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The Economics of Oil

Planet OilThe price of oil is on everyones mind right now. Gasoline prices have sky rocketed and ‘experts’ are being interviewed on cable news shows around the clock. Some ‘experts’ are blaming sky rocketing prices on investors driving the price of oil up, while others point to more concrete issues as to why the price of oil is on the rise.

Some factors we should look at to understand the current oil markets.
1. About 85 million barrels of oil are produced each day.
2. About 86 million barrels of oil are consumed each day.
3. Global consumption increases by around 2.5 million barrels of oil each day.
4. A barrel of oil is about 19.5 gallons
5. The average oil company makes about 10 cents of profit per gallon of gas.
6. The US federal government places a 18.5 cents per gallon tax on all gasoline.
7. The US consumes about 20 million barrels of oil each day. That is 390 million gallons of oil each day.
8. The US produces just under 6 million barrels of oil each day.

Now I want to make some logical conclusions based on the data above.
1. Globally more oil is being used than is produced, which means stored oil is being utilized to meet current demands. (Not a good scenario, and certainly not sustainable.)
2. Global demand is increasing at a rate of about 912 million barrels more than current output each year at current growth rates. Estimates are that growth in China and India will be greater than current rates. So there is a good possibility that it could easily be a 1 billion barrel shortfall annually very soon. ( literally like 2-5 years from now )
3. Oil companies only have a margin of 10 cents to play with. So even with massive government controls the price of a gallon of gas would only drop one dime if oil companies were forced to make zero profits. Government subsidies could lower prices, but where will that money come from? The Federal government could also bring down the cost of gas by eliminating the gas tax, but only by 18.5 cents. So there is about 29 cents that can be cut off of the top of the price of a gallon of gas if we force oil companies to operate as non-profits, and for the Federal government loses all funding for road projects and maintenance. As sad as this sounds 29 cents isn’t much of a savings. And would it be worth it to have no new roads and current roads to be never be maintained, or for oil companies to have zero incentive to do business well?

So what can be done about gas prices?
Honestly, not a whole lot. When demand is so much greater than production, costs will be driven upwards. As China and India develop this issue will only continue to get worse. The oil companies will continue to be wealthier than anyone could imagine, but at some point the demand will outweigh production by such a large amount that oil will no longer be an affordable option for fuel. When will that be? I have no idea. But I wouldn’t be surprised if we are only 20-30 years away from this.

Now, if large quantities of oil were to be found and pulled out of the ground this issue could be resolved by once again making production equal or greater than demand. But the idea that we could pull enough oil out of the ground fast enough to meet the global growth demand for oil is not very likely, if anything new oil could hold off the scenario above for some period of time, but not for long.

This is the time to be researching real alternative fuel sources. They may be expensive now, but at some point they will be less expensive than oil, and we can’t simply wait until oil is no longer affordable, we need to be developing a plan now. I am a big proponent of solar technologies since when the sun is gone we will all be gone too, so it is a non-renewable resource that is essentially unlimited as far as we need to be concerned. A real solution would be to harness renewable resources rather than re-focusing on another resource that will be limited, like natural gases.

I have no doubt that the oil crisis will also start a third global war at some point. Oil makes our plastics, fuels our transportation, powers our gadgets and our homes. Our entire way of life is dependent on oil. The US, China nor India will accept rolling back to the stone age. Fighting will happen unless alternatives to oil are found and are used on a global scale.

Oil investors may be driving oil up artificially at the moment, but the facts above remain. And those factors are far greater than the investors. Oil is never going to be ‘cheap’ again. There is too much competition for a limited resource, too much demand, and too little production. It is a matter of global security that alternative fuel sources be utilized, but as long as so much money can be made as oil demand goes up, I am doubtful that anyone will take action and have the foresight to do what needs to be done to insure our nations, and the planets future security.

Over the weekend I was able to get my hands on the CECT p168+. It is an unlocked GSM phone that will work on pretty much any GSM cellular network in the world. And it resembles the famous iPhone that everyone is drooling over.

cect p168+

I want to begin this review by saying that if you love the iPhone interface and are considering this iClone, the CECT p168+ is not for you. You will need to get an iPhone to satisfy your phone craving. Trust me you will end up being disappointed. The initial screen of the p168+ and the physical look of the phone are really where the resemblance with the iPhone ends. If you are wanting a phone with a lot of features, or simply want to have a conversation starter the CECT p168+ might be something you will be interested in.

The CECT p168+ is a phone with a lot of features for the price. (available on eBay from $100- $200 ) It is a touch screen phone that also comes with a stylus. The stylus is handy for using the keyboard that appears on the screen, just about every other function you can simply use your finger for. (if you have gigantic fingers you may need to use the stylus for everything).

The phone comes with two batteries and the phone charger can charge the phone and the additional battery. I haven’t had a phone that has come with this since I was just out of high school (over 10 years ago). My first thought was “Oh man, the battery life is going to be horrible.” However, yesterday I used the phone with my Bluetooth headphones for two hours and talked on it for about an hour yesterday and my battery only dropped one bar. So, I am pleased with the battery life so far.

You can also use the included USB charging cable to plug the phone into a PC or a MAC and access the Micro SD Card. This made it very handy to move my .mp3 files over to the phone. ( To accomplish this I did have to make a setting change in the phones engineering mode, and I was really annoyed by this. )

The MP3 player on the phone works. I am not extremely happy with it since it can’t use playlists. But since I will probably only be using it occasionally as an MP3 player this isn’t a huge issue for me. It also displays the MP3 file name rather than the ID3 tag name for the song. This is another annoying little issue.

Bluetooth works perfectly on the phone. I have connected my Bluetooth headphones and headset without any problems. (Motorola M9 headphones and Anycom Headset)

I have taken a couple of pictures, and the quality is ok. But it is a phone so I don’t expect amazing picture quality. This will be handy for those times where I bump into Bigfoot or the Lockness Monster and will need proof so people won’t think I am crazy. Other than that I doubt I will use the camera feature much. The phone can also do video, and I haven’t messed with this at all. I doubt it is great quality video, but hey everyone gets excited about low quality video on youtube.com now, so maybe I can take some clever videos and join the craze.

Overall this phone does just about everything I would want a phone to do. I am very pleased with the CECT p168+. The only feature that I really wish was present would be to say a name and have the phone call one of my contacts. (My last couple of phones have had this feature) I used this feature often, and now I can’t do that. My workaround is to use the speed dial feature on the phone to call 1 of 9 people with only a couple presses on the phone.

I would rate this phone an 8 on a scale from 1-10. I know a ton of people are wanting this phone because they want an iPhone. I want to reiterate that if you are one of those people you will be disappointed in this phone. If you want a phone with some great features or is eye catching the CECT p168+ might be a good addition to your cell phone collection.

Negatives
- The USB port is not standard on the phone so you need their special cable. (it comes with one though, so this is good)
- The USB port on the phone is also the headphone jack so to plug in normal headphones you will need to find an adapter (The phone does come with some headphones you can use.)
- No Voice Dial Feature for the phonebook
- The MP3 player can’t use playlists
- To use the phone as a storage drive you need to change some settings that are far from obvious
- No 802.11x Wi-Fi access

Positives
- MP3 Player
- Camera
- Digital Camcorder
- Picture Viewer
- Video Player
- MP3 Ringtones
- Touchscreen
- Slide to Unlock

If you are looking for setting changes or tons of details about this phone I found a discussion forum http://cectp168.freeforums.org Updated: http://forum.kevozzy.com/viewforum.php?f=11 , where you can register and get tons of information about the CECT p168+.

I am in a competition with others at my Gym to be on the Top 10 list this month. I successfully achieved this last month and was well on target to be at 4th or 5th place a few weeks ago. Then I had my ‘incident’ that kept me out of the Gym for over a week. Now I am struggling to stay in the number 10 slot. A few days ago I thought this was going to be fairly easy to do, but the competition is tougher than I had expected. I am no longer certain I will be able to keep the number 10 spot. And I may not have an opportunity to go to the Gym tonight after work since I need to work late.

top10 1/31/08

Hopefully the Town Hall Meeting tonight will be short so I can get into the Gym and do at least an hour of intense cardio to give me a boost in the standings.

Yesterday the NFL informed a few churches that they are not allowed to have any Superbowl parties that use the word Superbowl in the name as well as being shown on a screen larger than 55 inches. The NFL says they are simply enforcing their copyright, so in response many Churches are canceling their parties. First Christian Church of Fort Myers is one of these Churches. First Christian Church has canceled their party because to disobey the law knowingly is not something anyone should do. So I don’t disagree with FCC’s decision. But I am now wondering if the NFL will end up changing their copyright rules. There are advertisers shelling out huge dollars for a commercial spot during the Superbowl. The most expensive advertisement slot in North America any given year. So will the advertisers that are paying all this money be pleased that hundreds of thousands of people may not see their commercials because huge parties have been shut down by the NFL? I think the NFL will have enormous pressure to change. Money talks in this culture, and there is a lot of money involved in this. I think if the NFL does not recant within the next 24 hours they will by next year. These huge parties are good business for the NFL, not a hindrance. The NFL grants Sports Bars an exception, which allows them to show the game to the public. They can make a similar exception for non-profits to do the same.

So in summary, I understand the NFL is simply enforcing their copyright. They have every legal right to do so. But I think in this case it is distasteful and will not benefit the NFL. And for me, I may just not watch the Superbowl this year since the party I was going to has been canceled and I have no desire to watch the Big Game in a Sports Bar.

Update:

It seems the NFL is giving a bit on their copyright rules.

Here is an excerpt from World Net Daily:

A written statement given to World Net Daily by the NFL late today made no mention of many of those restrictions. It was attributed only to “an NFL spokesman.”

“The National Football League has absolutely no objection to churches and others hosting Super Bowl viewing parties as long as they do not charge admission and show the game on a television of the type commonly used at home.

“We are simply following copyright law and have done so with regard to any type of commercial establishment including hotels, theatres, museums, schools, arenas and others.

“This is nothing new. It is a matter of longstanding policy and the law.

“We have no rules that relate to viewing at home on any type of television.”

So the only question I have now is. “Is it legal for a Church to project the game onto a wall?” Is projection considered a television by the NFL or is projection still not allowed? Maybe we will see more clarification early tomorrow morning.

Sources:

World Net Daily

Bell State Daily News

StarTribune

Zuned

This is an article that I just read by Michael Robertson that made me realize how the download music business is really messing with people.

October 5th, 2006

Every week at MP3tunes we hear from people who have lost all or a portion of their iTunes music (it’s often motivation to get ‘music insurance’ and open a $40 locker with unlimited storage). While we’re happy to have a new customer, it’s sad when someone loses their personal possessions. Their loss is often tied to a DRM (digital restricted music) problem. Music wrapped with restrictions like songs from iTunes aren’t really a purchase, but rather a rental. Like all rentals they come to an end and you’re out on the street with nothing. It’s just a matter of time before one of the following happens:

- Technology company changes rules, technology or strategy. See: Your Music Goes Flat
- A hard disk crashes.
- Computer is stolen, broken or upgraded.
- Exceed number of allowed devices (usually some are lost, stolen or broken).

I’ve been looking for a good verb to describe losing all of your music to DRM because it’s increasingly common and I think I have one: zune.

Sample usage: He had an extensive classic rock collection that got zuned.

Now if you’re thinking that zune sounds familiar it’s because the press has been abuzz about an upcoming MP3 player from Microsoft called Zune. At first glance the features seem compelling but my prediction is it will be the biggest flop of 2007 with less than 50,000 units sold worldwide.

The wow feature of the device is wifi - a wireless way to connect to the Internet. Great - I can get music directly to the device without a PC! Wrong. In a baffling move Microsoft has crippled the wifi so it cannot load music from the Internet. You’ll need to attach it to your PC and run their software just like every other MP3 player. The wireless connection is only used to connect to another Zune device to move songs which will then vaporize after 3 days or 3 plays even if you own the music and both devices. Astonishingly the one feature which could fundamentally improve upon the iPod is worthless. If this device sounds familiar it’s been tried before with the MusicGremlin which I wrote about earlier this year when I called it the “most disappointing device” from this year’s CES (Consumer Electronic Show).

In spite of the larger display and capacity the Zune is inferior to the MusicGremlin because it zunes your entire purchased music library. Microsoft made a corporate decision to abandon their previous technology called “Plays for Sure” and turn it into “Screwed for Sure”. Anyone who purchased music from Rhapsody, Napster, Buy.com, Wal-mart, BuyMusic, etc. will discover that music is unplayable. (Of course iTunes music won’t play either because Apple doesn’t play nicely with others.) You’ll be required to re-purchase that music or go without.

The danger with DRM is that it gives corporations the power to change the rules of the game anytime they think it will benefit their bank account, even if that means zuning your music library. There’s no better illustration of this than when the world’s largest technology company curtails support of their OWN technology abandoning their hardware partners, music stores and most importantly customers they convinced to use Plays for Sure. Microsoft will surely claim that they’ll continue to support Plays for Sure, but their actions speak louder than their words - it won’t even play on their own music players! Plays for Sure is dead for sure and it’s going to its grave with hundreds of millions of dollars worth of music fans’ digital music crammed into the coffin.

Microsoft will likely spend nearly $100 million in marketing the Zune. The press will give them tens of millions of dollars in free marketing. In spite of this publicity the Zune will be an expensive failure for Microsoft because consumers aren’t stupid. As the saying goes: Zune me once, shame on you. Zune me twice, shame on me.

–Michael Robertson

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