Big Oil Profits Don't Add Up

While my college economics is a bit rusty and possibly outdated, I fail to comprehend the market forces at work in this period of economic turmoil and new record high crude oil prices that continually lead to atypical profit figures for the world's big oil companies.

Is there any other industry that directly benefits from the cost increases of their raw materials? I think not. Typical forces as a result of increases in material cost result in lower margins, at least temporarily before prices can be increased, as concurrently, marginal supply quantities are reduced or dropped off due to the new (higher) cost prohibitions for these supply sources; also driving up prices to a new equilibrium of supply and demand quantities. These higher prices force consumption cutbacks by consumers, investment in alternatives and the like, which add the the pressures of lowering demand - which in turn must (you would think) also effect profits negatively [at least in the short term].

So while I have no specialized insight into the petroleum industry and their ability to "print money" in a logically suppressed economic scenario, I still am troubled by how - even logically this increase in raw material cost, not only has no ill effects, but that it results in the opposite anticipated effect. Additionally I would love to be able to apply this "inverse cost effect" to other industries, there's a fortune to be had in consulting fees alone.

So let us over simplify the model; at $3 a gallon, let's assume that $1 a gallon is material and $1 a gallon is processing and overhead, for a net profit $1 (way over simplification, but hang with me). If my material cost instantly go up to $1.25 and my processing and overhead remains the same - they have some variable cost here, but not THAT variable in the short term [less than 6 months], so my profit is directly reduced by that $0.25 increase. Even if I could directly tie my pricing to my material cost and immediately charge $3.25 a gallon, that would leave my profits identical only assuming the demand was the same. Which in aggregate seems unlikely.

So in this simple model how do I get my profits to rise, when material costs increase, and make up for the lower sales (however small that may be)? Logically - and mathematically, if I have this right - I would have to IMMEDIATELY increase the price by a greater amount that the increase in my material cost. Isn't his price gouging? This of course only works in a product with a very inelastic demand curve - such as gasoline.

But there is something inherently 'wrong' about this from a society perspective, there is certainly no incentive for the big oil companies to work to negotiate lower material costs (unless they maintain the higher pricing levels - which increase their profits - that is gouging, isn't it?), nor are they incentived to increase efficiency or develop alternate raw materials or sources...they're already making RECORD PROFIT.

My economic understanding has passed the way of the rotary phone. Man I wish I owned a oil company.

Baseball as Religion

This is no attempt to diminish or admonish the traditional religious conviction and beliefs, nor is it a treatise to analyze the influence and importance on the human race; supported or unsupported by the deities of faith. It is simply an assertion that Baseball for those that are devout, is a religion.

Baseball has its rituals, repeated and expected with fervent piety; whether its the throwing out of the first pitch, the singing of the national anthem, or the simplified benediction of 'Play Ball!' The drawing of the faithful, through promise of deliverance is the message to the masses and the faith in that belief that sustains them.

The cycle of renewal that begins each spring and is celebrated each 'opening day' in each parish of green and brown, of sun and wind; a veritable cathedral to the game they love. Their faith in their collective ability to influence the fate of the results and triumph through the long tribulations leading to the crowning of champions of cold October days.

And those left less fortunate can take solstice in the support from their fellow man - if in nothing else but a tax distribution - and believe again that anything can happen when the cycle begins again. Even though the colors and the allegiance make for distinctions among this congregation, it is all still baseball and makes us all brothers and sisters in this pastime.

Death, Taxes & Microsoft

The triad of the inevitable. The source of great frustrations and consternation. The banes of our very existence. In a fit of 'compfrustration' through attempting to deal with the, oft put off, tax preparation and the being put off through near continuous and Illogical hindrances, permission denials, and cryptically or ‘holier than thou’ error messages from my Vista operating system, reminding me that no matter how much I knew; I knew nothing.

I cannot explain all of the technical details about my problem but I'll summarize it as:
I am running Vista Home Premium, as purchased (no upgrade), in attempting to load a tax software [adding tax frustrations on top of computer frustrations: a defensible insanity plea if there ever was one] the load kept failing with error 1935. Tax Software's support group had no resolution.

Separately I had a problem around "Windows Update" failing for some time with an error 80073712. A search through windows support for this particular error yielded nothing, a veritable random number, a false crumb on a trail that lead nowhere. My fellow bloggers and messages posters detailed challenges and horrors of no resolution, no fix from Microsoft. Others suggested removal of secret or hidden files, that make one wonder how much time this problem had cost people to even find these files, let alone the desperation to see what happens when they delete them.

The logical nature of my thinking surmised that there must, nay; had to be, a link between these two problems and if there was a life and death god, or a tax god, or even a OS god, that this deity would show mercy on the suffering to resolve two problems with the resolution of one. Which one would be the next logical question?

Clearing the windows update folder did nothing for me. A few other suggestions tried, all sounding riskier and riskier. I was venturing into destructive territory I felt like the astronaut in the movie 2001 trying to disconnect HAL by being where I should not be, nor should have to be. The frustration boiling my blood and pressing to my face as the steam inside seeks its escape. The course of last resort, the apparent last act of desperation that those before had gone, and seemingly Microsoft’s permanent answer to the problem, was to reinstall Windows.

I had one more thing yet untried. Through some cryptic command line code I had to remove a pending.xml file in winsxs folder (not an easy task) and the windows update program had to be reloaded (which could be done previous due to another 1935 error). In an act of mercy, or display of a miracle, or simply the alignment of the universe, it worked. This fixed MY 1935 error and my error 80073712.

This for me highlights the true power of the internet. Message boards and blogs to share information, catalog possibilities, highlight the unmentionables, and help people get on. So until the next ‘compfrustration’, I was down to the more reasonable two inevitables to overcome. And at least only one of them has a known deadline date.