My spin on oil prices, oil companies and price gouging

High gas prices due to high oil prices, and now record profits by the oil companies, are on everyone's mind. The oil companies will have you believe that the prices and profits are totally driven by the market, while the politicians looking to get some good press for their reelection bid will tell you that the oil companies are making a killing. Truth be told they are both right and both wrong.

The oil companies say that the price of gasoline (and the crude oil that is a major part of the price of gas) is based solely on supply and demand. For the most part, they are right on that part. The price of any product, in the absence of any kind of price or consumption controls, is determined by supply and demand. Economists use a supply and demand curve to illustrate this, and its a pretty simple concept to understand. If the price for something is very high, producers would like to produce more but consumers want to buy very little. At the other end of the spectrum, if the price is very low, consumers want to buy a ton but producers want to sell little to none since they make no money there. In the real world you seldom see either extreme, and the true amount supplied and demanded is somethere between the two. In effect, supply and demand adjust until they are in equilibrium. Over time the price will still fluctuate due to either supply or demand spikes, but generally will stay within a given and established range untli something comes along to change that consistent pattern.

In the case of the supply of gasoline, the oil companies say that environmental rules and low profits in the past have restricted the building of new refineries. That is partly true. Environmental laws have gotten tougher in the past couple of decades and the restrictions on building a new oil refinery would be considerable. Low profits in the past and low gas prices have reduced the willingness of oil companies to make an investment in new plants. Also, with the very American tradition of "Not in my back yard", this makes new the building of new refineries even more unlikely. By investing in such a plant, a given oil company would produce more product, potentially driving the price they receive down further, meaning such an investment in a new plant would be foolish from a purely economic standpoint. There have been basically no new major oil refineries built in the past couple of decades in the US. A recent story in the Kansas City Star reported that in roughly that time frame (I believe over the past 2 decades), the demand for gas has increased 38% while supply has decreased about 9%. Factor in added demand from countries like India and China, and its no wonder that prices have increased. Then when you add in supply shocks and disruptions such as Hurricane Katrina, that just magnifies the problem. The numerous market specific blends of gasoline further compound the problem. While I myself agree that some of these blends of gasoline do help, there are clearly too many right now. That market proved that point when the rules were temporarily suspended when gas prices were at their peak regarding these blended fuels, and gas prices dropped almost overnight as a result. Again, some of these blends may be warranted, but there needs to be fewer different formulas used across the country.

Prior to the recent run up in oil prices, getting all the red tape and government regs ironed out to build a new refinery would have been an uphill battle for any major oil company, especially with the current "Not in my backyard mentality" that most Americans seem to have nowadays. Regulations, especially from the EPA, have made it almost prohibitive to open any new refineries. Also, the oil market has been the scene of many rounds of consolidation, with many refineries closed in the process. Oil companies closing refineries is really not that much different that GM, Ford or Chrysler (or any other company for that matter) closing plants to reduce excess capacity. When gas was cheap, some oil companies went out of business, many consolidated and basically all of them made less money. So they closed refineries to reduce supply, and now with demand higher, you get a supply disruption like Katrina, and BOOM! you have big price increases. One big difference though, is that while the auto companies have openly admitted closing plants, many of the oil companies have not been so forthcoming with their facility closings. They have the same effect and are done for the same reason, but its as if the oil companies don't want you to know that they are trying to restrict supply to raise the price. On the other hand, people aren't up in arms when the big 3 auto makers announce that they are closing plants, so big oil could argue that they have that same right to look out for the liveliehood of their own business. In a democratic and capitalistic society such as ours, any business has the right to make such decisions.

Another big difference between the oil industry and manufacturing is that with manufacturing, most plants can increase volume or add another shift to increase production, but many refineries are already operating at capacity. Once refineries are at max. capacity, there is not much a producer can do to lower the price. From that point, demand takes over in controlling the price. As a country, even when gas prices hit about $3 a gallon, consumption did not really seem to drop off much. Once you get above that amount though, you may see demand start to wane, at least a little bit.

Part of gas price increases (at least in the short term) are due to the buying habits of many in this counrty. Many people top off their tanks when they hear prices are going to go up, and this further drivers the price up due to the increased demand. So by topping off your tank, you are basically making the gas prices go higher and do so at a faster rate. I personally will get gas in such a situation if I have less than half a tank left, but otherwise I don't bother. By topping off our tanks, we just make the price increase higher and sooner than if we just act normally. Unless I know the price is going up 10 cents or more a gallon and I need well over half a tank, I just wait until I need gas to bother filling up the tank.

Unfortunately, when gas prices rise, the retailers make less profit as the oil companies make more money. But an angry public tends to blame the first one they see, which is the retailer that sells the guess. Some of them are owned by the oil companies, but some of them are not (including the market leader in this area, QuikTrip). Their margins on gas are pretty thin, and sometimes they will actually absorb part of a price increase, at least for a short period to keep gas from getting too expensive.

So how do we fix this problem? Well, as in any case like this, you either have to increase supply or decrease demand to get the price to fall. Increasing supply is pretty much out of the question as far as crude oil is concerned. From the info I have gathered, crude oil production is just about maxed out at the moment. When you factor in the political instability of Iran and Venezueala, that supply is even more uncertain. But the supply of refined gasoline could be increased if more refineries are built in this country. However, before any oil company is going to invest that kind of money, they will likely require either massive subsidies or tax cuts from the government to do so. Right now if a large oil company decided to build a new refinery, it would cost them billions of dollars (the cost of building the new refinery and to meet all of the environmental rules and regulations that go with a new refinery) and would only really pay off if the demand would pick up enough from the lower price of gas resulting from the extra supply of gasoline resulting from the new plant. If the price did drop by say, fifty cents a gallon or so, you would see a spike in demand. But its hard to say if that would be enough to pay for a new refinery. Also, one refinery would not likely make anywhere near that big of an impact on supply. Otherwise, such an oil company would basically be spending billions of dollars to lower their margins on gasoline. Obviously no oil company is going to want that as a result, so a new oil refinery or refineries seems less likely. You could see more new indepenedent small and medium sized refineries if the prices stay at this level, and that could ease prices somewhat, but I don't know that it would do more than lower prices a few cents a gallon.

Ethanol and other alternative fuels also play a part here. Ethanol helps because ethanol blends have at least 10% ethanol, meaning they use that much less refined gasoline. But they have to pay for the ethanol, and demand is outstripping supply there as well, and if corn prices spike, that could make that situation even worse. Ethanol supply is gradually increasing as new plants come on line. There is some hope of finding cheaper sources of fuels for ethanol than corn, but none of them are really in full production yet or are likely to be any time soon. Wider adoption of ethanol could help the situation a little bit, and does have the added benefit of reducing our dependendence on imported oil, a potentially big factor if an intertnational crisis reduces our crude oil supply.

Every time gas prices climb close to $3, the public gets pissed off, and politicians seek out the opportunity to look good on national tv, even if there is not much that they can do. Congress holds hearing and investigates collusion on oil and gas prices, but they never find anything. Congress can pass a windfall profits tax on the oil companies, and that is possible in the future if gas prices go higher and oil companies continue to have record profits. I continue to be amazed that the oil companies do absolutlely nothing to help their case with the American public regarding high oil prices instead of just talking about how its all based on high crude oil prices and that there hands are tied, but those arguments seem pretty hollow to the average consumer who is paying over $3 a gallon for gas while oil company after oil company posts record profits. Picture if one of the major oil companies decided to lower their refining margins on gasoline for a month as a gesture of good faith to the American consumer. They would lose some money in the process but would go a long ways toward gaining the support and good faith of an American public that is growing ever skeptical of the oil industries arugment about high oil and gas prices. If the public gets too pissed off, they may create enough pressure on Congress to pass the threatened windfall profits tax on the oil industry. I would be against that since it not only interferes with the ability of these companies to do business, but it also would not necessarily lower gas prices at all.

So what do we do?

Here are a few ideas:
1.) Reduce demand- drive less, use public transportation, etc. This would work but is very hard to make happen with a public that is used to driving everywhere in their own cars.

2.) Use more ethanol- this helps up to a point, until demand for ethanol goes high enough to raise the price of corn enough to negate this. But it does reduce the dependence on foreign crude oil, and that is a good thing.

3.) Tougher mileage requirements for cars and trucks (have to thank my big brother for this point, its one of his favorite) and don't exempt any vehicles for it. This won't solve the problem but will help ease it.

4.) Have fewer blends of gasoline- This drives up the cost of gasoline considerably in some markets for a questionable benefit. I am not arguing that they are not necessary, but there should only be 2 or 3 blends. That would lower refining and transportation costs and lower prices for all of us.

5.) Encourage the building of more refineries, especially smaller and medium sized ones that would be more likely to be locally owned, instead of being owned by giant companies. This would help keep prices on check, and also might the economies since smaller refineries were probably create more jobs than the builidng of one big refinery, as well as be less of a fight to get it built.

As far as the oil companies go, my biggest gripe with them is that they still fail to admit that they played a big part in gas prices going up (although they are not solely to blame). Over the past couple of decades, they have shuttered a number of refineries. This reduced the supply of gasoline, ensuring that as the demand for gasoline increased, the price would rise more rapidly, and it has indeed done that. Again, in virtually every type of industry, supply cuts are made when there is excess supply (which always lower prices and therefore margins), and this is really no different that that, except for the fact that high oil prices affect all of our pocketbooks on a weekly and montly basis since we all use gas. High oil prices can also be a drag on the economy as well.

In the long run, unless prices stay this high for years, I think the major oil companies will not build any huge new refineries, but you will see some smaller ones pop up, especially those that are independently owned. At least those will help some local economies out. There will be more emphasis on alternative fuels and gas mileage.

Beyond that, only time will tell.

The Hysteria over the Court's property rights ruling

I had the priviledge of being on vacation when the Supreme Court, in the case of Kelo vs. New London, ruled that a government entity could take land through the power of eminent domain for purposes that "are rationally related to a conceivable public purpose." While listening to the conservative talking heads, Limbaugh and Hannity, both the hosts and especially callers were talking like the sky was falling and that soon the government would be taking people's lands willy-nilly on a whim.

Let me try to clear a few things up for you. Basically what the court said was that federal law did not prevent states for using eminent domain to take private property for uses other than for public projects (such as roads, schools, etc.). I am still mystified that people as allegedly intelligent as Limbaugh and Hannity used this ruling to whip people into a frezny rather than to explain to people that this is really a state and local issue and the federal government did not have any laws allowing or requiring it to intervene. Some states and localities already have laws restricting the use of eminent domain for strictly public projects. I think governments using eminent domain for anything should be a last resort. But there are cases when the true public good benefits from a particular project being completed, even if eminent domain is used to acquire some land. Keep in mind that we are not talking about governments just deciding to take property without the developer in question trying to first by the property at a fair price. Even though the talk shows and many alarmists would lead you to believe otherwise.

I think their should be restrictions as well as some oversight of the process, perhaps similiar to how planning and zoning commissions work in many cities, to make sure that this process is not abused and that first every effort is made to buy the land at a fair price. Should developers get to use this so they don't have to pay as much for the property? Not only no but hell no! But should an entire development, including those perhaps creating hundreds of jobs, be held hostage by either a property owner that just likes to be a thorn in the side of others (we probably all know someone like that) or one that wants to get rich in the process. The Kansas Speedway might not exist today if eminent domain was not used. Think of how many jobs that would have cost the area. In that case you also have to think that if the speedway was not their, Nebraska Furniture Mart, Cabellas and the entire Village West development would also likely not have been built. Is it fair for a handful of landowners saying "I was here first so tough shit for the rest of you, its me first here" while the rest of the community loses? I don't think so. I do think the compensation should be enough not just to cover market value but assitance to relocate as well.

Again, this is a state and local, not a federal issue. The supreme court made a good decision by basically deciding not to get involved here and lets the states sort it out. Funny how many conservatives want less federal involvement but here they seem to be against that. More liberals seem to be for it, and they normally love big government. Seems odd to me.

To me what it boils down to is that the community as a whole should be more of a priority than a handful of people. Yes, they should be treated fairly, and well compensated, but they should not get rich from it either.

If states or cities want to pass laws to restrict the practice (I believe they exist at least to an extent here in Missouri already) then they have every right to do so. Also, if local officials are buddy buddy with a developer and cut him a sweetheart deal using eminent domain, there should be a process in place to settle the dispute (there is actually, its called the court system) and those same local officials will likely face an angry public voting them out of office when the next election rolls around. Had the court ruled for Kelo in this case, it could have had a chilling effect on developments that need eminent domain to happen and are for the good of the whole community (like maybe a plant opening and creating 300 jobs).

If you want to read the actual ruling, you can view it here:
http://www.supremecourtus.gov/opinions/04slipopinion.html

The Pension mess is just beginning

Its not exactly news anymore that the government insurance plan for private pension plans is in trouble or at least, not adequately funded. I have known for years, and I am far from the only one, that the tiny amount the agency collects as insurance premiums is inadequate for a major collapse of a pension plan and certainly inadequate for more than one. In that sense it is somewhat simliar to that all time debacle of debacle's, the S&L scandal and subsequent gov't bailout of the savings and loan industry as well as the former FSLIC (now part of the FDIC).

Part of the problem with the agency, known as the PBGC (Pension Benefit Guaranty Corporation) is that the agency collects far too little in insurance premiums from the corporations and companies whose pension it covers. Kind of sounds like the S&L crisis there too eh? Past efforts to reform it have been met by challenges from big businesses (no real shocker there). I suspect this time, Congress will have no problem increasing the premiums those companies pay, but the damage has already been done. Also, the sure to be intense lobbying by big business interests may not prevent an increase, but may keep it lower than it needs to be to fix the problems. But the premiums charged are by no means the only problem involved here.

Companies have several accounting loopholes they can and often do use, such as credits given to them that are allowed in lieu of actual contributions. The stock market and interest rates also have played a part here. Pension plans have used both the stock and bond markets for investments, neither of which has been as good in the past five years or so as they were the years prior to that time. These pension plans assumed a certain rate of return based on the return from previous years. Consequently, the years that markets did not do so well meant that pension plans were underfunded in those years. In those years many companies were either unwilling or unable to contribute enough to cover the shortfall. That is one weakness of the current rules- companies are allowed to run shortfalls apparently without penalty. Once a company is in trouble, perhaps on the verge of bankruptcy or going under, no one can really expect them to risk the whole company to make their pension contribution required to keep their pension plan properly funded. United Airlines is by far the largest company to default on their pension plan. The participants of that pension plan will still get a pension, but its only guaranteed to limits imposed by the PBGC. Those covered often do not get their full pension, even though they were promised it by the comapny when they were hired. The PBGC only provides a certain level of benefits, regardless of what the original pension program provided as a benefit. In this case, some benefits is better than no benefit but tell that to the people who lose a good chunk of the pension income that they have been counting on receiving as part of their retirement.

When you add this to the uncertainty future of Social Security, retirement benefits are not as certain for retirees as we would like them to be. Because of all of these pension plan problems, many companies are either ending their pension plans, closing them to new members or converting to either 401k's or the less risky defined contribution plan. 401k's are better in some ways for companies because they are not required to contribute to them and employees have to contribute to them for them to exist (which makes them less attractive to lower income workers who may not have the income to spare to contribute). A defined contribution plan is a pension plan where the particular company promises to contribute a certain amount or even a percentage of money each year, but they do not promise a definite dollar benefit to workers. In such a plan, if the plan's investments yield a less than expected return, the company would not have a shortfall to make up since they are guaranteeing their contribution, not what they pay out as a benefit. Larger companies with the older defined benefit plan have found themselves forced to make large contributions to make up shortfalls when the plans investments yield less than expected. For large companies such as GM, this shortfall can be in the billions of dollars and accumulates over time. If the shortfall happens when the economy is softer (often meaning that company is making less money at the time), it is even harder for the company to contribute enough to prevent a shortfall. During recessions this problem is even worse since investment earnings are lower as well as the profits of the company.

Going forward, you will see more and more companies bail out of the more risky defined benefit plan and go with the less risky defined contribution plan and 401k plans. Defined contribution plans can still have shortfalls but they often are less severe than defined benefit plans.

In the meantime, Congress needs to do the following:
1.) Raise premiums that companies with pension pay to the PBGC, perhaps charging more for companies on the riskier defined benefit plans.
2.) Make the rules more strict on what is considered a pension contribution, meaning much fewer credits in lieu of actual contributions. Limits on how much a pension can be underfunded would also be a good idea, with perhaps an option that the PBGC can suspend that for a company in trouble that would have a hard time meeting obligations in that short term. Such a thing would have to be used very rarely, but if it allows a company to get back on its feet again it might be better than that company going under and dumping it all on the PBGC.

Now that United has basically dumped its pension plan on the PBGC during the bankruptcy process, look for other airlines to follow suit to allow them to compete with United. In other words, this problem will get worse before it gets better. Ulitmately, you and I the taxpayer will have to pay to fix the problem, as usual.

Counting the liablities from United's pension bailout, the PBGC is already over $20 billion in the red, a number that certainly will go up. Even with increased premiums, Congress will have to appropriate money to bail the agency out. In this case, you can't blame the agency but rather the system of lax rules that allowed this to happen.

Good ol money grubbing recording industry

Back in the day I used to literally buy an average of a new cd per week, sometimes 2. At one point, soon after college, my cd collection had grown to nearly 300 cds. Now days I might buy one a month and probably not even that often. Part of the reason for that is that I am more picky about what cd's I purchase since so many of them have one or two good songs and the rest are just filler. But the majority of the reason I have curtailed my cd purchases is because of the actions of the RIAA (Recording Industry Association of America) and their quest to sue everyone on planet Earth who has ever downloaded, thought of downloading or known anyone who has ever downloaded music off the internet. I will grant that the recording industry does lose money from this, as there are people who will download a whole cd instead of buying one. But, even though I don't have exact stats here to back me up, I think most people fall in the category of dowloading a song here and a song there that they like.

If you have not heard, the RIAA is trying to track down those that download and upload music to the internet and then they subpeona the records from that persons ISP (Internet Service Provider) to find out who that person is so that they can sue them. For someone that downloads several hundred songs a year, I don't so much have a big problem with them being used. But that is not the only people they are after. I have seen them sue someone who has downloaded two or three dozen songs.

But here is my favorite part: The RIAA, in their infinite wisdom, automatically assumes that anyone who downloads a song would otherwise have paid full price for it, an assumption that is ludicrous. The reality is that I might download a single song because I don't feel like shelling out $15 for an album that sucks ass other than that one song. I think we all can name a few albums that we have purchased because of one song we have heard that was good, then we get the cd home and the rest of it sucks. So my challenge to the RIAA and the record labels is to quit putting out crap and maybe more people will buy albums.

If there is a group that I really like, I am going to buy the cd if I am big fan. You get not only the music, but the lyrics, notes, artwork, etc and those things are important to some serious fans. I also think that the music labels are partly to blame for not having the sense to get in on downloaded music early on. If it weren't for Napster, would the song download sites be anywhere near as popular or would they even be there at all? At least napster showed them how popular it was, and now there are several sites where you can download single songs for less than a buck. Yeah its not as much profit as someone buying a cd for $15 for that one song, so the record company does lose some potentail profit there, but they need to be smart and get that to work in their favor. Maybe go back to offering a good bonus track on the cd to entice people to buy it, much like they did in the early days of cds to get people to buy the cd version.

In case you aren't aware how big of money grubbers these people are, consider that many years ago, they tried to get a law passed that would pay them royalties off of every blank audio cassette sold to make up for what they claimed they lost from people dubbing cd's to tape. As I recall the recording industry used the same arugments then that they are using now, and they make no more sense now than they did then.

Okay, end of rant, have to go download some music.

The hypocrisy about the filibuster debate

While we may know here in a day or two if Senate Republicans will vote to exercise the nuclear option, or as I like to call it, the "It was okay when we did it but now that it hurts us its not fair so it should go away" option. Before any ultra conservatives start going off about me being liberal, let me say this, I personally wouldn't mind the nuclear option since I agree that a nomination should get an up or down vote. They should. Although I don't have exact numbers here, I do believe Democrats have used the filibuster tactic to hold up nominations far more than Republicans, but people like Senator Frist of Tennessee are omitting something key when they talk about every judicial candidate getting an up or down vote on the Senate floor. Frist was actually quoted as saying that any candidate that makes it out of committee should get a vote. Want to know what Bill left out there (and just a hint you won't hear it from Hannity or Bimbaugh, oops I mean Limbaugh)? The favorite tactic of Republicans is to not let democratic nomiations out of the committee where they hold the majority. They did to 60 some of former President Clinton's nominee's ( I think the number was 63 if I remember correctly, although I can't recall the source to give them credit for that number). My question is this- if a fillibuster is wrong, and not mentioned in the constitution (Die hard conservatives, warning- hold on with both hands, you aren't going to like this part and I know how many of you have a hard time with anything that does not come from Hannity, Limbaugh or Coulter but try to grasp this anyway) then how is bottling a nomination up in committee strictly for partisan reasons (or any other for that matter) any better. Keep in mind that the committee process for judicial nominees is not spelled out in the constitution either, and oh hold on to your hats again my conservative friends this will hurt as well, and it is more of a tradition just like (oh, this is going to hurt) THE FILLIBUSTER!

Okay, if you are conservative go ahead and relax for a second, I know its hard to hear the truth. Please turn to line 2 of the conservative playbook and invoke the 'liberal media excuse" and give me the usual bullshit about Fox News being the only source for news (don't even get me started on that one, although I myself watch fox news probably more than MSNBC or CNN).

Again, I think the filibuster is not cool either for nominees but for conservatives who used the process to support their views (people like good ol Bill Frist) now acting as if it is part of the devil himself and trying to get rid of it, kind of reminds me of the little boy who went crying off to mom when he didn't get his own way. I think its pretty damn hypocritical to use a process to its full advantage when it suits you and then once its not in your favor decrying it as unfair and wanting to do away with it. That is, by the way, a view that some senior Senate Republicans seem to share as well.

Where is the Democrats plan for social security?

Well, President Bush has unveiled some new ideas to help keep social security solvent in the future besides the personal accounts he proposed a few months ago. The ideas are still fairly general at this point, but at least he has come up with some ideas. I do give him credit for that, it would be easy in his second term to just let that one go, especially with all of the opposition his idea for personal accounts have gone up against, but he keeps on going.

One big complaint that I have is that the democrats have no plan of their own. Its fine that they want to oppose Bush's plan, they have that right, but shouldn't they also come up with some alternatives of their own? Tactics like that are what causes them to be labeled obstructionists, something that will not help them win back either the House, Senate or the Presidency. Their strategy with social security seems to be to shoot down the Republican plan but come up with nothing on their own, hoping they will win by the President's plan failing. This is a great opportunity to come up with a plan of their own that they could take credit for but they have not done that and they do not appear to be willing to do so at this time.

You would think they would have learned their lesson by now, but apparently not.

Dems, you need to start proposing solutions instead of just being the party of no.

My favorite topic- bankruptcy reform

As you might have noticed, I have been very critical of the overhaul (I mean cash giveaway ) of the bankruptcy laws that just passed both houses of Congress. Don't get me wrong, some reform is probably due, but lets not forgot that the bankruptcy process is not automatic, a judge presides over it and ultimately determines what debts you are allowed to discharge or if you need to pay them back. I am sure there has been some abuse of the system but probably not enough to warrant the overhaul of this magnitude.

I think calling this bankruptcy reform is not correct. It should be called the credit card and finanical service industry cash giveaway, kind of like the lottery, except this will pay off more often. This whole thing is a vicious circle started and in many cases, orchestrated by the credit card companies themselves. Now I don't think someone should be able to just charge up a fortune and then declare bankruptcy because they don't want to pay their bills. That is what the finance industry wants you to believe happens with most people that declare bankruptcy but that is not the case. I thought I remembered reading somewhere that about half of the bankruptcy filings out there are becuase of medical bills.

I might feel differently about this issue if the credit card companies were not at least partly to blame for this mess. They extend too much credit too easlily to people who should either not have it or not have that much. They start even in college before you are working. Then once you are deep in the hole the fun starts. Now again, the credit card companies are not holding a gun to anyone's head telling them to charge but they are responsible for issuing credit responsibly which they have not done.

For people on the ropes with lots of debt, the credit card companies to a great deal to put them further in the hole. If you are late by even one day, you get hit with a late charge of up to $40. Doesn't matter if you mailed a week earlier, if its not one time, its late and you get charged. Then if you are late, not just to them but to anyone that they can find out from, they jack your rate up to the penalty rate which is usually at least 22%, sometimes as high as 29%. If you have someone that is in financial trouble, and they jack your rate way up, not only will you pay more, but your balance will drop less even though you are paying more. Now its even harder to pay, basically they are pushing you to bankruptcy but now that you are there, they want you to have to pay up, even though they should bear part of the blame for getting you there. Now again, its not all their fault, but as you can see from the steps above, if someone is on the ropes financially, these companies make it hard to catch up. In the above situation, if that person is close to their limit and then go over because of the extra finance charges, boom, a $39 late fee.

The credit card companies (and other financial companies) have been lobbying for this reform for about a decade and they have spend a massive amount of money on this effort. In this case it looks like they got what they paid for didn't they?

Watch over the next year or two, I predict even though the change in bankruptch rules should help these companies financially, they will not lower credit card rates at all, even though they should because they have less risk now. So when they borrow at prime rate, currently 5.75 % and they jack someone's credit card rate up for being two days late one time on their car payment, how can you not call it a cash grab? That is a spread in that case of nearly 20%, pretty healthy, I can see why Congress needed to bail them out. My prediction is that you will see record or near record earnings from credit card companies in the next 18 months to 2 years as a result of this, but just remember its not about money, its just to stop abuse. Did they man by borrowers or lenders, becuase the lender abuse will continue.

Gay marriage

I decided to post something about this controversial topic since its been in the news around here the past few weeks, especially with Kansas passing a constitutional amendment banning not only gay marriage but also civil unions. I was not surprised that it passed since Kansas is a fairly conservative state and if can pass in Missouri you would think Kansas would pass something as well. I myself am against gay marriage, I think that should be left between a man and a woman. I don't really have a problem with civil unions because why should say two guys living together not get the same rights as a man and woman living together whom are not married. In a common law state I could see why people would be against that since that could basically give them rights similar to married people after a few years.

Judging from the response around the country, I don't think gay people will have the right to get married virtually anywhere, and that is not necessarily a bad thing. But they may have the right to form a civil union where they would get some of the financial and other benefits of being married. I myself am not deadset against that at this point. I am not necessarily thrilled about it, but last time I checked it was not legal to discriminate based on sexual orientation so not sure why that would be legal. I am not gay, nor do I claim to even understand that lifestyle, but I also don't view it as my responsiblity or right to tell others how they should live and who they should be. Is there really any reason that two guys or two women living together should get fewer rights than a man and a woman, would that not be discrimination if they aren't treated equally? I would have no problem with a man and woman that lived together getting the same treatment as a civil union either, I think you should treat both groupsl the same there. Keep in mind I am looking at this here from a legal, rather than moral or religious, issue.

Unfortunately, some people still are of the notion that anyone that is gay is either mentally incompetent or a deviant, that kind of thinking has pretty much been debunked except to the very conservative or religious. I myself don't understand why anyone would want to be gay, but I don't believe that anyone just decides to be gay, they end up that way somehow. To look at a gay person is having some kind of mental issue is pretty narrow minded and frankfully, pretty damn dumb. Why would anyone just choose to be gay if they had a choice in the matter? Would that even make sense? Granted, I am not gay so I guess I can't say for sure either, but it sounds rather silly.

An even thornier issue involves gay couples raising kids. This obviously has religious groups in an uproar, but then again, what doesn't these days? I think I would want to see some actual scientific evidence (not religious, scientific) before I would want to make up my mind on that. I am not worried about the prospective parents as much as the kids. I wonder how that would work out, besides the obivous things like getting picked on by other kids for having "queer parents". Would their kids turn out okay, would they be predisposed to ending up gay themselves, would their development be the same as with straight parents? I don't think anyone knows the answer to that question yet. Yes, there are some anti gay groups that think they have the answer, but considering the fact that they had their answer before they knew the question, I put about as much faith in their opinion as the average guy on the street.

I am still puzzled by those that view gay people as having a sickness or illness that can be cured. Yes, there are a small number that turn out to be heterosexual, but for the most part, it is not something that people can change about themselves. Despite all the religious rhetoric against it, homosexuality was apparently around even in Roman and Greek times and probably before that, people were just not very open about it. I have heard people use the bible as justification to prevent people from being gay, but to be truthful about the bible, you can use some part of it to back up about any viewpoint. Also keep in mind that the bible is a collection of stories handed down multiple times that is not necessarily exactly 100% historically accurate. It might be but it might not be. But to stay on task you can use the bible to support all sorts of viewpoints, including opposite sides of the same argument. In the 1850's you probably had southerners use it to justify keeping slaves.

The think I find the most puzzling about people's behavior around gay people is that (especially guys) people act like they will be converted if they have gay friends or hang out with gay people. Or that the gay person will hit on them or something. Kind of funny. I don't have any close friends that are gay, but I have worked with several people that are gay and you know what? Other than there sexual orientation, they were just like everybody else.

Overall, I am a little concerned that so many people across the country are for the first time actively passing or trying to pass constituional amendments not to give people more rights, but rather to take them away or prevent them being granted to certain people. Look back to our founding fathers and that is not exactly consistent with what they had in mind now was it? If you are against gay marriage (or for it for that matter), good for you. But it does not belong in our constitution next to the Bill of Rights and other amendments that give, rather than take away people's rights! Is this the United States of America or the Socialist States of the America's?

Such amendments lean to the latter, and I personally find that kind of scary.

What do you think?