Gas Prices

Yesterday the US House of Representatives passed a bill giving the Federal Trade Commission power to investigate the Oil company profits. President Bush's Admistration says they will veto any such bill if it passes the Senate.

The representative that introduced this bill, Bart Stupak, D-Mich., should be commended for his hard work on this issue. On his website he says this...

While consumers are being forced to pay up to $3.00 a gallon for gasoline, oil companies continue to reap record profits. Last year, Exxon Mobil posted $36 billion in profits, the largest profit for any corporation in United States history. Moreover, over the past year, refineries have increased their prices 255 percent. As these profits increase, so does the potential for price gouging.

When talking about refinery profits, economists refer to the “crack spread,” which is the price difference between a barrel of crude oil and an equal amount of refined gasoline. Typically, a crack spread of $4-5 per barrel will cover a refinery’s costs. Anything over this amount is usually profit, although this can differ from one refinery to another. If a refinery has a crack spread of $8-9 per barrel, economists consider this spread as a good, consistent profit. It has been estimated that refineries’ current crack spreads are as much as $20 to $30 per barrel. Refinery companies are raking in these excessive profits at the expense of working Americans. This is price gouging, and Congress should give the Federal Trade Commission the tools to investigate these profits and prosecute those refineries that engage in unfair practices.

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How Much Money is in the Federal Reserve?

Trick question! The Federal Reserve System is neither Federal nor a Reserve! The Federal Reserve system was developed in secret by the BANKing industry and DELIVERED to congress for approval over many years of legislation and lobbying.

The Federal Reserve loans money to "member banks" so that they can lend more money than they actually have in reserve. The Federal Reserve chairman can produce more or less money as well as increase or lower interest rates charged to the "member banks." Doing these two things can help control inflation.

Inflation is the DEVALUATION of the dollar so that consumer good's prices seem to appear to increase. Inflation is caused by the basic economic principle of Supply and Demand. The more money available to the public, the less valuable it is.

Little known fact: When the government needs money to fund things like the war, they can go to the Federal Reserve Chairman and request those funds. The chairman then writes a check to the US Treasury for the amount needed and CREATES those dollars. Thus flooding the market with money that did not exist the day before.

3 Common Money Floods: (Causes of Inflation)

• As stated previously, borrowing by the government.
• Borrowing by the "member banks". Member banks can loan up to 9 times for every actual dollar they have in reserve. So, if they choose to streatch their dollar, they are actually creating dollars for the loan.
• Frozen Money. Money is frozen for many reasons; stuck in retirement funds, overseas in government vaults, savings by businesses for trade.

When you hear these three things on the news, remember, it's your TAX dollar that is paying for these! When we as a nation are at the highest national debt ever, you and I are being taxed. When the US citizens have more debt than ever, you and I are being taxed. When China buys US debt, they are doing so to help the dollar (since we are their biggest importer), when they sell it... it will tax us. Inflation is a tax!

Most Americans have no understanding of inflation. My statements are not political, if we must go to war... then we must go, but do not under any circumstance believe that it's paid for by anyone but YOU!

It is important that if you are saving money that your savings plan has at least a 6% gain over the long term. (3% inflation plus 3% taxes) Failure to do this means you could be moving backwards by saving.

Gas Prices (First Post of Many)

Well... there are a milion issues when we talk about gas prices. While there are a ton of issues that effect Gas prices, the issues are all Supply and Demand related. Sometimes even a 1% possibility of a supply change will cause our pump prices to increase.

According to CNBC... Gas prices are at an all-time high, averaging over $3.07 per gallon, the previous record high was $3.03 on August 11, 2006.

Things to know about Gas:

• There are two different supply chains.
  -The supply of Crude Oil from various sources including the Middle East.
  -The supply of refined Gasoline.
  This is the fundimental part most people don't understand. It is possible for us to have a great supply of oil and still not have enough refined gasoline, because that Crude oil is shipped to us and we have to convert it to gasoline for use.
• While we blame the Middle East for many of our gas supply problems, in reality/as of late, our gas prices are more effected by local production.
• When Crude Oil is refined, the oil is broken down into:
  -Natural Gas
  -Propane Gas
  -Automotive Gasoline (Liquid)
  -Kerosene (Liquid)
  -Jet Fuel (Liquid)
  -Disel Fuel (Liquid)
  -Industrial Fuel Oil (Liquid)
  So, when "gas prices" are up, usually all of the the above are effected in one way or another.
• The gas in the pump has already been paid for, the price you pay is based on what the station owner believes they will be paying to replace the gas you take.
• Supply and Demand says... When supply is up and demand stays the same, the price will go down. When deman is up and supply stays the same, the price will go up.
  In this graph, you can see that our demand [consumption - red line] is higher than last year's demand. Assuming that production is the same then, the prices must be higher than last year. (And they are) Graph: AG Edwards - Gasoline Chartbook - 05-02-2007 - Eric Wittenauer

Find Gas Prices in your Area at: Gasbuddy.com A cool new feature of the web site is the Gas Temperature Map.

When Will Gas Prices Affect Your Driving Habits?
When asked, “How high will gas prices need to get before you drastically alter the amount of driving you do?” 42% of respondents stated that they had already altered their driving, 25% said they would alter their driving at $4 per gallon, 20%stated they would alter their driving at greater than $5 per gallon and 13% said they would alter their driving at $5 per gallon.

Lotto Winner goes from $5.5 Million to Broke

Lotteries, two big problems. I've had the debate a million times with a friend of mine, you know who you are.

Lotteries target people who are poor at managing money, it's not the amount of money you have... it's your ability to live within your means.
Lotteries target people who are bad at math. Odds are you aren't going to win!

So, let's look at the first, "Lotteries target people who are poor at managing money." We know this because if you investigate the numbers, the average person who plays the lottery spends $35 a month. Anyone who is good at money management would never spend this amount for no return. (Just the chance of a return.)

An article appeared on April 30 JS Online about a guy who won $5.5 million dollars in the lottery has now had to sell his house and lives on a pension because he's broke.

His fiscal downfall followed what has emerged as something of a pattern among lottery winners nationally: Someone with little training in dealing with vast sums of money gets a sudden windfall, only to see it tumble maddeningly into the wind.

The second, $35 into a growth stock mutual fund monthly over a 40 year time span will give you a Million Dollars EVERY TIME! Why would you spend that money on the "hope".

Dave Ramsey says... "If people were good at math, they wouldn’t be in debt in the first place." This is also a case where Dave's "selling crock pots, not microwaves."

JS Online - Lottery winner blames bad advice for his losses

When was the last time you READ your Bills?

The Wall Street Journal had a blog post yesterday by Nathan Koppel about a Sanford Professor that did a study about billing abuse by attorneys. He pulled 5000 attorneys and found that many of them pad the bills and preform "unnecessary" tasks to bump up the rate.

Ross polled 5,000 attorneys from various walks of life throughout the country, and 251 responded. He worked with Reed Business Information to generate a random sampling of lawyers who work at law firms. Two-thirds said they had “specific knowledge” of bill padding ─ a finding virtually identical to one reached by Ross in a 1995 billing survey. Also, 54.6% of the respondents (as compared with 40.3% in 1995) admitted that they had sometimes performed unnecessary tasks just to bump up their billable output.

Now this post is about Attorneys, but really... how often do you read your bills in detail? Do you know what your credit card rates are, would you know if they changed one month? Do you know what your banking fees are and if you were charged $2 extra for "POS Debit Fee" would you have any idea if you were supposed to?

Having worked in the phone industry, doing contract negotiation, I know that many of the "regulatory fees" are actually phone company charges that stay right in the phone companies pocket.

Chances are you are being ripped of by someone! You should read your bills in detail every month, often, if you pay the bill then you agreed to it's contents and getting credits for longstanding "mistakes" is very difficult.

My recommendation, start negotiating more of your bills. When you call and discuss your utility bills and what you can do to get it reduced you will learn a lot about what you're actually getting billed. Take this negotiation as an opportunity to learn about the business, the better educated you are the better you will understand how to protect your budget. And... think of it as a game, what's the worst that could happen?

Ask questions that have nothing to do with why you are calling... get out of your comfort zone... ask the phone rep if he is paid by the sale or just hourly. Ask if they get in trouble for discounting your bill. Ask if they have a record of how many credits they have already given you, even better, if they have a limit. (annual, monthly, daily, percent) All of these little tid-bits of information will drive you to better negotiate and better understand your bill so you won't get ripped off anymore.

I'll give you one more tip... read these... I know the bill you are negotiating might not be your cell phone bill but read these posts they will give you a real understanding about how customer service reps are paid and think.

• 18 Confessions Of 2 Former T-Mobile Reps
• 10 Things We've Learned From 'Confessions of A Wireless Sales Rep'
• 8 Confessions Of A Former Verizon Sales Rep
• 7 Confessions of a Cingular Sales Rep
• 6 Confessions Of A Former Sprint Sales Rep
• 11 Confessions of a T-Mobile Sales Rep
• 8 Confessions of an Alltel Sales Rep

Dealerships Rip You Off With The "Four-Square," Here's How To Beat It

This is one of the most informative articles I have ever read about high pressure sales and the specialized techniques car dealerships use. This is a MUST READ for anyone who owns or will ever own a car... new or used.

Read the whole article, it's long, it's important, and it will save you thousands... for example.

Sometimes, if the manager feels especially nasty (or has gone a few rounds with you via the worksheet), they'll come out of the tower and say "Folks, I'm (Douchey Douchebag), the sales manager here. Congratulations! You've just bought a car! We were able to get the payments to $310 - I know you wanted $300, but that was the best we could do. That's close enough, right?" They'll nod their head (another psychological trick to get you to agree), and almost every time the person says "Yea, that's fine!" The problem is, they didn't realize that a $10 payment bump over a 5-year loan nets an extra $1k in profit for the dealership. It's called "the $10 (or $15, or $20) close", and I only saw it fail when a person was really, really exasperated with us. The deal ends, and you wake up in a year realizing that, somehow, you're $6,000 upside down on your car, while the dealership is laughing all the way to the bank.

The Consumerist - Dealerships Rip You Off With The "Four-Square," Here's How To Beat It