Business & Economics: September 2006 Archives

It looks like someone at 7-Eleven reads my blog because the company is dropping CITGO as its gasoline supplier at more than 2100 locations.

Convenience store operator 7-Eleven Inc. is dropping Venezuela-backed Citgo as its gasoline supplier at more than 2,100 locations and switching to its own brand of fuel.

The retailer said Wednesday it will purchase fuel from several distributors, including Tower Energy Group of Torrance, Calif., Sinclair Oil of Salt Lake City, and Houston-based Frontier Oil Corp.

A spokeswoman for Dallas-based 7-Eleven said its 20-year contract with Citgo Petroleum Corp. ends next week. About 2,100 of 7-Eleven's 5,300 U.S. stores sell gasoline.

Citgo is a Houston-based subsidiary of Venezuela's state-owned oil company, and the foreign parent became a public-relations issue for 7- Eleven because of comments by Venezuelan President Hugo Chavez.

A perfect example of why government regulation isn't required to shut idiots up -- the market can take care of itself.

The New York Times has a voyeuristic article about "Why the Rich Go Broke" that is absolutely fascinating. There are lots of details about particular people, and regarding celebrities and athletes specifically:

"You have people who are struggling for a long time and then overnight, boom, they hit it," says Shelley Finkel, Mike Tyson’s manager. "If they don’t have someone watching out for them, and some emotional stability, it will be very hard for them to be grounded financially."

MR. FINKEL, a genial, elfin 62-year-old New Yorker who began his own career promoting a A-list rock stars like Jimi Hendrix, said he had always advised musicians and athletes to protect their wealth by socking away a chunk of their earnings into annuities or pensions. Few of them have heeded that advice, he said, including Mr. Tyson, who Mr. Finkel believes earned and lost more than $400 million in his boxing career.

"It’s very hard to tell them ‘Don’t!’ because they love the instant gratification," Mr. Finkel says. "I think the human in general is vulnerable and whatever their weakness is it’s going to get exploited, particularly around money."

I enjoyed reading the whole thing... even though I'll probably never be rich, I enjoy knowing that I'm more financially savvy that most of the people who are.

I haven't seen this program promoted much yet, but Wal-Mart is planning to sell generic prescription drugs for $4. What an evil corporation!

"Each day in our pharmacies we see customers struggle with the cost of prescription drugs," said Wal-Mart CEO H. Lee Scott, Jr., in a statement. "By cutting the cost of many generics to $4, we are helping to ensure that our customers and associates get the medicines they need at a price they can afford."

The initiative would be the fourth time since last October that Wal- Mart has moved to improve health benefits.

Wal-Mart's recent moves to improve its health care plan include relaxing eligibility requirements for its part-time employees who want health insurance, and extending coverage for the first time to the children of those employees. Part-time employees, who had to work for Wal-Mart for two years to qualify, now have to work at the company for one year. This year, Wal-Mart also expanded a trial run of in-store clinics, aimed at providing lower cost non-emergency health care to the public.

Last October, Wal-Mart offered a new lower-premium insurance aimed at getting more of its work force on company plans.

Wal-Mart contributes greatly to America's standard of living, both by providing more than a million jobs and by selling all sorts of stuff at great prices. Does anyone know if Wal-Mart manufactures these generic drugs itself?

Everyone knows that the three most important factors in real estate are location, location, and location, but many people may not consider that the same principle currently holds true in the development of space. The recent puff piece about astronauts losing a bolt during a spacewalk reminded me that every ounce of material lifted into low earth orbit is incredibly valuable.

Spacewalking astronauts worried they have may have gummed up a successful job connecting an addition to the international space station Tuesday when a bolt, spring and washer floated free.

Astronaut Joe Tanner was working with the bolt when it sprang loose, floated over the head of Heidemarie Stefanyshyn-Piper and skittered across the 17 1/2-ton box-like truss that they were hooking up.

A bolt, spring, and washer may only be worth a few dollars on earth, but those same pieces of equipment are worth thousands of dollars once they're in orbit. Considering that cargo lift costs for the Space Shuttle are currently around $10,000 per pound, most of the material in orbit is far more valuable because of its location than because of its design or composition.

As a side note, one of the most important fields of basic research is figuring out how to get stuff into orbit more cheaply. Until lift costs drop dramatically, don't expect to see hotels in space.

Update:
Oh no, they've lost another bolt!

This is a brilliant idea that's directly analogous to time-share condos: car sharing. Just like time-share owners don't need a condo in Aspen 52 weeks a year, many people don't need a car every hour of every day. People who have to commute to work by car can carpool, but what about others who only need a car once or twice a week to go to the store, or one weekend a month for trips? Owning your own car can be convenient, but every second it sits idle, unused, is a waste of your money. Car sharing is intended to reduce that idle time, reduce the number of cars per capita, and thereby reduce the cost of car use for suitable travelers.

Marc Bovee is committed to not using his car -- and that's quite a commitment in wheels-crazy Los Angeles.

Bovee's Jeep Wrangler has been garaged since August 2005, in part because he uses a vehicle-sharing service called Flexcar.

Whenever the bus or subway won't get him where he needs to go, Bovee, 43, visits the Flexcar Web site to find and reserve cars, which are parked in designated lots and garages around L.A. Once he arrives at his chosen vehicle -- often a hybrid, although sometimes just a fuel-efficient Honda Civic -- Bovee opens the door by placing his membership card over a reader installed on the windshield. He gets the keys from the glove compartment and drives off, returning the car when he's done buying groceries, running errands or taking a weekend trip. ...

Flexcar, which is based in Seattle, says its average member spends $80 a month on the service, a far cry from the typical $863 monthly cost of maintaining a midsize car in Los Angeles.

Such a commercial operation is not a great option for suburbanites who don't have mass transit available and a high enough population density to make car sharing profitable, but non-profit cooperatives like Dancing Rabbit might be viable alternatives for friendly neighborhoods.

Yet another new economic model made vastly more practical by internet technology.

Here's a handy miles per dollar calculator that you can use to determine how much you spend commuting each day. At current gas prices, my commute costs me about $2.50 round-trip. The calculator would have been even cooler if you could input your car type and have it amortize the car's value over your mileage.

(On a side note, I have a friend from Canada where they use "kilometers" and "litres" to measure things, and yet their cars are still rated by mileage. Just to make things more confusing, the units they use are "litres per kilometer".)

(HT: Sound Mind Investing (registration required).)

Despite the pointlessness of linking to anything by Glenn Reynolds, here's an interesting piece of his about cottage industry and societal change. Nothing revolutionary, but he captures several of the effects that are likely to emerge from the remaking of modern industry.

Crime: Crime in the suburbs increased once the population of stay-at-home moms was diminished. Neighborhoods had fewer sets of adult eyes around, teenagers got less supervision, and two-career couples were more distracted. Will that change? ...

Family: One of the standard negative depictions from the Gray Flannel Suit era featured a disconnect between the world of work -- to which fathers trudged off en masse to downtown office buildings where they performed inscrutable tasks, from which they returned exhausted and in need of martinis -- and the world of family. Kids had little idea what their fathers did; fathers knew little about what their kids did. Husbands and wives moved in different worlds. ...

Economy: If more people are free agents, working at home or out-and-about rather than in traditional offices, then businesses that provide them with useful services and amenities will flourish. ...

Traffic: Proponents of light rail and other sorts of mass transit tend to portray these systems as the wave of the future. But the "commuter rail" model assumes the presence of, well, commuters. ...

Politics: I suppose I should save this for another column, too. But here's one note: people who are self-employed are far more aware that there's no such thing as a free lunch, and far more likely to look at the bottom line.

As he frequently encourages: read the whole thing.

My mother-in-law supports herself by working from home as a freelance writer and editor, and since I'm in the software industry I know a lot of people who do computer work from home. I myself work for a large company and like it quite a bit, but then I also suffer few of the ill-effects that plague most such workers: I make my own schedule and work on things I like.