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This Is What Democracy Looks Like

www.NationalView.org's Note From a Madman

August 5, 2008

 

Fuel is Funny

Fuel is funny. And now allow me to explain:

Most companies figure out what they're going to charge for their product by calculating the cost of the item and multiplying by a satisfactory number - a percentage they wish to make in relation to their cost.

My best friend Scott (not his real name), an accountant, used to be the CFO (controller, head finance guy, whatever) of a big 99 cent store in New York City. Let's call it Harry's 99 cent store. Harry's would charge a maximum of 99 cents for each and every item in his store regardless of cost. If an item cost him 50 cents, he would almost double his markup and charge 99 cents; if an item cost 75 cents - the most he would pay for anything - Harry would charge that same 99 cents. Whatever Harry lost in profits (as a percentage), Harry made up for in quantity.

When I owned and ran my own business in New York City's garment district, my markup over the raw cost of an item was what we called "Keystone" - the term referred to as doubling one's cost. In that raw profit, I paid rent, salaries, health care and other assorted do-dads to whomever was helping keep me in business, including Big Oil at the pump, Big Insurance and various government agencies.

Big Oil is so much more fortunate.

Figured in their profits are actually profits on their profits. Here's where that explanation comes in I promised you:

Let's assume that Big Oil Company "A", who owns the method of extracting the oil from the ground all the way up to putting it in your SUV's gas tank at the corner of "Too Much" and "Going Broke", was paying $50 a barrel for their liquid gold not too long ago. After drilling, shipping, refining and converting the crude into gasoline, let's say that their final cost per gallon was one dollar. So if they wanted to keystone that price, they would charge two dollars per gallon.

Of course, in my company's keystone was included all of the resources necessary to make the item and keep the company in business. We'll give Big Oil the benefit of the doubt here and say that the $1.00 per gallon cost already includes that stuff.

So at $2.00 per gallon, a few years ago, Big Oil was "earning" (we'll call it "earning" for this piece) $1.00 per gallon.

So what happens when crude oil jumps up to $150 per gallon? Well, Big Oil gets to charge $4.00 or more at the pump pumping their profits to $2.00 per gallon. Even though their profit margin remains the same (at least on paper), their actual dollar profit doubles.

Nice job if you can get it.

But if that weren't enough for Big Oil to make Big Profits, they have this new way of "earning" money. By purchasing their own stock back, Big Oil artificially raises the price of their stock making their own worth on stocks they already own that much more valuable. And they are doing this neat little trick with - get this - the extra money they are "earning" from the rise in gas prices.

And even better job, huh?

Big Oil has many other tricks to get your hard-earned middle-class tax dollars as well. how many of you hold in your wallet a gas company credit card? If you do, you might know the penalties involved if you're late with, or miss a payment or simply don't have enough money to pay your whole bill. Penalties can be upwards of thirty dollars per month for late payments and interest charges can be in the as high as forty percent.

So the next time one of you Right-Wing buddies comes to you and tells you that Big Oil is just doing Big Business and that their profits are small as compared to other companies, tell the truth.

And then get new friends.

-Noah Greenberg



Drilling for Petrol Lobbies


Or how fear and perceived shortages produce the right environment for unnecessary drilling, the old bait and switch utilized for the petrol lobbies.


We all realize the price of gas is hovering around four dollars a gallon on national average, and has doubled in the last eight years. Here in Eureka {Northern California} it is $4.65 for regular and at one point reached $4.87 a gallon, a squeeze of the American pocket book is on.

I hear the cries of the public trying to budget their lives with twice the level of energy cost falling hard on their collective pocketbooks. It puts a strain on our entire lives including food prices, from the cost of fuel for hauling and the use of corn for ethanol have worked together to push our food prices skyward.

Then of course there is the weak American dollar which is intrinsically tied to the OPEC price per barrel. With the flimsy dollar created by debt and misadventures by our current leaders, the price reflects the weaker dollars and is adjusted upward by those that trade petroleum to make up for that weak currency comparison.

Further there is the burgeoning third world countries China, India and others stretching their industrial consumer base and needing more energy to do it. And as we all know prices are based on supply and demand, the demand is up, the supply remains the same; so we pay. Oil speculators hedge the market and spur prices to spike upwards, rumors of shortages that are not there float to keep the market at ill ease.

Petro dependence is a worldwide addiction and the factors are varied as the countries for the rise in price per barrel of crude which eventually affects our gas pump price.

This energy crunch leads to other problems like higher unemployment, inflation and slower moving economic strategies.

Increasing fuel cost for airlines are driving the price of a ticket up and forcing airlines to stretch the fuel and that makes for a dangerous safety factor. Pilots complain they are given the minimum of fuel required for a flight, leaving no room for error or the possibility of circling an airport to receive clearance.

Is this an accident waiting to happen?

This is a growing problem and seems to reach every facet of our lives, what are the short term solutions and long term plans? There are short range solutions, yet the oil men in the oval office refuse to take these simple moves, such as opening the US reserves forcing the price down, as Clinton did when gas went to $2.00 a gallon in the nineties. Or dropping taxes from the price, another overlooked relief pro gram.

We gaze towards DC for some kind of answer, or positive plans for the future yet our qualms and collective trepidation are played upon instead of positive solutions.

What do some members of Republican Congress and John McCain propose?

They put out policies that will assist their oil lobbies friends or donors and do nothing to lower gas prices for the next decade.

These lobby biased power drivers want to drill in places set aside for its natural appeal and wildlife, while millions of acres of designated oil sites are already waiting to be explored and they ignore them.

Millions of gallons of crude await, in leased and approved spots that are not being explored and yet they want more areas and use the gas crunch to justify drilling in heaven while there is no shortage of approved sights yet tapped.

This off shore drilling is not a solution this is a pork belly loving lobbyE2s answer to the crisis that will not help the American people, but will expand the petro business in to the realms of kingdoms.

Exxon Mobil announced recently that the petro giant recorded a record profit--$11.7 billion in just three months. If Exxon Mobil were a state or nation, it would control the 18th prevalent economy in the world, as reported by the Washington Post.

Of course you may say but they pay taxes and that comes back to the USA.

Off shore tax shelters encouraged by the Bush bunch and tax breaks amounting to corporate welfare leave the profits primarily in the hands of the petro giants. In fact, according to a fresh report by "Friends of the Earth,” the petrol industry can expect $33 billion in tax breaks and other handouts over the next few years. The Saudis have more money than most continents and the Bush friends in Saudi Arabia love their hero in DC. Many claim off shore drilling and petro hauling have become far more environmentally friendly, and it has improved greatly but not fail safe. Meanwhile a huge oil spill occurs in the Mississippi delta recently killing wildlife and polluting the area including crawfish and other edible foods

We are watching another oil derrick platform of fear tactics used on the American people that are based on our ignorance and native attitude.

The Republican oil pushers are hoping we do not ask the pertinent questions like why not drill in land already designated? Or why the research money for alternatives has shifted to subsidizing oil companies through tax breaks?

Oil magnet T. Boone Pickens recently testified before congress that we need to look for alternative sources of energy, wind, solar and hydro, are all promising, but ignored by the drill for Lobbies people.

Conservation and its benefits have long been ignored to the beat of the grand consumption game of petroleum driven greed.

The Bush administration went so far as to give tax breaks for consumers that bought the highest level gas guzzlers and the SUV craze was underway. More low efficiency autos were sold in recent years then anytime since the early years of the sixties when the average gas consumption hovered around seven miles to the gallon. SUV’s and large trucks once utilized to make a living and do hard work were now used to take the kids to soccer practice and buy groceries.

Meanwhile the Peak Oil crisis fears loomed in the background and we were warned but laughed at the chances. Prestige became owning a huge four wheel drive gas hog to impress the neighbors, and every macho teenager wanted a pickup truck with a giant V-eight.

We traded our awareness of the energy crisis for a Texas style American dream that brought further dependence on the Texas oil men and the Saudi’s OPEC.

As an International traveler one has come to realize we pay far less per unit of gasoline here in the USA than most industrialized nations. Our own oil supplies and vast consumption gave us a slight advantage that is now slipping away. Third World countries are fast becoming petrol consumers at a rate that increased demand and fosters the up spike in prices. Further the constant tension of war in the oil rich Mideast have increased the price at the pump as Texas oil men and Saudis oil companies smile and back the Iraq war as a petro cash cow. Venezuela is now one of the greatest producers of oil and we have ostracized this source due to political differences.

One fact that stands out is the fact that most of our oil does not come from the Mideast but from our good neighbor Canada. In fact Canada has the world's second largest oil reserves some claim it is t he largest.

The average cost of gas June 14th 08 was $4.00 per gallon in the USA and $1.38 per liter in Canada. One gallon equals 3.7843 liters so taking the US and Canadian dollars at par gas is $5.22 a gallon in Canada. According to the LA Times as of June 2nd gas was “nearly $10” in France and more than $11 per gallon in Turkey. Gasoline in Germany is at $8.33 a gallon, and a gallon of ethanol costs $5.67 in Sao Paulo Brazil. The Vancouver Sun newspaper reported on May 31st that gasoline (per liter) in Belgium is $2.14 or $8.10 a gallon; Norway $2.28 or $8.63 a gallon (and Norway is an oil exporter); and in Portugal $2.05 or $7.76 a gallon.
Simply stated US and Canadian gas is cheaper compared to most international locations, when driving in the US we are buying at a discount.

Feel better yet?

Venezuela’s public pays about fifty cents a gallon, so it is relative and we subsidize Iraqi fuel so they get it cheap. But most the world gets it in the derrière daily like we do.

As tensions in the oil rich Middle East amplify we pay more, and as demand increases we pay more, every storm that nears an oil derrick we pay more, fear drives this industry.

This supposed shortage and rising prices have had another repercussion that the Bush oil men love, it has opened up the debate for coastal drilling and off shores oil wells. The ANWAR and Alaskan fields are being discussed but they may not be available to impact our supply for a decade. Wind and solar power are being bantered about and hydrogen cars seem to be on the verge of utilization. So perhaps20this is the oil business on its last legs trying to gain as much profit as possible before being phased out as an energy20source.

We are caught in the middle of greed and desperation, as the petroleum industry has bought off many patents on energy saving technology but development of these patents is going so fast on things like hydrogen and electric they work in fear of their positions. Electric cars hybrids more fuel efficient automobiles need to be pressed into production, instead we get more drilling in new ground. Barrack Obama is offering rebates for fuel efficient cars which is great. Obama is bending to the pressure for off shore drilling, but we hope he sees the truth before it happens.

Most of all we need to drill where we already set aside millions of acres and sea miles for just that purpose and stop trying to use fear and economic pressure to feed the petroleum greed machine.

Inform your20fellow citizens that this is another Republican scam, and America is falling for the same old manipulations.

-Robert W. Barker


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-Noah Greenberg