on Twitter @RayHartjen

Saturday, February 11, 2012

All a-Twitter over North Korea

Yesterday, social media networks were a-buzz over the “reported” assassination of North Korean leader Kim Jong-un, with the first mentions occurring on the Chinese microblogging site Weibo, its flames fanned rather unnecessarily by a seemingly large number of Twitter’s close to 500 million users. It’s always dangerous relying on the internet – particularly social media sites – for news, as it’s incredibly easy for false information to spread.

It’s the old FabergĂ© shampoo commercial revisited.  I told two friends, and they told two friends, and so on, and so on … .  It’s easy and so very tempting to read reports as fact when, in fact, they’re often fiction, and even more so with Twitter’s 140-character limit making it difficult for the best of writers to communicate both a single cogent point and cite a reliable source.

Of course, in the case of on Kim Jong-un, we still don’t know for certain the reports are false, as the famously tight-lipped North Korean government has issued forth neither a statement nor even a word or picture to prove reports true or false.  The U.S. intelligence agencies are even in the dark, although after an exhaustive ten-year hunt for Osama bin-Laden led us to find him living comfortably in what passes as a Pakistani bedroom community, one shouldn’t assume their networks are any more reliable than Weibo or Twitter.

Uh oh, I hope I didn’t just reveal the CIA’s and NSA’s most prized intelligence gathering assets.  Just to be safe, I won’t answer the door today.  Or, rather in no effort to beat the rush, just won’t open the door ten years from now. 

As you’ll remember, Kim Jong-un ascended to the title of North Korea’s “supreme leader” upon the death of his father, Kim Jong-il, who was also referred to by his communications staffers, if not his country’s citizens, as “dear leader,” “our father,” and “the general,” all of which are, of course, significant improvements on Libya’s former dictator Muammar Gaddafi.  After all, in the close-knit world of tyrannical dictators, generals, et al. carry so much more credence and credibility than colonels. 

In December, Kim Jong-il’s death created its own little Twitter firestorm, as rumors quickly spread the rapper Lil’ Kim had died.  You hadn’t heard?  While I wish, I’m afraid I kid you not.  One of the illustrious knuckleheads was former Detroit mayor Kwame Kilpatrick, whose tweet can only further sully a reputation rife with indictments and convictions of corruption, extortion, bribery and fraud.  Kwame, if you thought your road back to elected public office was one filled with pot holes, hair pin turns, and dangerous cliffs, just wait until voters find out you care one shake of a lamb’s tail about Lil’ Kim. 

The saving grace in yesterday’s North Korean-based stories was the reporting that after a super-quick building period of just 25 years, the Ryugyong Hotel is finally ready to open its doors in the capital of Pyongyang.  Even ardent students of North Korea, both of them, might not be familiar with this hotel, for it is often edited out of North Korea’s official photographs of the city.  Made almost entirely out of concrete and looking like something you might find scaled down at Space Mountain in Disneyland, the hotel will open only 23 years behind schedule, first as an office building, then as a – get this – a hotel for tourists.

You read correctly, tourists.  Don’t you remember the 70Chinese tourists let into the country in November?  With its first tour bus of tourists in generations, North Korea has now moved just behind Chernobyl, and just ahead of hell, in the rankings of the world’s most desirable tourist locations, and for good reasons, including:
  •  42% of the country’s 24 million inhabitants do not have access to improved sanitation facilities
  •  but they do have access to a whopping 1.18 million telephone lines and 430,000 mobile cellular phones
  •  the country’s GDP of $40 billion is about the same as Apple’s annual net profit
  •  no, none, zero independent media and all radios and televisions are pre-tuned to four government stations
  •  couple its political isolation with the fact only 22.4% of its land is arable and just 1.66% dedicated to permanent crops, and it’s clearly visible why persistent famine exists

But, I guess there’s another way to look at things – there’s only one way to go, and it’s the way up, which gets me to mulling over the possibilities.  Maybe Kim Jong-un will leave behind his family’s legacy of tyranny and push to move North Korea to a free, open, and potentially prosperous society.  Or, if we’re too late and he has already met his premature demise as speculated so much yesterday, maybe his replacement will be an open, democratically elected government instead of another sour-puss chump in a cheap suit. 

Far-fetched possibilities?  Yes, perhaps.  But nowhere near as far-fetched as the idea of Pyongyang dragging in tourists and their wallets to jump start its military-based economy, and we don’t have to spend 25 years building an above ground concrete bunker to speculate.

Of course, it’s just this guy’s opinion, and I suppose I could be wrong.

Tweet me a visa @RayHartjen