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Don't Blame Me for $4 Gas
Tweet Share on Facebook June 30, 2008 Comment (18)The following commentary aired on the PBS program Nightly Business Report on June 27.
Whose fault is it?
I could be talking about the housing bust or the credit crunch, but today's crisis is record-high oil and gas prices. So let's finger the boogeyman responsible for that.
Maybe it's the government's fault that gas costs $4 per gallon, since the government won't subsidize the cost and give Americans a gasoline rebate, out of our own tax dollars.
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6 Myths About Oil Speculators
Tweet Share on Facebook June 27, 2008 Comment (63)So now we know who's really responsible for $4 gas. Finger-pointers from Washington, the International Monetary Fund, and even Saudi Arabia no longer seem to buy the idea that the demand for oil around the world is simply growing faster than the supply, driving prices to record highs close to $140 per barrel. There must be a more nefarious reason, it seems. So now entering this drama is a villain everybody can hate: The Evil Speculator.
At recent congressional hearings, politicians and energy experts argued that speculators have artificially added $30 or more to the cost of a barrel of oil, turned oil trading into a global poker game, and doubled the price of gasoline practically overnight.
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The Good News From Gloomy Consumers
Tweet Share on Facebook June 25, 2008 Comment (3)It's getting hard to sympathize with the sad-sack American consumer. According to the latest report from the Conference Board, Americans' confidence in the economy is at one of the lowest points recorded since the board began doing the survey in 1967. And the outlook for future economic conditions is the worst number ever recorded.
That means consumers are more pessimistic now than they were in the early 1980s, say, when the unemployment rate topped 9 percent. (Today, it's 5.5 percent.) Or in the mid-1970s, when inflation hit about 11 percent. (Today: about 4 percent.) Or during other national crises such as terrorist attacks, race riots, assassinations, and the long, awful wind-down of the Vietnam War. Yep, things look a lot worse than all that, I guess.
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Why More Saudi Oil Could Harm American Consumers
Tweet Share on Facebook June 24, 2008 Comment (35)This guy walks into a bar. He's an alcoholic who's trying to kick the habit. The bartender knows that. But the guy is also a reliable customer who directs a good chunk of his disposable income to the bar's cash register. So what does the bartender do? Pour him another drink: It's somebody else's job to deal with the guy's addiction.
They don't drink in Saudi Arabia—not officially, anyway—but the Saudis sure know how to nurse an addiction. Ours, that is. American and European officials are expressing thanks and relief, now that the Saudis have pledged to boost oil production by about 0.2 percent—two one-thousandths—of the daily global demand for oil. The increase in supply is so puny that it's hard to see how this will make a penny's worth of difference, given that demand for oil seems to be rising faster than supply. Yet the Saudis, in this tableaux, are the good guys, doing everything they can to help ease the pain for Americans paying $80 to fill up their SUVs.
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The Oddities of Driving a Puny Car
Tweet Share on Facebook June 17, 2008 Comment (15)So this is the wave of the future. Or maybe a wavelet. I'm piloting the new Smart fortwo coupe along the highway in a thick rainstorm, feeling like a kid crossing a busy street on his own for the first time: Should I even be here? The fortwo is so tiny—28 percent shorter than a Mini Cooper—that I can touch the rear windshield from the driver's seat. That Ford Explorer one lane over weighs almost three times as much: Does that make me "smart" or suicidal? And when I stop to pick up a friend, she's reluctant to climb in, fearing it might trigger a bout of claustrophobia.
The fortwo accomplishes its job, though: It gets me around, and I never have to get out and push it up a hill. The cabin is actually comfortable for two ordinary-size people. You can get necessities—whoops, on the Smart, they're options—like A/C, a stereo, and power windows—for less than $14,000. The roof kept the rain out. And it took a lot of driving to budge the gas needle, thanks to average fuel economy of close to 40 mpg.
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At Yahoo, America's Most Endangered CEO
Tweet Share on Facebook June 13, 2008 CommentA lot of CEOs these days get criticized—and sometimes prosecuted—for overinflating the value of their company's stock. One prominent exception: Yahoo CEO Jerry Yang, who seems intent on depressing the value of Yahoo shares.
The mission Yang sees for himself, of course, is to keep Yahoo independent, or at least keep it out of the claws of archrival Microsoft, which has now made two attempts to buy all or part of Yahoo. OK, three cheers for the little guy battling Goliath, but seriously: How in the world does Jerry Yang hold onto his job?
When Yang rebuffed Microsoft the first time, he forfeited a premium of about 40 percent that shareholders would have earned had Microsoft bought Yahoo. The share price fell to the low 20s, compared with Microsoft's offer of $33 per share.
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6 Cars Built for $4 Gas
Tweet Share on Facebook June 11, 2008 Comment (58)It's been a bad year to be a car salesman. Four-dollar gas and a lousy economy have driven sales down 8 percent so far this year, with SUVs and pickup sales off far more. Overall, 2008 could end up being the worst year in the car biz in more than a decade. But a few models are thriving, mainly because they offer the higher gas mileage that buyers crave, with a bit of pizazz in the bargain. Some of the winners that are defying a down market:
Honda Civic. For the first time ever in May, the Civic was the bestselling car in the United States. The top seller is almost always a pickup truck—either the Ford F Series or the Chevy Silverado—but with pickup sales tanking, the Civic edged them out. Honda in general is on a roll, with sales up about 5 percent in 2008. That's on account of small and midsize hits like the Civic, Accord, and CR-V crossover—and a lack of big vehicles in the lineup to weigh down results.
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Cars Hurt Most by $4 Gas
Tweet Share on Facebook June 10, 2008 Comment (24)Call it the revenge of the little guys. With gas prices officially cresting $4—and running higher in many parts of the country—American drivers are finally downsizing in big numbers. Overall auto sales are down about 8 percent so far this year—but sales of large cars and trucks have plunged 23 percent, according to J.D. Power & Associates. There's no mystery behind the shift: Buyers clearly believe high gas prices are here to stay, and are desperate to cut their gas bills.
Among the cars piling up on dealer lots, here are some of the biggest losers:
Hummer. Sierra Clubers can go ahead and cheer: Hummer sales are down by 36 percent so far this year, the biggest drop among a single brand. Sales of the smallest Hummer—the H3, which averages about 15 mpg—have fallen even more than the brawnier H2, which gets a meager 10 mpg or so. Consider some painful Hummer math: With gas at $4, it costs about $120 to fill the tank of an H2, and then you can only go about 300 miles before forking over another $120. No wonder General Motors is considering offloading the whole division.
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How Toyota Could Become the U.S. Sales Champ
Tweet Share on Facebook June 9, 2008 Comment (18)There's little doubt that Toyota will displace General Motors as the world's biggest automaker when 2008 sales are finally tallied. GM edged out its Japanese rival in 2007, but the American giant continues to struggle with a drawn-out turnaround plan and billions in losses. Toyota, by contrast, has been growing virtually everywhere it does business, with record profits in 2007. Ascending to No. 1 worldwide seems inevitable.
Now, here's a startling new possibility: Toyota could overtake GM in its home market, the first time ever that a foreign company would be the No. 1 seller of cars in the United States. Only a few months ago, that seemed implausible. Toyota's market share had grown consistently, to about 16 percent of the U.S. market at the end of 2007. But GM still had a commanding lead, with 23 percent of the market. And share swings of more than a point or two in a given year are rare.
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What GM’s Downsizing Means for Drivers
Tweet Share on Facebook June 3, 2008 Comment (28)If General Motors is getting small, something big must be happening.
GM's announcement today that it will close four SUV and pickup-truck plants—and possibly stop building Hummers—is a startling turnaround for Detroit's biggest automaker. The car companies routinely speed up or slow down assembly lines to tweak the mix of big and small vehicles consumers seem to be most interested in. But shutting down several production lines, and possibly killing off an iconic brand, signal a long-term retrenchment.
