By G.L.C., on September 10th, 2008
Crime rates should drop during good economic times and rise during bad ones. So very soon if you are walking the streets of New York late at night, you may be at risk of being mugged by gangs of investment bankers, driven to acts of desperate violence by the travails of the credit markets. This seems logical at first glance – people who lose their jobs may turn instead to burglary and theft to get what they want. But there is little evidence to suggest that crime rates drop during good economic times and rise during bad ones. Crime rates rose every year between 1955 and 1972, even as the economy surged, with only a brief, mild recession in the early 1960s. A bad economy doesn’t always bring more crime. Crime rates fell about one third between 1934 and 1938 while the nation was struggling to emerge from the Great Depression and weathering another severe economic downturn in 1937 and 1938.
Declining wages for poor young males drew them to crime as crack ravaged inner cities during the economic boom of the late 1980s. Low wages and the lure of crack profits thus discouraged young men from finding honest work. Economists and criminologists who can refer to data from all 50 U.S. states to help them understand what is going on have found little indication of a strong link between economic growth and crime. They instead credit some of the sharp fall in crime in the U.S. in the 1990s to larger police forces and harsher prison sentences. More stringent laws and larger government expenditures have also played an important role in the fall in the crime rate.
The truth is that broad figures on crime conceal large differences in specific crimes, each with its own particular explanation. Crimes, broadly speaking, have been falling for a decade. Car thefts are down because cars are harder to steal. Modern televisions and other home electronic equipments tend to be either too large to steal or too cheap to bother with.
That should take the focus away from crime. The economic downturn is threatening an increase in crime, illegal immigration, and extremism, putting further strain on tight police budgets. Illegal working is forecast to increase as migrants’ opportunities for legal employment decline and businesses seek to save costs.
Economic downturn also risks increasing the appeal of far right extremism and racism. Experiencing racism can be one of the factors that can lead to people becoming terrorists.
Local police resources could come under increasing pressure. The ever increasing gas prices might leave the police forces facing financial pressures.
So if the war against crime is to be won, then more stringent laws and increased federal, state, and local spending on law enforcement are needed. In other words, crime declines not because the economy is booming but because the government passes stringent laws and spends money – larger prisons, more police, and tougher punishments.
By G.L.C., on August 11th, 2008
Under the Energy Independence and Security Act passed last year, the Department of Transportation (DOT) has to raise the fuel economy standard for cars and light trucks to a fleet-wide average of 35 miles per gallon by 2020. The act also gives the DOT the authority to fix interim standards. The government’s recent proposal to increase fuel efficiency of automobiles to 31.5 miles per gallon by 2015 has drawn criticism from all quarters. Auto makers say it is too tough on them. Activists say it is not tough enough.
This recent proposal is a 25% increase from the present standards and does a great disservice to the auto industry and the American people. The auto industry is in absolute crisis scrambling to adjust to the market shift that has occurred due to rapidly rising gas prices, with consumers fleeing from large, fuel-inefficient light trucks and SUVs and buying smaller, more fuel-efficient and hybrid electric cars.
U.S. auto makers say that while the proposal is expected to save car owners more than $100 billion in fuel costs over the lifetime of the vehicle, it would cost the industry over $46 billion to implement the proposal making it the most expensive federal proposal ever. They warn that many of them would be forced to close shop or cut down on the number of workers – both of which are not good for the economy. This year is turning out to be the worst year for car sales in more than a decade. News of the troubled auto industry keeps mounting. Ford Motor Company just announced a loss of $8.7 billion for the second quarter.
U.S. automakers contend that the act puts them at a disadvantage to foreign car makers who are used to higher gasoline prices and much stricter regulations. It’s not nearly as hard for them to meet the 35 mpg average as it is for the American companies.
Activists point out that the new fuel economy standards are for all the vehicles that one manufacturer produces combined and not every vehicle has to meet them. The act assumes retail gas prices of $2.31 per gallon for model year 2015, with a high estimate of $3.19. For 2030, the assumed price is $2.51 per gallon, and the high price is $3.76. This is totally incorrect. Prices are already well over $4 a gallon.
The 35 miles per gallon target is well below what is technologically feasible. The national Highway Traffic Safety Administration’s own analysis shows that automakers could achieve a fleet-wide fuel economy standard of 37 miles per gallon by the year 2015.
The proposed fuel economy standards that are unreasonably low cover a period that is unreasonably long and are inadequately documented, meeting neither the spirit nor the intent of the Energy Independence and Security Act.
By B.P.T., on August 2nd, 2008
We’ve all heard the old saw, when you’re given lemons, make lemonade. The travel industry is no doubt attempting to do just that, given the current economic woes and high gas prices. The Smith Travel Research Global is reporting hotel occupancy rates are down 3.9% to 66.7% for the first half of 2008 in the Americas. The company reports that the “malaise in the U.S. economy seems to be affecting a large number of countries” and that there are drops in occupancy in 3 out of 4 world regions. The only region to see an increase in the past six months is, interestingly enough, the Middle East/Africa region, which is up a reported 4%.
Travel specials and promotions are nothing new, even in a booming economy. But when the stock market is down, gas prices are up and the general economic outlook is cloudy, travel and other disposable income dependent industries must sometimes step up their efforts. In an attempt to lure travelers and even capitalize on the trend to take vacations closer to home, hotels and resorts are offering a myriad of interesting freebies, gimmicks and other specials in attempt to recapture some of the travel market that may be losing steam as a result of a sagging economy. Here are a few of the most interesting.
While hotels have used the “extra night free” special for years, a plethora of deals is available these days, from free third night to free seventh night, and offers often include “kids eat free,” “kids stay free,” free parking and free breakfast as well.
One attempt to ease the pain at the pumps is the free gas offer that has proliferated throughout the travel industry. Recently the Mississippi Gulf Coast, a visitors and convention bureau based in Gulfport and Biloxi, Mississippi, is running a $50 gas card special for anyone who spends two nights in a qualifying hotel. Choice Hotels (the chain that includes Comfort Inn, Sleep Inn, Clarion and a few others) is also offering a $50 gas card after three individual stays at its hotels. The free gas promotion is one of the hottest gimmicks around right now, with everyone from Best Western to the Texas Campground Association to Expedia getting in on the act.
Wyndham Vacation Resorts is offering add-ons for their travel packages to Destin, Florida. For instance, couples staying three nights have the choice of a $50 dining certificate or a pair of dolphin cruise tickets. Marriott will give visitors a $25 gift card for travelers spending a weekend at certain hotels.
Credit cards are partnering up with hotels and other travel industry groups for promotions as well. MasterCard has a long list of specials for those willing to leave the house on a jaunt, and these are not limited to budget properties. These promotions include a “Special VIP Experience” at any designated Small Luxury Hotels of the World (SLH) and include such experiences as spa treatments, culinary activities or other local activities; the Sofitel “chic picnic” deal for European properties, which includes an upgraded room, a VIP gift and a special “enchanting moment,” is filled with gourmet goodies.
A few other creative offers include free cocktails, activity or entertainment credits or tickets. In Vegas, the offers get even better and include such gimmes as free chips or slot play, VIP passes to certain nightclubs, room upgrades and perhaps the best – a future flight credit of up to $350 to the Luxor or the $300 Flyback offer at the MGM Grand, which gives a $300 credit for return trip airfare.
Travel specials can be found not only in the United States but around the globe as well, with rail travel specials in Canada and Europe, Exotic Dubai travel packages that include a free desert safari with a BBQ dinner and free river cruise passes in Singapore.
Whether these specials, gimmicks, promotions and offers will help shore up a stinging travel industry remains to be seen. Perhaps the cleverest, however, is the Lehigh Valley area of Pennsylvania. This area’s lodging members offer special travel packages under the “Pain in the Gas” promotions, which consist of free gas cards or rebates with qualifying stays. A pain in the gas indeed.
By Evelyn Black, on July 18th, 2008
In 2005, the U.S. Department of Energy published a report entitled Peaking of World Oil Production: Impacts, Mitigation, & Risk Management. Called “The Hirsch Report” after its lead author, Robert Hirsch, its purpose was to lay out a governmental strategy for softening the effects of peak oil and its aftermath: that is, the chaos and economic crises sure to follow the point at which the world’s oil reserves would begin to fall.
The Hirsch Report laid out three possible scenarios for mitigation and risk management. In the first scenario, alternative energy sources, redesign of U.S. infrastructure, and other extraordinary measures are taken 20 years in advance of peak oil, with significant negative impact on the economy but a good chance at a positive outcome after a period of adjustment.
In the second scenario, extraordinary coordinated emergency measures are taken at all levels of government 10 years in advance of peak oil, with a period of severe shortages and social stress in the immediate 5-10 years after peak oil.
In the final and scariest scenario, nothing is done until after worldwide peak oil production occurs. In this scenario, severe shortages, widespread social upheaval, the collapse of financial markets, and violence are predicted, with an uncertain and painful adjustment period that could take decades.
What is alarming is that the U.S. government and the oil industry have known since the mid-1950s that peak oil would occur sometime between the year 2000 and 2010 if not earlier. Shell Oil itself commissioned the original study, done in 1956 by geophysicist M. King Hubbert. Hubbert predicted that after the peak, reserves would drop off very sharply, creating an environment in which social upheaval, famine, violence, and general chaos could occur if other energy sources were not in place. The first chart at the top of this post shows M. King Hubbert’s original 1956 peak oil curve.
Ever since Hubbert’s peak oil curve became the touchstone for oil supplies and the mitigation of their depletion, very little has been done in terms of preparing for what both the U.S. government and big oil have known would happen all along. I think it is disturbing and revealing that, even though the Hirsch report was commissioned in 2005, the U.S. is still basically doing nothing to mitigate the effects of peak oil.
 Why would that be? Is it because the U.S. Department of Energy thinks peak oil is still 20 years off in the future or more? Or is it because it is already too late and the U.S. is being run by a pack of oil executives like George W. Bush, Dick Cheney, and Condoleezza Rice? I mean, it’s not like they personally are going to suffer when the worst consequences hit. On their way out, to very wealthy established lives, they have little to lose at this point.
Houston, I think we have a problem.
I think we had a problem back in the seventies, and we should have dealt with it then by instituting a sane longterm energy policy. We didn’t. By general agreement, we passed our own peak oil production point during that same time period and for the past 30 years have been relying heavily on imports (as shown by the chart at the bottom; the middle chart shows all the competing current theories on when peak oil will occur worldwide). By all the best estimates, globally, we are now at or just past peak oil, and we’ve done basically nothing to mitigate its effects. This has happened just as global demand for oil in developing industrial nations like China and India has spiked and continues to climb rapidly.
Yes, commodities speculators are driving up prices right now, including oil prices, but trading in oil commodities is tightly regulated. Speculation is a very small part of the total picture. What is happening right now with oil (and by default gas prices) is more consistent with increased demand in the face of limited or even decreasing supply.
If in fact we have passed peak oil production, we will know it very quickly because things will get very, very bad very, very fast.
 But let’s say the optimists are right and peak oil will not hit until 2020 or 2030. (I think they’re wrong, but for the sake of argument, let’s say they’re right.) Even then, by our own government’s study on mitigation, we know that right now we need to be taking extraordinary measures toward alternative energy and energy independence just to soften the blow. Where are these measures? Why are we not taking them?
Think about that for awhile, and while you’re thinking about it, think about planting some food in your backyard and getting to know your neighbors.
I think we’re in for quite a ride.
By Mark Mahorney, on July 11th, 2008
Most people probably don’t realize (I didn’t) that the U.S. has a strategic grain reserve. Well had. It’s almost entirely depleted. The United States Department of Agriculture (USDA) operates the Commodity Credit Corporation (CCC) which, according to the USDA site, performs the following functions:
“The Commodity Credit Corporation (CCC) is a Government-owned and operated entity that was created to stabilize, support, and protect farm income and prices. CCC also helps maintain balanced and adequate supplies of agricultural commodities and aids in their orderly distribution.”
Some may recall that in the 90’s there was a big push to get the country off various forms of welfare including farming subsidies. A 1996 farm bill nixed government grain reserves and Farmer Owned Reserves (FOR), the latter of which was intended to geographically spread out the country’s grain reserves to protect against something unforeseen happening to the stockpiles. The reserves are just now running out.
Now that decision is looking to have been a very bad one indeed with this year’s corn crop caught in a perfect storm. One-hundred-year storms flooding the Midwest combined with an 8% reduction in acreage dedicated to corn will amount to a 10% hit on this year’s harvest. Then, too, there’s the rising demand from the ethanol distillers. In 2006, they used 20% of the corn crop, 27% in 2007, and the expectation is that ethanol will absorb somewhere around 40% of the 2008 crop. Though at $7 a bushel of corn, ethanol producers are losing money at today’s pump prices. Yet, since ethanol burns less efficiently than gasoline and requires special equipment, there’s little room to jack up the pump price without killing the market.
Corn is having a serious ripple effect out into the other grain markets and feed for livestock without putting much of a dent in the energy market. That’s got speculators and the hedge funds looking beyond the usual agricultural companies for ways to get in on the action.
By B.P.T., on July 7th, 2008
Exploding gas prices, a housing burst and the shaky state of the stock market have all combined to create a tenuous economy that has already had a direct impact on travelers and vacationers in the U.S. In addition to the weak dollar with respect to the euro, the cost of flying across the pond seems to increase on a daily basis. In an effort to combat high fuel prices, United Airlines has recently joined American in the latest fee taxed upon travelers for what has long been a complementary service – a flier gets to bring his luggage with him!
Not only has international travel been impacted but domestic travel as well, with one of the hardest hit areas being family summer vacations. With gas prices exceeding $4 per gallon, families are rethinking and reorganizing the family road trip. The Travel Industry Association, which develops an annual Travel Price Index, estimated a 6% increase in travel prices in April from one year prior. The major driver of this increase is, of course, gas prices which have increased well over 20% in the past year. This is all in contrast to the Consumer Price Index which increased a seemingly mere 3.9% during the same period.
Families who take the quintessential Great American Road Trip have been directly impacted by these increases. Indeed, AAA recently released a report that estimates the cost of driving a new car at 54.1 cents per mile – a 1.9-cent increase from last year. AAA’s sensitivity to fuel prices is reflected in its online travel planner which lists current gas prices at over 100,000 gas stations in the U.S.
At Lake Bruin, Louisiana, Memorial Day weekend was a crowded day on the lake. A rural oxbow lake near the Mississippi River, the lakeshore is dotted with family homes and holiday camps. Vacationers in the local bait and gas shop were heard discussing the increased number of people. “We think it is because families who usually drive down to the beach or go somewhere else have stayed closer to home this time – gas is just too high!” lamented lake-goers. “There seems to be far more people here for a holiday weekend than normal,” agreed another.
From Hollywood to Reality
Another vacation method families have long used to both limit costs and heighten the vacation experience has been the home exchange. While not a new concept, the idea was popularized in the 2006 movie The Holiday, starring Cameron Diaz and Kate Winslet. The premise is simple: potential vacationers are matched via a website based on where they live and where they would like to visit – and they stay in each other’s homes.
A quick read-through of some of the most popular websites that handle these exchanges, such as HomeExchange.com and 1stHomeExchange.com, will show that most of these homes are very nice abodes. Most profiles tell a bit about the owners as well, revealing a large proportion of professionals, including physicians, attorneys, professors and retirees; some are couples, others have small children. This seemingly affluent group comes with the expected nice selection of homes as well, ranging from suburban McMansions to Caribbean condos to beach bungalows.
However, even within this group of sophisticated yet frugal vacationers, the dynamics are changing. Whereas a year ago many American homes listed were requesting exchanges in Europe, Mexico, Australia and around the world, many recent updates are sticking closer to home. Listings give site members a spot to list where they are interested in visiting. Although there are still many around the world, a higher proportion now lists areas much closer to home than did a year or two ago.
One particular listing in Sarasota, Florida, for instance, states, “We are looking for a place close to home, due to the weakening economy – two days of driving distance at the most.” Another listing in Georgia lists its preferences as Tennessee, North Carolina and Florida. A Sacramento, California, ad requests, “Anywhere in California.” Several Hawaii listings request, “Any other island in Hawaii.” While these types of listings are not singularly the result of the price of gasoline (some people just like to stay close to home), the increased frequency with which these types of requests appear seems to be.
For now, these changes in the travel habits of Americans seem to be only slight. Vacationers are still traveling, just perhaps for shorter distances or driving rather than flying – a tightening of the belt but still relatively slight. With fuel prices steadily increasing, however, the long-term fallout on the travel industry and the great American summer vacation remains to be seen.
By Mark Mahorney, on July 6th, 2008
At over $4 a gallon, gas is definitely putting the pinch on consumers. Wired writes, “No Mocha For Me, Thanks. I’ve Gotta Buy Gas.” We aren’t sweating the little things; we’re simply cutting them out.
The media is self-centered. It loves to write about itself without regard for whether its audience is interested or not. Lately, everywhere I turn I see “the death of print” articles sniveling over the struggling newspaper and magazine industry. They put the blame squarely on the Internet.
I squarely disagree with this assessment. No doubt some advertising dollars have shifted to the Internet and some readers have shifted their viewing to the Internet. So it’s a contributing factor.
But at the heart of it is gas prices. Consumers are having to divert a few hundred dollars a month to gas. Where does that money come from? It comes out of discretionary income, the money we have left over after paying our bills. It’s the money we spend on mochas, newspapers, magazines, and going out to eat.
One of the first things consumers are going to cut back on is newspapers and magazines. They’re still reading, but instead of paying for paper, they’re turning to the Internet and cutting out the cost of delivery. So the media is out the markup.
But more importantly, advertisers go where the readers are. It’s not that advertisers are preferring to advertise via the Internet necessarily, but rather advertisers are ticks and leaches. They go wherever consumers go. And gasoline prices have driven consumers to the Net.
Will they go back to print when times are better? That depends on how long it takes for the economy to recover. In part, they will become used to getting more of their info via the Net. Technology companies are finally seriously committed to coming out with products that make getting information from the Net easier and more portable. We’re seeing more UMPCs and Netbooks offerings, larger screens on cell phones, and better batteries. And the media is making their content easier to access via feeds.
Eventually, the economy will improve as it always does, but by the time that happens we may have already moved on and left print behind.
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