Month: May 2010

Boycott BP, Or Not – A Lesson in Distribution

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The BP oil disaster has been on everyone’s mind lately and for good reason. We won’t know the full affect on the region for months or maybe years and the spill is another haphazard mistake from BP, the last one being the Texas City refinery explosion. I know BP will clean up the mess, it’s their responsibility (though the federal government by law has a responsibility as well), what bothers me is the chatter on the internet and television about boycotting British Petroleum.

I saw these two things this morning and decided that something, no matter how little audience I get, needed to be written. There seems to be a large misunderstanding of how the industry operates and how people are able to pump gasoline into their cars each and every day. I aim to clear that up, if only by a little bit.

First, it needs to be known that oil is traded and sold at a very fast pace all day long. Because of this, refineries share crude oil, or feedstock. This type of sharing allows the refineries to be constantly supplied and making end products. Some refineries only make more feedstocks, usually for chemical plants. Others produce gasoline and diesel fuel and chemicals. The gasoline that is produced is moved to terminals that are located all over the country in strategic places. These terminals are privately owned and are essentially holding facilities for gasoline. There is no segregation of brand at these facilities, just stockpiles of fuel.

The local gas stations then send their trucks to the terminal to buy a load of fuel for sale at their station. En-route to the gas station the truck driver may mix an additive to the fuel depending on what brand it is being sold under (Chevron, Shell, etc.) and then pump the fuel into the underground tanks at the station. What you end up with is the exact same gasoline at every station, minus the additives. There is no discernible way to know where your gasoline came from. Even though a gas station has a BP logo, Shell may have been the one to refine the oil.

The same essentially goes for other oil based products.

What is the point in all of this? Well, the idea that one can boycott BP and make it go under is based on the false premise that one can distinguish BP gasoline from any other. In all of this, people are looking for someone to blame, to make pay and they’ve understandably gone after BP. However, at the same time, these same people could actually be making a difference by volunteering to help clean birds or scoop up crude. But, I guess it’s easier to attempt to boycott something that is near impossible to boycott rather than actually doing something.

The Responsibility of the Public Sector

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As we have already seen in Greece, poor management and the continued growth of government without reigns to control spending are a dangerous combination. The question this poses then is, where do we stand? At the city level, at the state level, and at the federal level, is the public sector being a responsible spender of cash? Should they be? The fact that my wife and I both work in the public sector makes this a personal issue and though neither of us would want to lose our jobs, I think the real answer is that there is a lot of waste at all levels of government.

It is my belief that the public sector should be good stewards of our tax dollars, just like we should be good stewards of our own money. Though, that may not be the best gauge with the number of Americans in debt slowly rising. What brought me to this notion of responsibility in the public sector? Observations. It seems as though efficiencies have been lost simply because they are not needed when one is spending someone else’s money. I believe it’s endemic to the idea that funds are unlimited, therefore one can spend whatever one likes. But shouldn’t it be the opposite? Shouldn’t efficiency be the norm, not the exception? Sure, we should not skimp when it comes to things that are absolutely necessary, but to spend for the sake of spending (to seal in one’s budget) is beyond wasteful, it’s idiotic.

Instead of school districts buying iPads, focus on calculators, paper, or other necessities. Technology will come eventually, but the goal is to provide education, not the newest gear, to students. The same applies to city and state services. The budgets need to be adjusted to run lean and mean. These things do not generate revenue so why should they be treated like they do? If a private company was to come in and take over a city service, I guarantee that they could find places where there is significant, unnecessary spending taking place. Not only could that company make the spending go away but they could keep service levels the same, if not improve them.

There is no reason that our public officials cannot be good spenders of our money, it’s simply a choice. Of course there might be some downgrade in service, but the end result of keeping the service around rather than possibly losing it when the budget becomes unsustainable seems worth it. With the current way we are doing things, something has to give, the question is when. We can keep that “when” at bay and still employ people and provide services that are necessary for the general public to go about their daily lives.

So, what do you think? Should the public sector be fiscally responsible or should they be free to spend as they see fit?

Lower Taxes in 2009

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I came across a quick linked post from John Gruber about the tax bills for 2009. He quotes a USA Today article saying this –

Federal, state and local taxes — including income, property, sales and other taxes — consumed 9.2% of all personal income in 2009, the lowest rate since 1950, the Bureau of Economic Analysis reports. That rate is far below the historic average of 12% for the last half-century. The overall tax burden hit bottom in December at 8.8.% of income before rising slightly in the first three months of 2010.

“The idea that taxes are high right now is pretty much nuts,” says Michael Ettlinger, head of economic policy at the liberal Center for American Progress.

First, I have to point out that I think it’s hilarious what some of these lobbying groups call themselves (Center for American Progress). Don’t get me wrong, the Republicans have some funny ones too. Maybe if we just called them what they were, lobbyists, life would be a little more drab, but at least it would be less confusing.

Now, on to the real point. I don’t disagree that tax bills were lower in 2009, but I think the idea that lower taxes are what people who are unhappy with the administration want is asinine. In the USA Today article, Dennis Cauchon actually touches on the real issue, then skims right over it; The issue of smaller government with less need for our tax dollars. If the government was to run a tighter ship then tax bills could be even lower, imagine that! The other issue that the article really doesn’t address is that of the recession. If the recession was starting or in full swing in 2008, then people surely lost their jobs in 2009, making tax bills smaller out of attrition in the workplace.

Anyway, my point in all of this is, less of a tax burden is great, but when there isn’t enough money to support the budget, we should be worried. I’m sure a few years ago Greeks were glad that their tax bills were lower, now I’m betting they would just like a job.