Ford CEO Takes Compensation Cut. But are the Vehicles Better?

Let’s talk about Ford.  I just bought 150 shares.

Two epiphanies about Ford have come out of this recession:

• CEO compensation is out of control.  Who gets paid $20 million to lose $14.7 billion, and need a $9 billion dollar bailout to stay in business?
• You don’t want to be driving a Ford lately. The Consumer Reports Car Issue tells all.

OK, so these aren’t exactly epiphanies.  U.S. consumers have felt let down by Ford - and other U.S. car companies - for a while.  The difference now is that Americans are no longer willing to tolerate poor quality for the sake of buying American.

Let’s look at Ford in more detail.

CEO Compensation

In an effort to address investors’ and taxpayers’ explosive negative feelings surrounding skyrocketing CEO compensations whilst they are all being hung out to dry,  CNN reports that Ford has given their President and CEO, Alan Mulally, 5 million shares of stock options between now and 2012.

Mulally will take a 30% pay cut for the next two years, reports CNN.

Further, all previous incentive bonus plans for both 2008 and 2009 have been eliminated - not only for. Mulally, but for all executives and salaried employees.

Mulally can sell up to 1/3 of the options a year from now, 2/3 two years from now, and all must be sold by 2019.

What’s good about this announcement?

• (Finally) tying executives’ incentive packages directly to profits makes sense.  They got away with blockbuster paychecks for as long as they could.  And without any regulation, you can bet when the heat’s off they’ll be walking away with  them again.  But at least their salaries are being held in check right now.
  

• As an owner of 150 shares of Ford stock (purchased at $2.04/share this week,) it gives me a “we’re all in this together” kinda feeling.  I like that.

What stinks about this announcement?

• On Dec. 4th, 2008, CNN reported that Ford promised to cut Mulally’s salary to $1 per year if they took the government bailout loan. Well, they took the $9 billion loan, but even with the 30% pay-cut, Mulally is still making over $1 million dollars a year. His standard salary without bonuses was $2 million.
  

• His stock options were priced at $1.96/share.  The stock closed at $2.19/ share on Friday.  That means if the company goes nowhere and the stock stays exactly where it is until 2012, Mulally still makes $11 millon.

Have You Driven a Ford Lately?

The really sad question, of course, is “Why would you want to drive a Ford lately?“

And the really sad answer given by many Americans is “You don’t.”

In 2007, Time magazine published the Top 50 Worst Cars of All Time.  The Ford Model T (1909), Edsel (1958), Pinto (1971), Explorer (1995), and Excursion (2000) all made the list.

I owned an Escort station wagon in the 1990’s, and once the car hit 75,000 miles it was over.  I became friends with the Triple A towing service dispatcher.

This got me to wondering:  “Were Fords ever any good?”  Or was it just that we didn’t know any better?  The success of Ford - and other poorly built American cars - may be purely the result of:

• brain-wash type marketing, and
• the “I must buy American” guilt complex.

Were Fords actually better built then?  Or was it just that we didn’t know any better?

Case in point.  Who remembers the Ford Pinto scandal?

Many of the Ford cars made the 50 top selling lists and 50 top famous cars lists as well.  That’s what makes me love them even as I hate them. When I was in college, I traveled many miles in an old (even back then!) blue ’60’s mustang.  A milk crate kept the driver’s seat from falling back.

So, if I feel this way about Ford, why did I buy those shares?  Because Ford has momentum right now.  They aren’t going under any time soon.  They’re making press announcements that say what I want to hear.  And the market is gaining momentum. Oh, and at $2/ share, they’re a bargain.

I checked out the Ford website, and right now - other than the Ford Ranger pick-up, which has always been my secret dream vehicle - nothing is catching my eye.  How about you?

What’s been your Ford experience?

Related Websites

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Federal Cash for Clunkers Update: On Hold

In July, I posted an article on a potential federal economic stimulus program called Cash for Clunkers.

Already being run by a number of states, the program boasts two benefits - 1) get the old gas guzzling polluter cars off the roads, and 2) pump cash into consumer pockets that is spent on newer, more environmentally friendly vehicles.

To ensure the money is spent on another car, the proposed federal program offers “vouchers” rather than cash towards the next car purchase.  And the Senate changed the name from Cash for Clunkers to Voluntary Retirement of Fuel-Inefficient Vehicles.  Under this plan,

“consumers who voluntarily turn in cars or trucks that get less than 18 miles a gallon would receive vouchers worth up to $4,500 to help them buy more economical replacements.” (New York Times quote)

To date, the Federal Program’s on hold.  And the reasons they use for not implementing it seem pretty bogus to me.

Here are the purported reasons:

1. It’s unclear how successful the state run programs have been.
2. Many cars turned in had been sitting in people’s yards anyway.  So even though the economy was getting a potential boost with the cash back, the polluting car was already off the road.
3. No records were kept in any of the states on what people actually did with the received cash.
4. Many people that did buy new cars didn’t buy American cars.
5. Antique car groups were outraged with the program.

In my opinion, it’s a great program. There’s no question that the feds want to 1)  get money back into people’s pockets, and 2)  decrease pollution.  This plan does this.

So why is it on hold?

My opinion’s that the government wants people to buy American cars, and the plan’s on hold because those nose-diving US car manufacturers have yet to provide a variety of dependable gas guzzling vehicle alternatives to their current antiquated product line.

When - and if - these manufacturers get their act together, and the American public is willing to take a chance on them again, I bet the plan gets passed.

What do you think?

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Hyundai Assurance Program: Get Laid Off and You Can Bring the Car Back

The Hyundai Assurance Program will let you sleep at night - at least for the first twelve months of those pesky car payments.

Here’s the deal.  Get laid off in that first year, and you can return the car.  Hyundai covers the first $7500 loss in value.  So if you buy a $25,000 car and get laid off, if the value of the car is more than $17,500, Hyundai lets you return the car for the full $25k and picks up the difference. If the car has depreciated to less than $17,500, you can still return the car, but you need to cover any amount above the $7500.

That’s quite the port in a storm.  Other car companies are bound to follow Hyundai’s lead.

NPR reports that Hyundai currently has 3% of the US market share.  Sales fell 14% for them in 2008.

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Detroit International Auto Show 2009 Goes Electric

It’s electric!  The Tesla of California

The old dinosaurs aren’t extinct yet.  Their brains have not been preserved in motor oil.

Move over, Tesla - our own Detroit is about to plug in with their own fleet of electric cars.

The writing’s been on the wall for years, now.  Who knows why they finally actually chose to read it.

Perhaps -

• it’s a bargaining chip for receiving government bailout money (notice Exxon-Mobil isn’t bailing these guys out.)
• they see that Obama isn’t about to be the same Oil Industry Puppet our friend George W. Bush is.
• with the US government supporting their “other energy” competiton, they see that doors are opening for developing alternative technologies.
• they see that people want alternatives to their gas guzzling tanks.

A little trivia- Did you know that electric cars have actually been around since 1912? Detroit Electric (1907 - 1939) was an automobile brand produced by the Anderson Electric Car Company in Detroit, Michigan.

Rumor is that Anderson Electric was put out of business by the oil magnates of the time.

Go figure.

Here’s a few of the new electric car models.

GM

There’s the Chevy Volt.  40 miles to the charge.  You plug it in to the same plug that you plug your lamp into. We’ll be seeing it this year, in the $40K price range..

The Cadillac Converj - where “luxury meets electric”, according to GM.  Prototype.

Ford

Fusion Hybrid - a 2010 model available this spring.

Chrysler LLC

200C EV- a sleek prototype that may never hit the road, but the precursor to a secret “Project D.”  The rumor is that Project D will compete against the Toyota Camry and Honda Accord.

All still in the concept stage are  electric versions of:

• Jeep Patriot
• Jeep Wrangler
• Town & Country minivan
• Dodge Circuit - a two-seater sports car

More about the show

Here’s a slideshow of all the latest releases.

And a link to the show’s website.

And then there’s the electric slide…

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How to Save on Car Insurance

You earn every penny you get and it makes you crazy to pay more than you have to for anything. When gas prices exceeded $4.00 per gallon in July 2008, US car owners cut back driving billions of miles, and consequently filed thousands fewer car insurance claims. Although this saved insurers millions, instead of rewarding policy holders with cheap car insurance rates, state regulators asked to raise rates by up to 14 percent nationwide. Happily, there are ways drivers can lower car insurance rates, if they know where to look. Begin by comparing car insurance rates online.

Know Your Risk Factors
The fact is that there are dozens of risk factors insurers consider when assigning your car insurance premium, and many of them are under your control. Younger drivers and male drivers pay more than older drivers and female drivers. Owners of sports cars pay higher premiums than the minivan set. Professions which require use of a cell phone while driving, or those under greater stress on the job will see higher car insurance rates

Car Insurance Savings Tips

· If you want to drop yourself into a lower car insurance rate, lower your risk of being a victim of theft by installing a car alarm. Some anti-theft services qualify you for a hefty car insurance discount.

· Consider assuming a higher deductible.

· Eliminate or lower collision and comprehensive on older vehicles.

· Piggyback your car and homeowners policies.

· Work on improving your credit score by repairing errors and paying your credit cards on time. Insurers use your credit rating as a way to determine your rates.

· Clean up your driving record by attending a Driver Education Course to wipe out minor infractions.

· You can also qualify for discounts for customer loyalty, being a safe driver, being a good student.

· Insurers including Progressive and GMAC offer up to 60 percent discounts for driving fewer miles. Besides, each mile less you drive, prevents the release of one pound of carbon dioxide from being released into the atmosphere.

· Some insurers offer discounts for group membership.

The goal of paying less for car insurance is worth achieving but, to do so by sacrificing good coverage is foolish. Make sure you carry more that the minimum coverage that states require. Most states only require $5,000 property damage for accidents you cause. Crash tests have proven that many 10 mile per hour fender benders can cause that much damage.

The best way to save money on car insurance is to never have to file a claim. Take a Defensive Driving Course will not only qualify you for a discount on your car insurance, but will also pay dividends by making you a safer driver. Learn to identify dangerous situations in traffic and take a different route.

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Would You Buy an American Car?

4 years ago, John was thrilled when he purchased his first “real and brand new” vehicle, the GMC Canyon Pick-Up Truck with 4 wheel drive.  He’d gotten a great deal.  And it had been running great.

That is, until now.

Since he’s hit the 50,000 mile mark, John’s truck has had one problem after another.  First it was the clutch.  Then it was a mysterious electrical malfunction that only surfaces periodically, and never when the truck is in the repair shop.  The problems continue, and in addition to his payments, John now often has a large monthly repair bill.

One day a friend of John’s sat him down with the Consumer Guide Car Edition, and had him take a look at the rating charts for his truck versus some of the other trucks on the market.  Here’s what he found:

1)  His truck, the GMC Canyon 4 WD 2004, was listed on the Used Cars to Avoid List.

February 2008
Used cars to avoid

2)  Next, John’s friend showed him the GMC Canyon’s reliability chart:

3)  Then he showed him the Toyota Tacoma’s reliability chart.

At this point John concluded what his friend and thousands of Americans have concluded:

Don’t waste your money on GM vehicles. Or Chrysler, Dodge, or Ford vehicles, for that matter.

This evidence has been around for years, and Americans are finally getting fed up.  According to a recent NY Times article, GM, Chrysler and Ford are currently losing $2 billion dollars a month. They’re asking for billions in US tax dollar subsidies to stay afloat.

Now, in edition, GM is asking for $10 billion to pay for their merger with Chrysler.

First, the banks, then the insurance companies, then Wall Street, needed handouts to stay in business.  Now it’s Detroit.

Big business in this country is managing itself into the ground.

Detroit is just another sinking ship in the U.S. fleet.

U.S. car maker’s lackluster, over-paid, short-sited leaders have knowingly been cranking out inferior vehicles for years. Check out the Consumer Reports Car Report for the last 20 years if you don’t believe me.  Detroit cars are “black dot” cars. And no amount of flashy advertising is going to change that.

Unfortunately, hundreds of thousands of Americans are employed by these or ancillary companies.  If these companies sink, we all do.

But bailing them out only supports further mismanagement and inferiority. Detroit needs to clean up their act, or head for that great junkyard in the sky where they belong.  Toyota and Honda manufacture in the USA now.  They employ thousands, and could emply thousands more.  We should be encouraging those that “do it right,” not the screw ups.

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For ExxonMobil and Shell: Oil is King. Long Live Oil.

GM posts a 15.5 billion dollar loss, while ExxonMobil, and Shell clean up.

I’m not surprised. All promulgate the same position: Oil is King.

Only for GM, oil loyalty spells disaster. Not thinking about fuel efficient and alternative energy vehicles will sink them. In Darwinian terms: another dinosaur gone extinct.

ExxonMobil and Shell, as much as they’re flying high now, will be facing the same extinction in ten years, when alternative energies start to take off. Why aren’t these companies jumping in and developing alternative energies now? Which members of the board are running away with the profits, with no thought of the future?

Other oil profiteers are not so short-sighted.

The United Arab Emirates, richest oil producers in the world, are footing the bill for the first zero emissions city at Abu Dhabi.

T. Boon Pickens, CEO of BP, and Texas oil billionaire,is the first oil mogul to speak up, supporting wind power development.
From legendary oilman and billionaire T. Boone Pickens:
August 1st, 2008

“America is in a hole and it’s getting deeper every day. We import 70% of our oil at a cost of $700 billion a year - four times the annual cost of the Iraq war.”

“I’ve been an oil man all my life, but this is one emergency we can’t drill our way out of. But if we create a new renewable energy network, we can break our addiction to foreign oil.”

And from Green Chip Stocks:

“The “Oracle of Oil” [Pickens] has unleashed a $58 million public relations blitz focused on persuading Americans to reduce their dependence on foreign oil by turning increasingly to natural gas and wind.

Called The Pickens Plan, the project calls for an estimated $1 trillion government investment… to displace electricity currently produced with natural gas with clean wind power.

Meantime, he’s pouring billions of his own money into each of those profitable sectors. In fact, he’s spending $12 billion on what could prove to be the world’s biggest wind farm–in Texas.

Another of his ventures, Clean Energy Fuels, is the foremost company in one of the world’s fastest-rising industries: building and operating natural gas fueling stations for vehicles.”

If Exxon were using the extra money to foot the bill for alternative technology research, instead of pushing to drill up the gulf coast of Florida, I might have a smidgeon of sympathy for them.

They’ll always be someone out there that’s going to take the money and run, without concern for others. ExxonMobil and Shell are run by a bunch of short sighted selfish, profit mongers. They’ll be long gone with their billions, and we’ll be left to pick up the damage.

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Cash for Clunkers - A Great Idea

Alan Blinder of the New York Times is proposing a new eco-friendly stimulus package called Cash for Clunkers. He describes it as “the best stimulus idea you’ve never heard of.”

I agree. The plan in a nutshell:

“Cash for Clunkers is a generic name for a variety of programs under which the government buys up some of the oldest, most polluting vehicles and scraps them. If done successfully, it holds the promise of performing a remarkable public policy trifecta — stimulating the economy, improving the environment and reducing income inequality all at the same time.”

He goes on to describe the benefits in more detail. Here’s a summary-

A Cleaner Environment -

• 75% of air pollution due to vehicles comes from cars 13 years or older.
• This is because even larger newer vehicles have better emissions controls.
• 25% of all vehicles on the road are 13 years or older. This calculates out to over 75 million cars and light trucks.
• Cars would be put into recycling, or perhaps equipped with emissions control equipment and resold.

More Equal Income Distribution -

• Those owning older vehicles are generally in lower income brackets ( no surprise).
• These owners would be offered above average prices, putting cash in their pockets to buy a newer car.
• Keeping a cap on income for thoseparticipating in the program would further ensure money going into the right people’s pockets.

An Effective Economic Stimulus -

• More effective than a standard tax rebate in that the money is targeted to lower income.
• Rather than just giving out tax rebates, this would be a great way to give Americans more buying power,while also improving the environment.
• Consumers would be buying newer cars, helping out the car industry.
• The cost of the program is estimated at $20 billion, $148 billion dollars less than the recent stimulus package in February.

This type of program is being successfully run in a number of states, including California and Texas, and many Canadian provinces.

Cars for Clunkers is a winner in my book. Even though I’m nervous about the government national debt, this program makes sense to me.

As Blinder suggests, I’ll be emailing my congressman. If you would like to do that as well, here’s an easy way to do it: Find Your Local Congressmen.

What do you think of this idea?

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When Fuel Prices Go Up, America Slows Down

The face-paced life of many Americans has a new ball and chain: fuel.

It costs too much. Whether it really is because there’s not enough of it, or the oil companies are cashing in because of the perception that there’s not enough of it, we’re all feeling the pinch.

High fuel costs make everything cost more. The further an item needs to be transported, the more it will cost.

The quest by farmers to increase production of biofuel grains has decreased the production of food grains, causing “food droughts” around the world. And where there is food, such as in the USA, the cost has risen, often incrementally.

What’s is “in” and what’s “out” due to soaring oil costs?

Transportation-

Public transportation is in. Traveling by airplane is out. And for those in cars, speed is out. There’s no more pedal to the metal. We’ve all become “white heads,” driving slower, looking for that optimum speed that will give us the most gas mileage.

Fuel efficient cars are in. But if you’re looking to buy a Prius, you’ll pay top dollar, and have to order it. There’s currently a six month lead time. If you’re looking to trade in you SUV, you’ll get bottom dollar for it.

Two wheelers are adventurously in, whether it be a motorcycle, Vespa, or old fashioned bicycle.

Food-

Eating local products is in. It’s not that it’s necessarily any cheaper. But the difference in the cost of eating locally versus not eating locally has leveled.

New England farmers are starting to grow wheat for the first time ever. That could make local purchases less expensive in the long haul.

And then there’s the other lifestyle changes-

When people are spending more on necessities, what are some of the things they are spending less on?

ABC News reports that “Nevada brothels have been hit hard by gas prices…Truckers, who provide steady business to many of Nevada’s 28 legal brothels, are now paying 40 percent more this year to fill up their rigs.” That extra $100 dollars usually in their pockets is now going to gas.

According to the Giving USA Foundation, charitable contributions slowed to just a 1% increase from 2006 to 2007. And 2008 looks to be even worse. However, total contributions in 2007 were still over 300 billion dollars.

NBC reports that increased stress levels have also increased people’s waistlines.

“As the credit and housing crises rattle Wall Street, pressures over bigger workloads, job security and shrinking nest eggs are upending diets and fueling unhealthy habits across the country.”

On the bright side, in the USA at least, a downturn in the economy translates to an upturn for the planet. People are conserving more energy, spending less on new products and looking for recycled or used products more, and eating more locally grown food. Out of necessity people are thinking green. And that’s a good thing.

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Happy Hour

I love late Friday afternoons. It’s Weekendus Maximus Time. Raspberry Vodka Gimlet in hand, I contemplate the week.

Here’s a few short news bites on - what else? - gasoline prices and inflation, that caught my eye this week.

World
The US recently told China they have to start selling their imported gasoline to their people at a higher price. World fuel subsidies currently deflate fuel prices in many underdeveloped countries, including China, Malaysia and India. The US government feels that this is part of what is causing western prices to be unusually high.

China has agreed, but they gave no date as to when they would start doing it.

The picture above shows some Chinese people with there motorcycles waiting in line to fill up, after hearing rumors that gasoline prices would be rising.

In a quote from the Wall Street Journal: “While China’s population is larger and consumption is growing at a much faster rate than in the United States, the Chinese note that the average American consumes about 14 times as much oil as his Chinese counterpart.”

I have a feeling there’s going to be some trouble over this. I mean, what are they going to say? “Ok, sure, Mr. Bush. We’ll pay more for oil so you gluttons in America can pay less. No problem.” If they do it, there’s something going on that they’re not telling us.

Sheesh.

National USA

Meanwhile back at the ranch, fears of increasing inflation and rising fuel costs pushed the market below 12,000 points for the first time since March 17th. My 401k is back on the skids. The whole idea of “riding it out” is starting to worry me. Since I’m a good 10-15 years away from retirement, I’ll assume we’ll have a recovery by then.

To curb inflation, the government is pressuring the Feds to increase interest rates again, but at this point that seems unlikely, as it’s an election year. What the election has to do with us paying more for everything is mystifying.

Small Town USA

A huge branch fell from one of my neighbor’s mammoth maple trees. That’s not big news, but that it narrowly missed my house and garage, but fell on my car and totaled it is big news!

So I am car shopping this weekend. Because of the soaring gas prices and global warming, I’m limiting myself to the less gas guzzling options. The Prius is too expensive, so I will probably end up with a Yaris, Corolla or Civic. Yaris are the least expensive, then Corollas. The Honda is a good $1000 more.

Car loan interest rates are still at 7%, even though the Fed rates are at an all time low. More mystery. Perhaps another gimlet will help clear things up.

I’ll let you know how I make out on the car. Anyone out there buy a car lately?

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Frustrated at the Pump? Tips on Improving Your Gas Mileage

Still more gas saving tips -from Wall Street Week:

1. Only fill up your car in the early morning when the ground temperature is still cold. The colder the ground the more dense the gasoline. When it gets warmer gasoline expands so when buying in the afternoon or evening… your gallon is not exactly a gallon.

2. When you’re filling up, do not squeeze the trigger of the nozzle to a fast mode. If you look you will see that the trigger has three (3)stages: low, middle, and high. In slow mode you should be pumping on low speed, thereby minimizing the vapors that are created while you are pumping. All hoses at the pump have a vapor return. If you are pumping on the fast rate, some of the liquid that goes to your tank becomes vapor. Those vapors are being sucked up and back into the underground storage tank so you’re getting less for your money.

3. Fill up when your gas tank is HALF FULL or HALF EMPTY. The more gas you have in your tank, the less air occupying its empty space. Gasoline evaporates faster than you can imagine.

4. If there is a gasoline truck pumping into the storage tanks when you stop to buy gas, DO NOT fill up. Most likely the gasoline is being stirred up as the gas is being delivered, and you might pick up some of the dirt that normally settles on the bottom.

and a few of my own:

5. Use cruise control whenever you can. The steady electronic acceleration uses less gas than pressing the pedal manually.

6. Don’t let your car idle needlessly for long periods of time. Your burning gas but not going any where!

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Gas Tank Envy: The Death of the Chevy Suburban

Hot off the CNN press: “The $100 dollar fill-up has arrived.” If your vehicle has a 25 gallon plus gas tank, and you live in San Francisco, you just broke the gas ceiling. And don’t stop short, the rest of the country is right behind you.

Driving a larger SUV, Pick-up, or of course, our friend the Hummer? You might want to look into refinancing the house.

If Arnold (Schwarzenegger) hadn’t converted his Hummer to hydrogen, it would cost him $128 to fill his gas tank. With about 10 miles to the gallon, even if you can afford the Hummer, you have to feel it a little.

I can usually find anything doing a Google search. But I could not find a compiled list of gas tank sizes for vehicles.

Perhaps it’s because it hasn’t been important until now.

I was going to be the first to compile such a list, but inadverdently deleted the table 30 minutes into it. So, no list. What’s really important is total costs to own a vehicle from start to finish, anyway, and you can read about that here: Cars: Compare Cost to Buy vs. Cost to Own.

In the mean time:

Ever think about telecommuting?

Fuel Prices Getting You Down? Share the Pain

I’m lucky. I have a twenty mile commute. But my spouse drives into Boston, for a whopping 90 miles round trip. During rush hour. If I had to drive that every day, I’d want someone to take me out behind the woodshed and shoot me. But somehow, my spouse perseveres. A good travel mug, lots of coffee, and books on tape, have helped. And I have more free time, so I do a little more housework. That’s really a perk. Not for me but, oh well. We’re a team.

But as fuel prices go up, our monthly fuel bill is getting us down. We’ve done what we can. The commuter car is a Prius. We’ve found the cheapo gas stations. I work a four day work week. We coast down hills. Doesn’t matter. It’s a snowballing chunk of cash going out. This, and the rising costs of other little necessities, like food for instance, are giving us a squeeze.

What’s the good news? Spring is here. In New England, that’s huge. You can’t beat the feel of that warm sun on your skin at mid-day. Life is still good.

Oh, PS. If you’re looking for the best gas stations in your area, try GasBuddy. And here’s a few other links you might find interesting:

Globally: A New Global Oil Quandry: Costly Fuel Means Costly Calories
Locally: Truckers Protest High Fuel Prices, Clog New Jersey Turnpike
Gasoline Conservation for Dummies

How are you holding up with the increasing costs?

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ExxonMobil: Part of a $123 Billion Dollar Embarassment

(This post has been corrected based on input in a comment from “Billy”)

With the “top five” leading the way($117 billion) , oil companies posted a record $123 billion dollars in profit last year. ExxonMobil recently announced its highest profit ever- $40.6 billion dollars. The other four companies are Shell Oil($27.5 billion), BP America, Inc.($17 billion), Chevron ($18.8 billion), and ConocoPhillips ($11.9 billion).

I pondered these figures last week while filling my gas tank.

That means ExxonMobil alone earned $109 million dollars per day.
$415 dollars for every second of 2007.

Pure Profit.

I did a few more calculations.

The United States uses about 20 million gallons of gasoline per day. At $3.10/gallon, that’s a total cost of $62 million dollars income per day. Say half of that is profit (it’s probably higher). That’s $31 million dollars profit per day on US customers alone. $11.3 billion dollars per year.

Profit.

Now let’s do the math for different gas prices:

That means, if we were paying $2.00/gallon for gas per day, ExxonMobil would be making, on its US business alone, 7.3 billion dollars profit per year. And the US accounts for only 30% of their business. Foreign consumers pay even more for fuel then we do.

In my opinion, $7.3 billion dollars is enough profit for any company to make. And if you keep touting rising prices due to newfound global oil shortages, $40 billion is a gluttonous embarrassment.

I guess if you give retirement packages like the one former Exxon Mobil Chairman Lee Raymond received - $400 million in 2005- you need to make those kinds of profits.

Isn’t it also interesting that it was Hurricane Katrina that caused the original price surge in September of 2005. That month prices increased from $2.45 to $2.95. One year earlier, the price was $1.84. This was due to a reported “disruption in fuel supplies from the Gulf of Mexico.” Sounds a little fishy to me- sounds like Raymond earned that $400 million. And how come the prices haven’t come down since then?

Now there is talk of gasoline reaching $4.00/gallon this summer. If ExxonMobil can make $40 billion dollars in one year, why is our price continuing to go up? It’s blatant, in your face, price gouging.

These companies need to be regulated. The US government needs to act now. Otherwise, just like the banks, it is every man for himself. Profit at any cost.

And with no real competition, the oil companies can pretty much set their price.

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How Big is the Biofuel Footprint?

The jury is still out on whether or not biofuels are a better alternative to oil. A variety of recent studies suggest a much larger carbon footprint than initially thought.

Though biofuels burn cleaner, when you take into account the clearing of natural vegetation required to grow the corn (ethanol), or palm trees (palm oil), for example, the environmental cost is huge. Studies by Nature Conservancy (NC) and the University of Minnesota(U.Minn) estimate that it would take 93 years to replace the CO2 debt created by clearing one hectare (0ne hundred acres) of prairie grasslands to grow corn. Interestingly, they determined that the rainforests would require only 86 years.

“Those aren’t the worst offenders. Palm oil on converted peatland forests in Indonesia needs 423 years to make up for the missing carbon sink: Peatland traps a lot more CO2 than other tropical forests. And Brazil should stick to sugarcane, the study suggests: biofuel made from soybean grown on converted Brazilian rainforest needs 319 years to pay its debt. Sugarcane ethanol on the savannah needs just 17 years.” WSJ

Many long time ethanol scientists are challenging a recently released Science study agreeing with the team at NC/UMinn. This study states that the benefits of biofuels on the carbon footprint will be determined by how it is produced. If waste biomass, and unused marginal lands are used, the results are positive, but clearing rainforests and prairie lands to farm palm trees or corn will increase the CO2 levels 17-403 times more than the benefit of the amount of oil that biofuel would replace. The ethanol scientists claim the studies are based on faulty estimates and models that are not realistic.

Environmental groups such as Greenpeace are against the use of biofuels. They are not happy with the UK’s recent mandate to include 2.5% biofuels in all fuels beginning April 15th.

High oil prices and global politics have created pressure to establish alternative fuel sources quickly. But more studies need to be done on biofuels so that we proceed appropriately.

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