Category Archives: Energy Conservation

Good News For Costco, Bad News For Consumers !

We must be getting old, here at Routing By Rumor world headquarters, because we’re not spotting deceptive consumer practices as quickly as we used to.  If you’re a regular visitor to these parts, you’ve heard us complaining about manufacturers who downsize their products, and about manufacturer’s practices we’ve termed “deception engineering“.

Case in point…  When last month’s “Costco Connection” advertising and propaganda publication  arrived (they call it a “lifestyle magazine” –  believe that, and we have an “infomercial” we want you to watch), we found great news on page 52  (View the April edition of Costco Connection here).  Costco announced, in a two-page article, that while other brands of tuna fish were shrinking their cans from six ounces to five ounces, Costco was increasing the size of their  “Kirkland Signature” house brand of tuna fish, from six ounces to seven ounces.  You don’t read good news like that every day.  Sounds like they’re making an already good value even better.  Break out the mayonnaise and strike up the band.  Happy days are here again!

Or are they?

It turns out that it’s good news for Costco, but bad news for Costco members (and, we suspect, for those cute little tuna fishies).  While it’s true that they have increased the size of their Kirkland Signature tuna fish by 16.6%, to seven ounces, consumers are not getting more tuna for their money.  The article in their Costco Connection magazine somehow forgot to mention the fact that the price per can actually increased even more than the size of the can!  Bottom line: You get more tuna per can, but the price per ounce has increased.

Silly us.  We thought we might be getting more tuna fish for the same price.  In actuality, while the size of the cans was increased a whopping 16.6%, the price per can has increased an even more whopping 20%.  Packs of eight 6-ounce cans  had sold for $9.99 in area Costco Wholesale warehouses.  Now that they have introduced packs of eight 7-ounce cans, Costco has raised the selling price to $11.99, a 20% increase.  By the way, didja ever notice how most grocery items at Costco seem to be sized so that the average price per package is around $10 or $12 ?  Throw 9 or ten items in your cart, and you just spent at least $100.  But we guess that’s the whole idea of shopping in a “warehouse” club.   And why does the price of everything have to end in “.99”, ie: $9.99, $11.99, $14.99 ?  We realize that Costco didn’t invent that pricing strategy, but if you’re shopping in a place like Costco, which says it caps  it’s margin** (see below) at 14%, it seems like a suspicious practice to cynical little us.  Like maybe if their normal markup dictates a selling price of $12.35, it gets rounded UP to $12.99, just because someone at Costco likes the number 99, and rounding it up to an even $13.00 might seem, well, excessive.  Yes, we know that 13 is not an even number, but you get the point.  Besides, 1300 IS an even number, which is sort of odd, when you stop and think about it.  Then again, maybe we’re paranoid, and when they have an item that should sell for $12.35, they decide to give their members a break, and round the price down to $11.99.  Yeah, right.  All we know is that if you look at your receipt the next time you shop at Costco, just about everything except random-weight packages of meat, poulty, fish, etc., will end in “.99”.  But even those random-weight items will have a unit price ending in “.99”, such as $5.99 per pound.

But then, there are a lot of odd things at Costco, like the fact that they will accept any credit card in your wallet, as long as it is from American Express.  And the fact that they don’t offer grocery bags, so you end up throwing 500 loose items into your car in the parking lot.  And the fact that they won’t accept any manufacturer’s cents-off  coupons, unless they are distributed by Costco themselves.  And the fact that they have pretty limited hours of operation, especially for the lowest-cost membership holders. And the fact (according to this New York Times article), that Costco refuses to accept food stamps (now issued as debit cards) for purchases.  And the fact that you’ll find horrifically environment-unfriendly packaging of many small items (especially electronic items) at Costco, which doesn’t seem to be getting Costco members too upset.  We’re talking huge plastic blister packs (which can’t be recycled, at least where we live), or combination plastic and cardboard blister packs, so that these small items are less likely to be stolen.  In our opinion,  some of the terribly excessive packaging at Costco and other warehouse-type retailers qualifies as a crime against the planet, even if it doesn’t happen to be illegal.

Now, we’ll admit that we aren’t going to stop buying Costco tuna fish.  It’s actually excellent quality tuna.  It is quite possibly the best quality tuna we have ever found, at any price.  But those good folks in Seattle must think their customers are idiots.  To be sure, the price per ounce has increased only slightly, and it’s still a good value.  But shamelessly hyping the increased size of their cans of tuna fish, and not mentioning that it’s now more expensive and was actually a better value before they increased the size of the cans isn’t what we would consider good news or being straightforward with their customers .  In our opinion, it borders on deceptive advertising.  Of course, you can’t  expect that manufacturers will go out of their way to let you know when they raise prices, downsize a product, or substitute cheaper ingredients, either.  What we don’t like is the fact that, in our mind at least, Costco’s announcement paints a picture that it’s now a better value, when the opposite is actually true.

Since when is raising the price (per ounce, per pound, per gallon, etc.) of a product, while at the same time, forcing you to buy more of it at once, a good thing for consumers ?  What ever happened to the warehouse club concept that as package size increases, so does value ?

For us, the appeal of shopping at Costco isn’t so much about price, as it is about quality.  After all, shopping at Costco means an extra shopping trip,  an annual membership fee, not getting your groceries bagged, often waiting in long lines at the checkout, limited shopping hours and very limited product selection.  Indeed,we can buy many identical items for less at the local supermarket, especially when they’re on sale or if we use manufacturer’s coupons.  What we like most about Costco is that the quality of their private-labeled items, such as their tuna fish, is generally superior to not only the national brands, but any brand at any price.  Even Jimmy Kimmel shops at Costco.  Watch Jimmy shopping at Costco on youtube.  We never knew a trip to Costco could be so much fun.

An article entitled “Costco’s Artful Discounts” (Business Week, October 9, 2008), says this of Costco CEO James D. Sinegal… “he’s constantly pushing his buyers to find creative ways to lower prices and add value while getting his managers to crank up their efficiency efforts”.  It seems to us that Costco’s new 7-ounce cans of tuna have failed to deliver the lower prices or added value which Mr. Sinegal is so fond of.  What they do seem to have provided is a lot of hype for Costco’s marketing efforts, and very likely a higher profit margin because a product’s shipping and packaging costs (especially for canned items) decrease (on a percentage basis), as container size increases.  There is very little difference in the cost of manufacturing a 7-ounce tin can, compared to a 6-ounce tin can.  In fact, in the case of Costco tuna fish, the old and new cans use exactly the same size lid; but the walls of the can are slightly taller.  Costco is also very good at finding ways to minimize shipping costs, for instance, by having their vendors redesign packages so that more of them can fit onto a standard shipping pallet.  We wouldn’t be surprised if Costco’s next “improvement” to their Kirkland signature tuna will be to offer it in new and improved square cans.  Think of all the space that will save in the pantry, and the fact that you won’t have to worry about your can of tuna fish rolling away, should you drop it.  That’s always been a big problem for households that live in hilly areas.  Now, if the United States mint would only start issuing square pennies !

1919 Australian Kooka Square Penny

1919 Australian Kooka Square Penny

So, what have we learned today, class?  We’ve learned that you get less for your money when manufacturers shrink the size of their products,  and sometimes, you get less for your money when manufacturers increase the size of their products.  Heads, you lose.  Tails, you lose.

Dear Costco… May we please have our old 6-ounce cans of Kirkland Signature tuna fish back again?  They were a better value.

Then again, maybe we should just pay our money, eat our tuna fish (mercury content and torpedoes be damned), and keep our mouth shut.  Mother always said you shouldn’t speak with your mouth full, and now it’s 16.6% more full.

– Routing By Rumor

**  “Margin” is not the same as “markup”.  For instance, if you buy an item for $1.00, and sell it for $2.00,  your markup is 100%, but your margin (the percentage of the selling price that represents your profit) is only 50%.   We’ve always felt that putting things in terms of profit margin instead of markup, especially as markups become greater, has the effect of making a seller’s prices seem more reasonable.

Advertisements

1 Comment

Filed under Business, Consumerism, Deception Engineering, Energy Conservation, Environment, Food, Journalism, Money, News, Retail, Retailers, Routing by Rumor, Scams, Shopping, Shrinking Products, The Planet, Your Money

Companies In Mirror Are Closer To Bankruptcy Than They Appear !

Objects In Mirror Are Closer Than They Appear

OBJECTS IN MIRROR ARE CLOSER THAN THEY APPEAR

This article will be of interest to anyone replacing the rear view mirror in their General Motors (GM) or other vehicle, whether you are purchasing a replacement mirror from GM SPO, Gentex, Donnelly, or another manufacturer.

Installation information is included for Do-It-Yourselfers (DIY), including wiring harness connector pinout data.

Perhaps the most valuable tip we can give to a vehicle owner planning to purchase a replacement mirror is COMPARE PRICES !

The U.S. government can throw as many billions of dollars at General Motors as they wish, but they’re unlikely to change the fundamental problems at the automaker. Problems that have brought what was once a cornerstone of the American economy to the brink of extinction, dependent on a government bailout for it’s survival.

GM is not competitive for many reasons. They are hobbled by high labor costs. They lag in innovation, particularly in the area of electric and hybrid vehicles. In our opinion, they can’t compete with Japanese auto manufacturers on quality (or perceived quality) or customer loyalty. They’re certainly not competitive on pricing when compared to aftermarket parts suppliers. For most vehicle repairs, we think you’ll spend a lot less, and get a better job done at a private garage, then you would at a GM dealership. This might come as a shock, but in our opinion, Mr. Goodwrench isn’t.

As we’ve stated previously, we believe that their new vehicle warranty isn’t worth the paper its printed on. And GM seems to follow pricing policies usually associated with companies that sell hammers and toilet seats to the Pentagon.

Case in point…

Our GM vehicle was built with an auto-dimming electrochromic rear view mirror. Some rear view mirrors in late-model vehicles are marvels of modern technology, containing On-Star controls, handsfree cellphones, compasses, thermometers, back-up camera displays, garage door openers and other gadgets. But our mirror is just an auto-dimming mirror, with none of these other bells and whistles (see this NY Times article on these “bells & whistles”). On most of the auto dimming mirrors that we’ve seen in GM vehicles, after a few years of service, the magic liquid inside tends to leak out of the mirror. This either renders the dimming feature inoperative, fogs the mirror, or leaves it with an uneven or blotchy reflective surface.

For the past few years, the liquid crystal stuff (or whatever the chemical is) in our mirror has been leaking out, increasingly producing areas on the mirror’s surface that are either always clear or always dark. We finally decided to replace the mirror.

We checked with our friendly GM dealership’s parts department. They quoted us a price of $284.00 for a replacement rear view mirror, excluding the cost of installation.

Almost $300.00 for a rear view mirror ? Sounded awfully expensive to us, so we started to look at aftermarket mirrors. Virtually all American cars use a standard “wedge” type glass mount. The mirror attaches to a glass-mounted “button”, which hopefully stays attached to the windshield when you remove your old mirror from the vehicle.

Our search for a replacement mirror lead us to products manufactured by two predominant manufacturers of automotive mirrors, Donnelly (now called Magna Donnelly?) and Gentex (see company info). It seems that Donnelly sells exclusively to automotive manufacturers (OEMs), and not to the automotive aftermarket. Gentex sells to OEMs (probably the vast majority of their business), but they also sell their products to aftermarket suppliers (in our case, through a distributor named Mito Corporation).

We ended up purchasing a brand new, in the box, Gentex electrochromic rear view mirror that is virtually identical to our vehicle’s original mirror, for under $70.00, including shipping ! That’s less than a quarter of what General Motors wanted for a replacement mirror.

When you consider the fact that GM certainly pays much less for mirrors than the RoutingByRumor Corporation does, that probably equates to a markup of 400%, 500% or more.   What word best describes that sort of profit margin ?  “Criminal”  might be a bit too strong.  How about egregious.  How about unconscionable.  How about stupid ?  How many businesses that try to fleece their customers are able to stay in business ?  It certainly seems to indicate that GM doesn’t make their money selling cars.  They make their money (or at least they did) by selling parts and service;  Service that we’ve never been very impressed with in the first place.

The only caveat is that we had to replace the wiring harness connector that powers the mirror, because the Gentex mirror uses a 7-pin connector, while our original equipment Donnelly mirror used a 3-pin connector (our vehicle does not have auto-dimming external mirrors, and the Gentex mirror we installed does not have a temperature or compass display). But replacing the connector was a quick and easy procedure. The hardest part was getting the old mirror off of the windshield. Maybe it helped that we popped our Stevie Nicks album “The Other Side Of The Mirror” into the CD player while we installed our new mirror. To quote Stevie, “This is me talking to you. This is me talking to ya”.

The Gentex mirror we purchased came with very limited hookup information. We found the following pinout data on the Web, and we’re guessing that this information will apply to all Gentex mirrors that use a 7-pin connector.

JST "VH" Series Housing (8-pin version shown)

JST "VH" Series Connector Housing (8-pin version shown)

If you’re trying to figure out what type of connector Gentex (and Donnelly) use on their mirrors, our research indicates that the 7-pin Gentex harness connector (as well as the 3-pin harness connector on our original Donnelly mirror) are “VH” series connectors, from JST Manufacturing. Their U.S. website is at www.jst.com. View JST’s data sheet for the VH series connectors here. These connectors (and the necessary crimp terminals) are available from Digi-Key.

We’re not sure if the wiring color coding is standard on all vehicles, so we would be more concerned with the function associated with each pin on the connector (pin numbers are molded into the connector housing on the wire-side of the connector, but you might need a magnifying glass to read them).

WARNING: Before you begin working on your mirror’s wiring harness, we strongly suggest that you either pull the fuse(s) that protect your accessories (ACC, RAP, ACC1, ACC2, etc., depending on your vehicle), as well as the fuse that protects your backup lamps. In lieu of pulling the accessory fuse(s), remove your key from the ignition and open a door to deactivate the Retained Accessory Power (RAP) circuit, if present and utilized by the mirror. If you really want to play it safe, disconnect your vehicle’s battery, following your vehicle manufacturer’s recommended procedure (for your safety). This will prevent you from blowing a fuse, should you inadvertently short or ground a lead while working on your mirror’s wiring harness.


PIN # …. HARNESS WIRE COLOR …………. FUNCTION

. 1 …………….. WHITE …………………………. +12v (SWITCHED B+)

. 2 ……………. BLACK …………………………. CHASSIS GROUND

. 3 ……………. LIGHT GREEN ………………… FROM BACKUP LIGHT CIRCUIT

. 4 …………….. GRAY …………………………… TO AUTO DIM OUTSIDE MIRROR

. 5 …………….. PINK …………………………….. TO AUTO DIM OUTSIDE MIRROR

. 6 …………….. DARK GREEN/WHITE ……… TEMPERATURE PROBE

. 7 …………….. BLACK/WHITE ……………….. TEMPERATURE PROBE

Notes:

At a minimum, you must connect pins 1 & 2 (+12V & ground) for your auto dimming Gentex mirror to operate.

Not all Gentex mirrors or all vehicles will utilize all pins, but we believe pins 1 – 5 should be functional on all Gentex mirrors. If your experience differs, please let us know by posting a comment to this article.

Pin 3 is used to clear the mirror when the vehicle is placed in reverse. (DO NOT connect pin 3 to ground, since this will blow a fuse (or possibly damage your mirror) when you put the vehicle into reverse gear.)

Pins 4 & 5 are used to control outside mirrors on vehicles equipped with auto-dimming outside mirrors.

Pins 6 & 7 are used on mirrors that incorporate a temperature display. If a temperature probe is connected, either lead from the temperature probe can be connected to either pin.

Of course, your best source of information is your vehicle manufacturer, or the manufacturer of your new mirror. The above information is believed to be correct, but we take no responsibility for its accuracy.

A Volt-Ohm meter is an indispensable tool for any installer, and we recommend that you use one whenever working on your vehicle’s electrical system.


In our opinion, the auto-dimming feature of the Gentex mirror performs as well as, or better than, our original equipment Donnelly rear view mirror, even taking into account how it operated when our vehicle was brand new. We saved more than $200.00 by not buying the mirror from GM, and probably much more than that, if the dealership would have installed the new mirror for us. The Gentex mirror we purchased appears to be manufactured in the U.S.A. (see this article about their Zeeland, Michigan plant & headquarters buildings), and came with a three-year warranty. We said the Gentex mirror “appears” to be made in the USA, because the only indication we were able to find was the letters “U.S.A.” on the carton label in 2-point type. Not “Made In U.S.A.” or “Assembled In U.S.A.”. Just “U.S.A.”. We’re left to guess that Gentex may be embarrased to admit where the mirror is manufactured. If their products are indeed made in the USA, why don’t they state that fact prominently on the carton, with “MADE IN U.S.A.” clearly visible, like they are proud of it !

We always welcome the opportunity to buy products made in America. We think that buying American made goods, and supporting American workers, is the best way to repair the failing U.S. economy. The U.S. Government’s economic stimulus plans certainly won’t do that.

Let’s hope that if we should ever have to file a warranty claim with Gentex or Mito (their aftermarket distributor), that they honor their warranty better than General Motors has, on the numerous occasions that we’ve had problems with GM products.

As an aside, here’s an article we stumbled upon about another Gentex product, designed to solve one of nighttime driving’s most annoying and dangerous problems.

So the question we are left to ponder is this… Why does General Motors think it can gouge consumers for replacement parts ? If you said “because they’re General Motors”, think again. In our case, they couldn’t. And when you consider the fact that they are teetering on the verge of bankruptcy, begging for federal bailout money, it’s clear to us that their policies, including their pricing policies, are a failure. All of the GM dealerships that have gone belly-up, and those who continue to struggle to survive, in an American new car market that has all but evaporated, are testament to their failed business model. And of course, the decrepit U.S. economy doesn’t help either.

Ya know, our mention of Stevie Nicks’ album “The Other Side Of The Mirror” is quite appropos, because when our GM dealer gave us their price for a new mirror, we suddenly recalled the advice that Alice received from the Mad Hatter… “Better run for your life”.

– Routing By Rumor Continue reading

1 Comment

Filed under Automobile Manufacturers, Business, Cars, Cellphones, Consumerism, Energy Conservation, Environment, Jobs, Labor, Money, Personal, Retail, Shopping, Technology, Telephony, The Economy, Your Money

The Dirty Little Secret That Warehouse Clubs Would Rather You Not Know

We’ve had memberships to several membership-based warehouse clubs over the years. You can save money on many items, but there are often better deals on many items at your local supermarket, Walmart or Target. When you factor in the annual membership fees, which generally range from $50.00 to $100.00 or more, we’re not so sure that you actually save enough to make it worthwhile. That is, unless you own a restaurant, feed a small city, or really need to buy 50 pounds of rice, sugar or detergent at a time. They don’t bag your groceries for you. In fact, they don’t even have any bags (unless you want to buy 500 bags from them at a time).

Interestingly, at a time when other retailers are hurting because of an economy that is in deep recession, the warehouse clubs are enjoying healthy increases in membership and sales volume. Consumers desperate to stretch their dollars are flocking to these retailers in an effort to save some money. Check out this piece from CNBC that says Costco recently reported a 32% increase in quarterly profits, or this Forbes.com article that says BJ’s Wholesale Club saw a larger than 25% increase in profits in the first quarter of this year.

Many warehouse clubs open later and close earlier than supermarkets or other discount chains. In an effort to sell you their more expensive memberships, most of them offer expanded hours to only their premium membership holders, sort of like a caste system. By the time the doors swing open for the hordes of regular members, you just know that all the good stuff will have been snapped up by the privileged few who can afford the $100.00 premium memberships. All that will be left for everyone else will be the dregs. You might as well just drive ’round back and do some dumpster diving.

We’re also surprised they don’t have a little window by the entrance where you have to whisper the secret password before they’ll let you in. And some warehouse clubs limit your payment options. For instance, Costco won’t accept any credit cards except American Express. That’s unfortunate, since we’ve always felt that American Express offers the least consumer-friendly credit cards out there. And AmEx has probably deforested more of the planet than any other credit card provider, so that they can produce all the paper they stuff your mailbox with, trying to convince you to become a cardholder. We can’t believe the volume of crap we get from them. Maybe we should get a wood-burning stove. We could probably heat our home using nothing more than the American Express offers that our poor mail carrier has to keep delivering almost daily.

Then there’s the silly and demeaning entry and exit procedures at many warehouse clubs. You have to show your membership card (at least at Costco) to gain entry. After all, they can never be too careful about who they let in. I mean, God forbid a non-member might sneak in and try to buy something there. Then these places practically strip search you before you can leave with the shopping cart full of stuff you just paid for. If you think we’re overreacting to these policies, which seem to assume that everyone is a criminal, then you probably haven’t read this fellow’s rant on the subject. His discussion is much more eloquent than what the monkeys here at RoutingByRumor produce when they jump up and down on the keyboard to create each of these articles.

Here’s an account from a blogger who got the treatment at a North Carolina Walmart store, where he says he was briefly detained, then threatened by overly aggressive employees for declining to show his receipt.

Maybe we should put the warehouse clubs in charge of the U.S. borders and security at our airports. As an added bonus, they could sell club memberships to all the Mexicans that want to enter the United States, and the proceeds could go to the U.S. Treasury. Before they return to Mexico, they can stock up at Costco, Sam’s Club or BJ’s, thereby decreasing the U.S. trade deficit. Everyone benefits, and the illegal immigrants won’t have to risk their lives crossing deserts or rivers to get into the United States.

So what’s their dirty little little secret? In many states, certain departments in members-only warehouse clubs are required to sell to the general public without requiring membership. It seems to vary by state, but in general, product categories regulated by the state, such as pharmacy, alcohol and gasoline sales, are usually open to the public. Here’s an article at answers.com that lists which states require warehouse clubs to sell alcholic beverages to the public. This article from prnewswire mentions the fact that Sam’s Club pharmacies are open to the public. But don’t expect the warehouse clubs to advertise this fact. They would probably rather sell you a membership. Don’t even expect a straight answer if you walk thru the front door and ask the gatekeeper at a place like Costco. We did, and our opinion is that they like to play dumb. If you press them, they will acknowledge the fact that certain items must be sold to the public. This posting confirms our experience, and even mentions something called a “temporary alcohol shopping pass” available at Costco. Is this country great, or what ?

With all the big chains offering cheap generic prescriptions these days on a wide variety of medications, is it worth trying to get past the pit bull chained to the entrance at your local Costco, just so you can get some cheap medicine at their pharmacy? This New York Times article certainly seems to think so.

Another option is to ask for a “one-day pass”, which most warehouse clubs will provide. You may have to pay a 10% or so surcharge on any purchases you make, but if you don’t plan on being a regular shopper there, it’s probably a lot cheaper than buying a membership. Some clubs will even refund the surcharge or apply it towards their membership fee if you join within a few days. What wonderful people.

Even in places where the law does not require sales to the general public, there are loopholes that people use to save some money. Some people share their membership cards with friends and neighbors. This article explains how non-members can buy gasoline at Costco gas stations that are supposedly members-only.

As much as we hate Walmart, we think you can do better on most items at Walmart than at the warehouse clubs. We’ve never checked out prices at Walmart’s Sam’s Club stores, but somehow, we doubt that there will be much of a differential in prices between the two.

When you figure in the cost of membership, the extra gasoline you’ll probably burn to get there, the generally limited product selection, the inconvenience, the lack of shopping bags, limited payment options, the crowds, the long checkout lines, the often shorter hours and the obligatory strip searches at the exit, are the warehouse clubs really worth it?

– Routing By Rumor

Leave a comment

Filed under 9/11, Business, Consumerism, Energy Conservation, Environment, Food, Life, Money, Personal, Retail, Retailers, Routing by Rumor, Shopping, The Economy, Walmart, Your Money

George Bush Fiddles While The Ice Caps Melt

Polar bears' extinction threatened by global warming ?
photo credit: Associated Press / Johnathan Hayward

Apparently, protecting our planet takes a back seat to protecting Big Oil’s profits, as far as George Bush is concerned. No big surprise there, as Bush was an oil man long before he was running the country and it’s economy into the ground. Perhaps Mr. Bush is not concerned about global warming because the White House is air conditioned.

On Friday, President Bush rejected imposing government regulations that would aim to control the United States’ production of greenhouse gases, which are blamed by scientists for global warming. He claims that doing so would hurt the economy and cause too many job losses.

Well, it’s kinda nice that he is concerned about the economy and about American workers, but what do you think that shipping nearly all of America’s manufacturing jobs to China has done? Perhaps you haven’t noticed, Mr. Bush, but the U.S. economy is in shambles. Barack Obama is smart enough to acknowledge that.

As far as protecting jobs, it’s great that Mr. Bush has finally gotten religion about the plight of the American worker, but if you want to protect Americans, preventing a global environmental catastrophe might produce a better return on investment. It will also protect American’s lives as well as their jobs and the economy.

Just how much damage are we doing to the environment from the burning of fossil fuels?

As of 2006, the world was consuming 86 million barrels of oil every day. With 42 gallons of oil in each “barrel”, that equals a mind-boggling 3.6 BILLION GALLONS of oil per day ! That’s more than 2.5 million gallons of oil every minute. We find it incredible that the world’s oil wells can pull that much crude oil out of the Earth. It’s truly hard to believe.

How much money is at stake for the nations, corporations and individuals that profit from oil ? Well, (pun intended) at the current price for crude oil, it’s more than $12 billion a day. That kind of money gives a lot of people a very strong incentive to maintain the status quo, ice caps and planet be damned.

At that rate of consumption, it seems unlikely that anything we try to do to reduce the production of greenhouse gases can have a significant effect, but we must do something.

If global warming is indeed occuring because of our consumption of fossil fuels (which includes oil), then it really does seem to be an intractable problem unless we can drastically reduce our consumption of fossil fuels. To put it in medical terms, if you have a hemorrhaging patient, all the blood in the world won’t save them unless you can stem their bleeding.

The world’s industrialized nations are so dependent on oil that there is no simple answer. Technologies such as solar, wind, or wave power are not currently capable of lessening the world’s dependence on oil to any great extent. Even if every gasoline and diesel powered vehicle on the planet could be replaced by electric vehicles, it wouldn’t eliminate most of the greenhouse gasses being produced. That’s because most of the electricity generated in the world is produced by burning oil, coal and natural gas.

Yet with the enormity of the problem clear to almost everyone, and more evidence of global warming becoming available every day, President Bush has chosen to do nothing.

Foreign leaders who attended the just-concluded G-8 summit in Tokyo must think there are two George Bushes (actually, there are, but that’s another story). At the G-8 summit, the United States joined other nations in supporting policies that will effect a 50 percent reduction in global greenhouse gases by 2050. If Mr. Bush is serious about reducing greenhouse emissions, you’d be hard pressed to find any proof of that.

We propose a summit of a different kind. How about putting President Bush on a melting iceberg, along with a group of eight polar bears (the G-8), where they could engage in a constructive dialog about what global warming means to them. In that environment, free of political pressure from Big Oil and forced to confront the issue, Mr. Bush might decide to act in a more immediate way to limit greenhouse gasses. Come to think of it, you might want to have that iceberg summit take place in Prince William Sound, Alaska, where the local wildlife has some firsthand experience with Big Oil, courtesy of the Exxon Valdez.

– Routing By Rumor

Leave a comment

Filed under Business, Cars, China, Employment, Energy, Energy Conservation, Environment, Health, Jobs, Life, Money, News, Politics, Routing by Rumor, Technology, The Economy, The Planet

The $10 Gallon Of Gasoline Is Possible, But They Still Won’t Wash Your Windshield !

How high will the price of a gallon of gasoline go? Regular grade gasoline is at or above $4.00 a gallon across the United States now, and crude oil is hovering in the $135 a barrel range. In fact, gasoline is close to $5.00 a gallon in some areas, and diesel fuel is averaging just about $5.00 a gallon across the nation.

At these prices, you’d think a whole squadron of singing “Texaco men” would descend on your car when you pull into the service station, cleaning your windshield, checking your tire pressure and oil level and polishing your headlights. As the jingle promised, “You can trust your car to the man who wears the star… The big, red Texaco star” (or maybe it was “the big, bright Texaco star”). Today though, all you’re likely to find at your local gas station are self-service pumps. If you’re lucky enough to find an air hose to inflate your tires, you’ll probably have to pay for the air and do it yourself.

U.S. DOE EIA\'s Gasoline Price Graph

This gasoline price graph is linked from this U.S. Dept of Energy EIA page, and

should display their current data. For EIA’s Diesel Fuel price history, click here.

We have previously questioned what a flareup in Middle East tensions might do to the price of crude oil. In today’s news, there was speculation that an Israeli military exercise earlier this month may have been a not too subtle hint that they may be preparing to (or at least want to appear to be preparing to) attack nuclear facilities in Iran.

There has been speculation that if Iran reacted to an attack by blockading shipping in the Strait of Hormuz, the price of crude oil on the world market could quickly hit $300 a barrel. The Strait of Hormuz is a 21-mile-wide strategically important body of water between Iran on the North, and the United Arab Emirates and Oman on the South. It is the only shipping route for much of the oil exported from the Persian Gulf.

Just how serious is the threat of an attack on Iran? Mohamed ElBaradei, head of the United Nations’ International Atomic Energy Agency, said in an Interview on Arab television on June 21st, that “any military strike on Iran could turn the Mideast to a ball of fire” (see CNN article). This raises the possibility that the United States, the United Nations, or an international coalition might take military action to keep the Strait of Hormuz open to shipping to keep oil flowing.

The brilliant mathematicians at RoutingByRumor (they stay in our ivory tower) figure that a $300 barrel of crude oil would equate to a gallon of gasoline in the $10 to $12 range. That is, if you are able to buy it at all. Could you imagine the prospect of a $200.00 fill-up at your local gas station? We think the oil companies might have to start using armored cars to deliver the gasoline to their stations. Carjackings might become commonplace, not for the vehicle, but for the contents of it’s gas tank. Imagine what these stratospheric fuel prices would do to the American economy, which is already hurting because of the price of oil.

What we think future gasoline deliveries might look like !

For many Americans, we think gasoline at $10.00 a gallon would quite literally make it too expensive to commute to work (unless they are lucky enough to be driving one of these vehicles). Many Americans without access to public transportation would simply be better off staying home. Imagine what $10.00 gasoline will do to food prices, already spiraling out of control because of the current price of crude oil. People unfortunate enough to have oil heat will be unable to heat their homes.

So there you have it… Record high gasoline prices, military posturing by Israel towards Iran, warnings of an apocalyptic conflagration in the Mideast, and the supply of crude oil from the region hanging in the balance. Things do not look good for oil or gasoline prices or an uninterrupted supply.

You know, that old pair of inline skates in the attic, and that rusty old Schwinn in the garage are looking better every day now. Or maybe we will get a Delorean like the one from Back To The Future, with a “Mr. Fusion” Home Energy Reactor that can run on banana peels and half-empty cans of beer.

Dr. Emmett Brown (Christopher Lloyd) fuels up his Delorean’s fusion

reactor with banana peels and beer, in Back To The Future

(credit: wikia.com)

– Routing By Rumor

1 Comment

Filed under Automobile Manufacturers, Business, Cars, Consumerism, Employment, Energy, Energy Conservation, Energy costs, Home, Iraq, Jobs, Life, Military, Money, News, Politics, Routing by Rumor, Shopping, Stock Markets, The Economy, War, Your Money

The Commodity Crisis Du Jour – Gasoline… Rice… Now Corn. What’s Next ?

Jerry Edle, left, and Dave Lanz keep an eye on a large
propane tank which they are towing through a flooded cornfield,
in Oakville, Iowa, Monday, June 16, 2008.  The tank floated away
during flooding. (from yahoo.com - AP Photo/Sue Ogrocki)

As if the American economy and the American consumer weren’t being pinched enough by $4.00 to $5.00 a gallon gasoline prices, here comes another big hit.

The flooding in the Midwest will have a major impact on corn prices (see this article), corn supply, and a ripple effect that will be felt in almost all food categories, from breakfast cereals to meat and poultry, to soft drinks and every other food item that contains corn or corn-derived ingredients. Examples of important corn-derived products are corn oil and high fructose corn syrup. They’re used to produce everything from margarine and soda pop, to french fries to bakery items. And rising prices and shortages of corn-derived ethanol will simply fuel higher gasoline prices. Ethanol production was already putting a strain on corn supplies and driving up the price of corn even before the flooding in America’s corn belt impacted this year’s crop.

A police officer \

A police officer demonstrates his finely honed public
relations skills, and welcomes home a resident of
flood ravaged Cedar Rapids, Iowa (read story)
(AP photo/USAToday by Seth Wenig - Caption by RoutingByRumor)

Just like the rising price of crude oil, rising prices for corn will have an almost immediate impact on the cost of many of the things you buy. In fact, corn probably plays a more important role in the food chain than wheat, rice, oats, or any other grain.

If you thought the size of the box of your favorite breakfast cereal was shrinking, you ain’t seen nothing yet. If corn prices go through the roof, you’ll need a microscope to find your cereal boxes. Maybe we’ll switch to shredded wheat.

We expect that in addition to seeing rationing or purchase limits on rice at the supermarket, you’ll soon see shortages and rationing of corn and products containing corn as a major ingredient.

Better start stockpiling the Doritos and the Corn Pops.

– Routing By Rumor

Leave a comment

Filed under Business, Consumerism, Deception Engineering, Energy, Energy Conservation, Energy costs, Food, Home, Jobs, Life, Money, News, Pepsi, Retail, Routing by Rumor, Shopping, Shrinking Products, Stock Markets, The Economy, Your Money

The Coming Gasoline Crisis… Get Ready For Gas Lines And Rationing !

credit: Florida Sun-Sentinel / americanphotojournalist.com

photographer: Melissa Lyttle

The first gas crisis in the United States in recent (post WW II) times was during the winter of 1972-73. The second gas shortage was during the summer of 1979. It was during that crisis that gas prices broke (at least in the Northeast U.S.) $1.00 a gallon for the first time. Those were the good old days. Fast forward to 2008, when, for many parts of the United States, gasoline is now topping $4.00 a gallon, and rising daily.

Despite the fact that we are almost 30 years down the road since the last energy crisis, we are still almost totally dependent on petroleum-based fuel. Electric, natural gas, solar, hydrogen and to a lesser extent ethanol, have failed to make a significant dent in our demand for petroleum-derived gasoline and diesel fuel.

There are still virtually no all-electric, natural gas or hydrogen vehicles on the road, with a fairly insignificant number of these alternative-fuel vehicles in some fleets, such as utility company, transit authority and delivery company vehicles. Have you ever seen an electric, hydrogen or natural gas refueling station ? Even today, for all practical purposes, gasoline and diesel are the only fuel options available. What percentage of the privately owned passenger vehicles in the U.S. are all-electric or gas-electric hybrids ?

Despite more energy-efficient homes and appliances, we continue to set energy consumption records. Electric utilities generally set new winter and summer peak output records each year. It seems that no matter how efficient our homes or cars become, no matter how hard we try to conserve energy, we will never see lower demand for energy. All we can hope to achieve is to slow the increase in energy consumption.

While the increase in total energy consumption varies by geographic region and market sector, consumption generally increases between 1 and 3% annually (see US Department of Energy report).

Now couple our ever-increasing appetite for energy with the fact that developing nations, most notably China, are significantly increasing their energy use. It portends continuing increases in the price of energy from all sources, not just oil. It also means tighter supplies and future energy shortages (see this April, 2008 AP article in the NY Times about tight oil inventories). With the summer approaching, shrinking gasoline supplies (despite higher prices), and increasing seasonal demand, it’s a recipe for trouble. They are even attributing a decrease in U.S. oil supplies to fog in the port of Huston. What’s next… blaming it on which way the wind is blowing ?

Recent world events related to shortages of food staples such as rice, wheat and corn are already being felt in the United States. While there does not appear to be a true shortage yet, the prices of all these commodity items has risen sharply in recent months. And yes, much of this increase can be tied to the price of oil.

We are seeing more and more instability, in terms of price and availability of food items. In just the past few weeks, rationing (or more accurately, purchase limits) have begun to pop up at retailers around the United States, on rice and flour. While panic buying is likely to blame to a great extent, a tight supply is no doubt at the root of these actions, as well as the sharply higher prices.

credit: freeenterpriser.com

Gasoline is subject to exactly the same market behaviors as food. To some extent, it is even more vulnerable. You can’t plant more oil seeds next Spring in anticipation of higher demand. The crude oil supply is more or less constant, at least for now. It’s a non-renewable resource, so once it’s gone, it’s gone forever.

It would not take much to touch off panic buying of gasoline. A steep short-term increase in the price of crude, a new political crisis in the Middle-East, a weather-related emergency, or some unforeseen event that influences energy markets, are all capable of creating a crisis overnight.

We think that the recent run-up in gasoline prices has significantly increased the likelihood that we will see another gas crisis in the near future. This is regardless of whether there is a true shortage, or if it’s just panic buying that takes hold. Don’t be surprised to see gasoline rationing being put in place as soon as this occurs, whether it is imposed by the retailers, or by the government. Don’t be surprised to see long lines at the pumps, a la 1972.

– Routing By Rumor

1 Comment

Filed under Automobile Manufacturers, Business, Cars, China, Consumerism, Energy, Energy Conservation, Energy costs, Environment, Food, Iraq, Life, Military, Money, News, Personal, Politics, Retail, Retailers, Routing by Rumor, Shopping, Stock Markets, Technology, Terrorism, The Economy, The Planet, World War II, Your Money