December 25, 2008

Merry Christmas!

Just like at Thanksgiving time, I am wussying out and not writing a post for the Minister of Common Sense blog. Please forgive me (and this is the time of year to do so). I will also be opting out for New Year's Eve, but will be back in full force for 2009! Please come back and see us again after the holidays. In the meantime, enjoy the season.
-- The Minister

December 18, 2008

Gasoline Prices

This posting probably won't make me very popular, but I wish people would stop the communist, conspiracy theories regarding gasoline prices. I admit it – I am a complete capitalist. I studied the financial sciences in school, and I believe in letting businesses and people make as much money as they can (within the boundaries of what is legal)... or lose as much money as they can (which seems to be the more common scenario recently).

I, like you, did not enjoy paying $50 to fill up my tank back when gasoline was $4 per gallon. But I also understand that the price of gasoline is not governed by the gas station, nor is it set by the ExxonMobils of the world. The price of gasoline is essentially established by the price of oil, which is based upon global supply and demand fundamentals. When global economies are strong, then the demand (and price) of oil will rise, and when economies weaken (like right now) then the price will fall. It is far from the influence of oil companies.

When gasoline prices ramped up to $4 per gallon, it seemed like everyone was screaming bloody murder. There are ways to try to reduce the price of oil (and, by extension, the price of gasoline), but none of them are a quick fix. (For the record, some of the solutions include alternative energy and promoting the exploration for more oil.) However, many people, including some of my smart friends, were blaming the oil companies for the high gasoline prices, claiming that the companies were raising them, that they were trying to screw us, that they were greedy, that they were gouging us, and why don’t they lower them? That’s not really how it works.

I don't blame people for misunderstanding the complicated economics behind oil prices, and my following comments will be oversimplified, but perhaps they can help clear the record – and point out the inconsistencies of some lines of thinking. Certainly the media isn't going to be responsible and do the job correctly – they are too interested in the television ratings they receive when they rant about gasoline prices... it makes for good six o'clock news.

Gasoline is made from oil, and oil is a fungible, worldwide commodity. Which essentially means that you can move it anywhere in the world (i.e. put it on an oil tanker) and the price is essentially the same. The world's supply and demand set the price of oil (and, therefore, gasoline prices). You can’t sell oil for more than it's worth, because no one would buy it from you... it's too easy to go somewhere else and buy it from someone else. There is too much oil available for purchase in the world from too many different sources, so all these forces balance out and everyone essentially has to charge the same price. ExxonMobil may sounds like an all-mighty empire, capable of controlling oil prices, but they only produced about 5% of the world's total oil in 2007. That is hardly a monopoly position from which to control prices.

So, I hate to burst the bubble of conspiracy theorists, but ExxonMobil wasn't raising the price of gasoline higher and higher to see how much the consumer could withstand. They were charging the fair market price for gasoline – they couldn't charge more, and they couldn't less. (“Couldn't charge less?” Am I sure? Yes. If ExxonMobil charged $3 for a gallon of gasoline when everyone else was charging $4 per gallon, then arbitrageurs would buy all of ExxonMobil's $3 gasoline and immediately start selling it for $4. ExxonMobil would be sold out of $3 gasoline, and the only gasoline in the market would sell for $4. So, no, ExxonMobil really can’t give you a friendly discount. And while ExxonMobil does produce some of its own oil, they also need to buy additional oil from other sources to make more gasoline. That oil they were buying was increasing in price, and oil is a major cost component of gasoline. If they started charging less for gasoline then, at some point, they start to lose money, even at relatively "high" gasoline prices.)

I also laughed to myself when some people complained loudly when gasoline prices went to $4 per gallon, and they blamed it all on the oil companies, but now that gasoline prices have plummeted to below $2.00 per gallon, no one is saying, “Thank you, ExxonMobil! Thank you for lowering gasoline prices and making my life better!” You can’t have it both ways. If you want to erroneously believe that the big, bad oil companies are arbitrarily raising gasoline prices to screw you, then you have to thank them when they “lower” the prices for you, too, right?

Did the oil companies make a hell of a lot of money in the past few years? Heck yeah they did. And consumers and politicians screamed and railed against the oil companies, saying they were making too much money and how it was unfair and there should be a windfall profit tax (an extra tax to penalize a company for making “too much money”). Although oil prices reached $150 per barrel this year, did you know they fell to $10 per barrel in 1999? When oil prices were super depressed in 1999, do you remember giving ExxonMobil a donation to help them out during their tough times? Did you say “Poor ExxonMobil and their horrible profits – it’s such a shame”? No you didn't. So you can’t now say, “Damn ExxonMobil and all the money they are making!”. Once again, you can’t have it both ways. (By the way, I’m not saying you should say, “Poor ExxonMobil” during their tough times... you shouldn't say anything, ever – you should just let them run their business and succeed and fail, and let that be that.) And by the way, oil prices that once were $150 per barrel are now less than $50 per barrel, so there are good times in business and bad times.

The public and politicians may complain that oil companies “make too much money,” and therefore there should be an extra tax or the oil companies should give some of it back... but, theoretically, they already are. Their profits are higher, and therefore they are paying more absolute dollars in taxes to the government because of that. Higher corporate profits generate more tax revenue for the government and, therefore, more money to provide public services and programs. So, high gasoline prices actually are helping the consumer indirectly by providing more corporate taxes to fund government programs (which we all, theoretically, should benefit from).

The oil companies aren't out to “screw us” and the Middle East oil countries aren't out to screw us either. OK, the Middle Eastern countries are “out to screw us” in the way that they fly planes into our buildings, but they aren't jacking with the price of oil to try to hit us in the wallet. Saudi Arabia et al don’t really have the power to control oil prices. It is true that certain countries did form a group called OPEC (which is sort of like a union for oil-producing countries), and they try to control oil supply to help support oil prices, but they historically have been very poor and unsuccessful at doing this.

Also keep in mind that taxes represent a significant amount of the price you pay at the pump. Gasoline taxes vary state by state, but they generally range from $0.50-$0.60 per gallon. That is about 25% of the price you pay for a gallon of gasoline today, and the government didn't have to "make" the product, so it's nearly a 100% profit to them, whereas the oil companies has to pay to find and extract the oil, convert it into gasoline, and then sell it at all the physical locations (gas stations). I would venture to say that, at today's prices, our government is making more "profit" on a gallon of gasoline than ExxonMobil. Of course, things could be much worse. Next time you are filling up your car with gasoline at $2.00 per gallon, keep in mind that gasoline prices over in the U.K. are over $5.00 per gallon (similar to all of Europe because they have very high taxes). Back when we were paying $4.00 per gallon, people in London were paying over $9.00 per gallon!

So, things could be much worse. Sure, oil companies come with their problems, but they also provide and fuel nearly every single great aspect of our modern lives - from transportation to electricity to plastics. So gasoline prices aren't screwing you... what would really screw you is if oil companies failed to supply the 80 million barrels of oil that the world consumes every single day.

December 11, 2008

Weddings: The Money Pit of All Money Pits

If you think the stock market is the quickest way to lose vast sums of money, then you've never thrown a wedding. One of my closest friends is getting married in three months, and he invited me to be one of his groomsman. As a result, I have had a (terrifying) inside glimpse into the costs associated with throwing a wedding. If the divorce rate wasn't enough to put you off from marriage, then maybe the catering bill will.

My friend and his soon-to-be wife both have very good jobs (dentist and lawyer), and their parents are middle-to-upper class, so they can afford a really nice wedding, but I was still shocked at the costs. I used to think that maybe $30,000 would get you a really, really nice wedding... but now I’m starting to think that the number is more like $60,000 and possibly $90,000. I’m not even sure how that is possible, but it is.

I'm sure there are many of you reading this thinking, "$30,000?! I would never spend $30,000 on a wedding... let alone $60,000! That’s insane! Me and my hubby, Billy Bob, had a great wedding at Cracker Barrel a couple of years ago for $7,000, and it was great." OK, OK, I'm sure that the Cracker Barrel wedding was great and, yes, I will admit that each couple has their own spending budget for a wedding. However, I'm telling you that you cannot have a standard wedding for 200 people in a metropolitan city, in a real facility, with real food, real entertainment, real flowers, and a real cake, for less than $30,000. And, I'm horrified to say, it's probably closer to $60,000.

The wedding industry is a scam. It's shocking to think that people spend THAT much money ($9,000... $30,000... $60,000... whatever) on a party for ONE night. I know it is an important day, but tens of thousands of dollars? Really?? It's gotten to the point where you have to ask, "Who can afford to even get married anymore?"

As I mentioned, my friend and his fiancee can afford the big wedding they want, even as the United States is rapidly becoming a third-world country. But what about the 99% of "other" Americans out there? Most of us have normal jobs making a normal salary, and we don't have $5,000 lying around, let alone $60,000. Our parents may have some money, but that is still a massive chunk of coin, right? So how do these young couples pay for it all?

I think that many couples end up paying for it through credit cards. Maybe not the whole thing, but there is likely some difference between what they get from parents, what little they may have to contribute themselves and what they get in gifts. (By the way, you will NEVER recover your wedding costs through gifts from guests. If you have any question about that, take a look at one of my earlier blogs, called Hosting Weddings Sucks on 8/21/08.) Perhaps a couple may "only" put $5,000 of the wedding expenses on a credit card, or maybe it's more like $15,000 or more... but either way, it's a massive amount of debt that could prove crippling.

[By the way, the photo above is from a real wedding loan website. I love how she has a tatoo on her hand... you just know she is a dirty slut (great for a night, but bad for a marriage!) Why on earth did they pick her to be the model? I find that so amusing.]

Can you think of a WORSE way for a new, young couple to start off in life other than mired in credit card debt after the wedding?? Credit card debt that bought (literally) NOTHING. It bought a party. A party that the wedding couple didn't even enjoy, because they were running around hosting everyone. There is no hard asset to offset the debt they have incurred. The cost of a wedding could have been a substantial down payment on a house, or paid for school, or paid off pre-existing debt, or saved for retirement. Those who understand the "present value of money" from finance classes can appreciate the magnitude that this debt will have on a young couple.

It gets you to thinking... the divorce rate is about 50%, and the most common reason why couples argue (and why they get divorced) is money. You have to wonder how many marriages were ironically destroyed by the very event that formed them – a wedding (and the subsequent horrible financial position it can create). Now, I'm not saying that if we abolish weddings then we will prevent all the money problems and arguing in a marriage. However, I am saying that a lot of hardship could probably be avoided if there wasn't the societal pressures to have a big fancy wedding – especially if the couple can't really afford it. Am I off base here, or did some of you get married and have to take on tons of debt to do so? How expensive were your weddings, and was it worth it when you look back years later?

December 4, 2008

Chicken Fried Steak Lawsuit

I would like to invite you to join a class-action lawsuit that I am bringing against chicken fried steak. The name of this food item is completely misleading and fraudulent to the dining consumer of America.

I had jury duty recently, and during the lunch break, the only real food choice was this hole-in-the-wall place that specialized in southern food. I don’t think The South has ever really demonstrated any special culinary excellence, so I'm not sure why a restaurant would specialize in “southern food” – it’s the equivalent of specializing in cooking shit. If you want to specialize in being “gracious,” “racist,” or “slow,” then I recommend copying The South, but not for food. Anyway, as you expect, the restaurant had terrible food choices, so I steered clear of things like grits and pieces of pig that you wouldn't eat unless you were in Lord of the Flies... and I went with the safest pick – the chicken. Specifically, the chicken fried steak.

Now, if you are like me and didn't already know, “chicken fried steak” isn't chicken at all – it’s steak, as in red meat. When I cut into my “chicken” at the restaurant and discovered that it was actually steak, I was shocked and pissed off. I think it’s total bullshit that they call this thing “chicken fried steak”. Why the hell is “chicken” in the name?? “Chicken” is a noun and a protein, and when I order something with “chicken” in the name, I expect to actually get chicken. It’s so misleading. I mean, what the fuck?

Believe me... it's not chicken

I know, I know... the word “steak” is in the name, too. But, in fairness, that word comes at the end, and it isn't the headliner of the dish. I was also thinking that maybe the name referred to the type of chicken – that the chicken was cut into a steak-like pieces (or fillet) and didn't have bones. Plus, who knows what they mean in The South anyway?... it was like ordering off a foreign menu with all the weird stuff they had.

People have since informed me that it is called “chicken fried steak” because it is steak that is fried in the same manner as fried chicken. Obviously, that is the intent of the idiot who fraudulently named this piece-of-shit dish, but there are two problems with that explanation. First of all, it is grammatically incorrect. If you have compound words in front of a noun, then you are supposed to hyphenate them. So, the proper way to write the name of the dish is “chicken-fried steak”. OK, now THAT I understand... chicken-fried is the compound descriptor of the noun, steak. The proper way to read that name is that it is a steak that has been fried in a chicken style. As part of my lawsuit, I am going to require that all menus be changed to use the hyphenated phrase “chicken-fried steak.” The fact that the name is already grammatically incorrect is evidence that whoever invented this dish isn't necessarily coming up with the best ideas out there.

The second problem with the explaination for the name is that I don’t think that chicken has a special frying style that is exclusively its own, does it? Fried chicken is fried in batter – so what's the big deal? When we order other fried foods, we’re never disappointed with how it is fried, are we? Did you ever get served something and think, “Goddamnit, I wish this was chicken-fried and not just normal-fried”? We don’t call fried chicken “chicken-fried chicken,” do we? No, we just call it fried chicken. So why can’t we just call it fried steak, too? Why complicate and confuse the matter?

I have heard that sometimes this dish is called “country fried steak” (again, there should be a hyphen), but I am SO fine with that name. There is no confusion with a name like “country fried steak.” You might not know what “country fried” means exactly, but you have some idea, and you certainly don’t expect to order it and get a big slab of “country” on your plate, do you? In the name “country fried steak,” there is only one food noun, so you can’t go wrong, right?!

Maybe I am an idiot. Maybe everyone already knows that chicken fried steak is steak and has nothing to do with chicken. But I feel misled and cheated, and I think it’s wrong to name something “chicken fried steak” when all it really is, is a fried steak.

On top of all this, it fucking sucks, too. It’s this super-thin slice of red meat that is pounded down and fried with too much breading. The color of the meat is gray, and it’s a crap-quality cut, so that it’s tough and fatty. And then they pour this hideous white gravy on top of it. White gravy?? Who ever heard of such a thing? Gravy is brown (possibly red, if you are Italian). We all just had Thanksgiving, and how many of you out there poured a white “gravy” on your turkey? None of you. So how come chicken fried steak suddenly has this white gravy invention?? That is another rip-off associated with the dish. And by the way, white/cream sauces do no pair well with red meat. Do you know what white sauces DO pair well with?... fish... and CHICKEN! Someone please put an end to this fraudulent, shitty, protein-confused meal.