Some Ups but More Downs

Memorable phrase of the day: "Let me have $20 of regular, please" knowing that would fill my tank.

Gas is now $1.79 a gallon in my area. I never in my wildest dreams ever thought I would see the day again when gas was less than $2 a gallon or that I would pay $2 a gallon for my latest delivery of home heating oil. I definitely have to recommend codfuel.com to any Long Islander who is looking for the best deal on oil delivery. Gone are the days of paying at least $0.80 a gallon extra for the privilege of having a full contract with an oil company that included "free" service calls. We are going to roll the dice on this one considering that we replaced the water heater and the boiler a few years ago.

Sometimes we get so accustomed to a particular level of comfort and service that it takes a bit more than the usual prodding to undergo a regular review of expenses to find savings in the budget. Thankfully, my husband and I are fairly conservative in our expenditure and even more since we are diligently attacking business debt. Mind you, I am not sure that I am going to look back and enjoy this particular factor of my life. I think I would like to live a little sometimes and not be so fanatical about every expense.

After having my job for a couple of months, we released the tight financial reins a little bit to begin the process of replacing some completely worn out, broken and/or missing items in the house. 5 years ago, we bought Ikea in the hope that 5 years hence, which is now, we would move up a step to purchasing more premium items that would take us through the college years. I know I referred to Ikea in a recent post, so you know we were back there realizing that we have to do budget-conscious replacements again and delay once more our desire to find more permanent furnishing solutions. I think I am simply out of touch now with the reality of the amounts of dollars required to do a decent room upgrade; the kind of dollars that I simply cannot afford to spend right now and not sure when.

In light of my layoff on Monday, I am so happy that we stuck to the rule that we only spent what we could afford; cash only, no credit. Granted, we were tempted to splurge on many occasions but we both managed to talk ourselves out of it as usual. This is an area that is never of issue with us, neither of us is ever willing to spend more than the other which I have to state once more is simply not the best way; always being prudent can put the damper on things much too often, I suspect. For instance, traveling is something that I truly love to do and in reality have done so little of it lately other than the typical interstate driving to visit friends and relatives. However, every time I get that crazy notion that I want to actually fly somewhere, something that I haven't done since 2002, I multiply that airfare by 4, consider the hotel and eating costs and talk myself right out of it.

Last weekend, I was optimistic about the future, I had all the ducks in a row; my job would allow us to forge ahead despite the obvious challenges. My husband was feeling a little more "doom and gloom," directly influenced by the financial and business news, which is understandable. I countered that we should have a positive outlook on things since after all we both have jobs. I actually started to consider saving for a trip next year. We decided that when we were comfortable with the dent that we made on the business debt, we were going to go somewhere to celebrate, break our usual mold and surrender our usual penny-pinching selves. Alas it is not to be, yet again. I lost my job first thing Monday morning and he got an email the same day that his company planned to lay off nearly 500 people tomorrow.

Some would say have faith, the Lord works in mysterious ways, or we all have to pay our spiritual dues or we are lucky to be in a better position than many or we are simply lucky just to be alive and be happily married with children, or that we are fortunate to have a house or that we should be just downright grateful for everything.

Ask me again tomorrow what I think about that. Right now, I am definitely having trouble seeing the bright side.

Gas Prices Rise Quickly But Come Down Slowly

The following is from an article in today’s paper. See Newsday 8/6/08 Gas prices not falling as fast as crude.

“From a peak of $147 a barrel last month, crude oil has fallen by 19 percent -- but not gasoline.

The local average gas price has fallen by less than 5 percent from its high of $4.346 a gallon on July 8 -- and 6 percent nationally.

So, why do gas prices go up like a rocket as crude oil is rising, but parachute slowly downward when its basic raw material is plummeting.”

Why is that? The article went on to quote various experts from the petroleum industry, all of them had nothing but excuses when trying to explain away the inequity. From the previous run-ups in gasoline prices, we have certainly learned that once the prices reach a certain psychological threshold like when it passed the $3 mark, there is no reduction in prices no matter how much the price in crude retreats. Now that they have us psychologically past the $4 mark, this is where we will stay, for now. Prices may retreat a little but not enough to realize any real savings. Besides, gasoline was already costing too much money when it was priced at $3, let alone $4. Lately I have seen prices at $3.99 a gallon which psychologically seems like a bargain so they have us where they want us.

Exxon-Mobil recently posted its highest quarterly profit ever, $11.8 billion ($11,800,000,000*) dollars. They made this much money in 3 MONTHS, that is $98 million ($98,000,000*) a day. Who are the Americans who are still buying this overpriced gasoline? Has anyone ever seen the Exxon or Mobil stations have the cheapest price on the block? Yet somehow, they continue to rake it in. See post 6/4/08 Fight Back! Buy the Cheapest Gasoline You Can Find. We have no one to blame but ourselves for continuing to patronize these over-priced stations.

It is true that Americans have drastically reduced gasoline consumption in response to the high gasoline prices and that this lower demand has led to the retreat in price per barrel of crude oil. Sadly, this did nothing to prevent Exxon-Mobil from increasing their profits. Oh well.

*I will be writing out numbers with the requisite zeros going forward because the shorthand of million, billion, and trillion does nothing to make people realize just how huge those numbers are. We need to realize just how huge those numbers are.

Things Are Not As Bad As They Seem

Good News! Congress is close to passing a housing bill to help struggling home owners. It looks like the taxpayer will be bailing out Freddie Mac and Fannie Mae after all. The bailouts are working and the stock market is happy to hear it. The stock market is going up and the Dow has reached the levels that it had 2 years ago. In addition, the consumer is still spending as major food retailers show gains. The price of oil is coming down; I saved 10 cents a gallon over the previous week on my most recent fill-up. Even the federal minimum wage is going up 70 cents tomorrow to $6.55/hr.

Thankfully, I can quit all of my bellyaching about how bad things are, recognize that Phil Gramm was right about us whining, and ignore the federal reserve drumbeat of economic doom and gloom. I was even brave enough to tally our retirement accounts today and they really are not so bad. At least we have the same amount that we had in 2006 in spite of subsequent contributions and here I was dreading the worst.

I need to learn that I have to stop worrying vicariously. I worry about the middle class. I worry that people are not affording what they think they can afford. I worry about my friends and family members whom I believe are being fiscally irresponsible. I need not worry when it is fairly certain now that bad financial behavior will be rewarded. The government is completely ready to bailout whatever financial fiasco we get ourselves into. Here I was struggling to pay down debt and jumping through hoops to preserve my credit score. I need to throw caution to the wind and start acting like everybody else. Good guys and girls always finish last.

Greed is good and I absolutely need to figure out how to get on that bandwagon so I can get my piece of the action. Besides, if I go out there and start spending, it will be great for the economy. In fact, I should stop worrying about finding a job because the government will save us. I need to try on this truth for size, it feels uncomfortable but I’m sure it will stretch after I wear it for a while.

Summertime and the Living...

Today I was thinking about summer and how much I love the summer and how much I love summer on Long Island. So, as the financial markets hit hurricane territory with another round of treasury-funded bailouts and billions more in loans to struggling financials, I was going to focus on enjoying the summer. Yet how can I ignore that since March, with the government bailout of Bear Stearns, the treasury has been putting out financial fires and plugging leaks with ever-increasing loans to the financial markets. And can it stop? No. Consider that Fannie Mae and Freddie Mac guarantee and/or insure up to $5 trillion dollars in domestic mortgages. They cannot fail, not over the Treasury's dead body anyhow.

I started this week talking about one of my favorite events of the summer on Long Island so I was going to push the financial turmoil aside and not dwell on the doom and gloom, as I am wont to do. Alas, I cannot dismiss the nagging question, "Where is the money coming from? The U.S. is nearly $10 trillion in debt and it has been running on deficit spending for years. Do U.S. residents not realize that we make up the shortfall by borrowing, much of the funds coming from foreign governments and institutions? The treasury technically does not have the money to be the puppet master; propping up the economy with rebate checks, propping up the financial markets with loans, propping up the housing market with tax breaks and lest we forget, the ever escalating tab for the Iraq War. In addition, the Treasury has already borrowed the entire trillion dollar Social Security surplus and needs to repay Social Security when its current funds dwindle beyond sustenance amount. Lastly, all of this occurred amidst enormous tax-cuts but I digress…

Today was a simple meander through eastern Suffolk County within reasonable driving distance. We were looking for closer destinations where we could enjoy ourselves since in previous years we had no economic concern for our far flung destinations. To the tip of the North Fork, the South Fork, the North Shore, the South Shore and the in-between, we simply named it and we went. So we have to set our sights within reason not only to economize but also to conserve gasoline. We decided to check out a few bayside villages/hamlets that we had previously skipped over in our quest to visit the even more glorious. We enjoyed the views of the bay and the biggest bonus for the children, plenty of playgrounds on the water. Top that off with some home-made ice-cream and we thoroughly enjoyed our dollar-wise weather-wise perfect day.

Fight Back! Buy the Cheapest Gas You Can Find

As I drive around town these days, I catch myself glancing up at the signboard of every gas station I pass by silently logging the new price that is higher today than it was yesterday. Today when I saw a car swoop into the Sunoco station where regular was selling at $4.23, I was stunned. On a main road lined with competitors selling gas at up to 10 cents per gallon cheaper, this person deliberately chose to spend more per gallon at Sunoco. In a nation where branding is everything, we still believe the hype, in this day and age, that a certain brand of gasoline is better than another. Why? because these major brands spend millions in advertising dollars telling us so. And, to pay for all of this advertising, they charge more for their gas because they know we are always willing to pay more for the “premium” brand.

I know people will argue this point until they turn blue but the fact of the matter is gas is gas. Now, I know I can get testy about the taste of different brands of milk – my husband says it is all in my mind - but when it comes to gas, it is going in the car and I’m going to use it up driving from point A to point B a lot faster than I wish these days.

For more proof to the point, the following excerpts are from a 2008 issue of Car and Driver, AAA’s magazine:

“In recent years, the Federal Trade Commission has slapped several big-name oil companies with complaints about misleading or unsubstantiated ads. “Exxon gasoline keeps your engine cleaner…so it can help drive down maintenance costs,” said one ad. “Amoco Ultimate is the only premium refined an extra step to remove harmful impurities…for unsurpassed performance and a cleaner environment,” said another. The government forced the companies to pull these and similar ads because they didn’t have the scientific evidence to back them up.”

“In fact, experts point out that all base gasolines are pretty much the same. Trucks from several companies usually fill up at the same terminals, and the various proprietary additives are “splash-blended” in the truck. So there are differences between various brands, say the experts, but they don’t matter much in engine performance; as a general rule of thumb, the cheapest is the best.”

I know that those loyalty gas cards are a big incentive for people to stick to a certain brand especially when they get 5% cash back or whatever the latest gimmick. Since these cards generally carry a 21% interest rate only those of you who actually pay off the balance each month can realize a savings of $1 to $2 every time you fill up. Those of you who carry-over balances or get less than 5% cash back end up paying much more.

In any event, we cannot as consumers begin to fight the high price of gasoline if we still continue to patronize higher priced stations. If we all were to start buying gas only at the cheap stations in our area, this would create pressure on the higher priced stations to lower their prices to attract customers. We only hear about Exxon-Mobil’s record profits but Sunoco, Amoco and all the other brand names are reaping record profits as well. Nothing works overnight but we should at least try to take some matters into our own hands.