Global Variance in the Price of Gas
Another riveting article title COMING AT YOU! I should write romance novels.
Anyhow, I know I write about oil and gas almost as much as I write about retail. Stories about fossil fuels tend to dominate financial news because fuel determines how much transport costs, and transport affects many businesses. Fuel prices can even affect how some businesses develop- back in January I wrote about the state of “brick and mortar” businesses. These businesses must routinely pay to have product shipped to stores all over the country. That can get pricey, and as such many retailers are exploring digitized content like e-books or MP3s which do not require physical delivery.
So, gas gets things from one place to another place. Great. But what makes gas cost more or less from country to country? CNNMoney.com posted a great article about why gas prices “at the pump” vary so much internationally. It can mainly be chalked up to government taxes or, alternately, government subsidies. Some countries like Norway tax their gas heavily (gas is currently $9.28 per gallon there). Other countries like Venezuela decrease the cost of gas for consumers (Venezuelans paid about 12 cents per gallon during the epic gas hikes of 2008). The United States falls between these two extremes.
Elasticity of Demand
Elasticity of demand is an important concept within the consumer sphere. Businessdictionary.com defines “elasticity of demand” as
The degree to which demand for a good or service varies with its price.
The typical play is for demand to INCREASE as price DECREASES and vice versa. I will buy one delicious Cadbury Cream Egg if they are a dollar apiece. I will buy two if they are 75 cents apiece and I might well buy none if they go up to five bucks apiece.*
A good or service is said to be “elastic” if this variance is very strong- for instance, when the cost of a car goes down the company might sell more cars. In that case (indeed, in most cases) cars are said to be “elastic”. An example of an “inelastic” product is one that people just need regardless of price. Necessities like bread and toothpaste are examples of inelastic products.
Image Credit: Salvatore Vuono / FreeDigitalPhotos.net
*All lies. I will buy as many of those heavenly confections as will fit in my sadly INelastic pants pockets no matter the cost. They are the greatest things ever. I live for them and through them. All praise be to Cadbury.
Proud Iowan Moment
Check it out! According to an article in my hometown Des Moines Register, Men’s Health magazine has named Des Moines one of the 18 “coolest places to live in America”. I couldn’t agree more.
The article cites our growing technology sphere and cultural hotspots like the Pappajohn sculpture park. It also touts Des Moines as having a cost of living 10 percent below the national average (I didn’t know it was that low!). The article kind of goofed up listing Dell as a “strong presence” in the local employment scene, but whatever. The thought is there.
My favorite part about living in Des Moines is how we have everything a city boy like myself wants and needs, but in many cases we have JUST ONE. Just one Trader Joe’s, just one Apple store, just one art museum, just one Imax. Why is that a good thing? Do I enjoy driving all the way over to West Des Moines for fancy groceries or first-hand iPods? Not exactly. But there is something cozy about the shared experience- if someone says they “went to the Apple store” last weekend, I know exactly where they’re talking about. It creates a unified city spirit in a way.
Go Des Moines!
Wal-Mart Takes Sustainability Into its Own Hands
Wowzers. This article in Advertising Age absolutely delights my imagination. Apparently Wal-Mart has a set of policies that rewards suppliers who adhere to certain sustainability parameters and initiatives. These include reducing greenhouse emissions, investing in “community-development” activities, and even reducing sodium and sugar in food products!
There’s more: old Wally World is actually spearheading an initiative to create a “Sustainable Product Index” that they can slap on products. Initial going has been tough, but they are 19 months into the effort and show no signs of giving up.
Like any half-aware midwesterner I grew up nursing a wary love-hate relationship with Wal-Mart. Or should I say, I had a hate-hypocrisy stance whereby I railed against Wal-Mart while still shopping there on a more or less regular basis. A lot of recent developments are really making me question the dogma. I still believe that Wal-Marts squash local economies, and that’s awful, and their treatment of employees is suspect, but… but… now things are more complicated.
Regardless of my personal beliefs, Wal-Mart is a treasure trove of retail case studies and general interest. I will continue to keep a keen eye on their social and environmental policies (and watch out- I might take a look at some of the economic aspects as well).
Retail Poised for Big Gains
Sure, oil prices are skyrocketing and rising gas prices might doom us all. Let’s not worry about that right now. Check out what’s going on in RETAIL! According to this article on Marketwatch, retail is set to make a big splash when February numbers are reported. Year-on-year sales are set for a whopping 9.3% gain, the largest gain since March of 2000.
We are still expecting a small slide in consumer confidence due to the aforementioned oilmaggedon*, but this retail health should help sustain economic growth until the world’s political stage stabilizes a little bit and pump prices head back down.
*I should probably trademark that.
What is Organic?
Certainly not that box of Cadbury eggs I put down yesterday, am I right? Heh. I kid, I kid. The actual definition of “organic” is
Big business. Very lucrative.
I guess I’m feeling ornery tonight. This is all true, though- organic food is a $26.8 billion industry in the U.S., and it’s been growing at about 20% annually for the past 15 years according to this Times Leader article. Through the dot-com bust and the recent recession, “organic” has remained a hot label that keeps people spending. But what exactly is “organic”?
The precise definition of “organic” in the U.S. is maintained by the Department of Agriculture. According to their website,
Organic production is a system that is managed in accordance with the Organic Foods Production Act (OFPA) of 1990…
The referenced OFPA is a living document that was most recently amended in 2005. It is a fantastic and relatively easy-to-read guideline containing many worthwhile definitions and statutes. You can find the PDF version here.
So, loosely, “organic” is whatever the government says it is. Farmers, manufacturers, and handlers must partner with the Department of Agriculture to obtain organic certification in order to reap the competitive advantages of the organic label. After clicking around on the National Organic Program’s website a little bit, I found a cool document that more or less lays out their requirements in raw, specific terms. You can find the outline here- click around for yourself. It gets really juicy around section 205.203.
A little light reading to start off your week!
Unemployment Drops to 22-month Low
Woohoo! The national unemployment rate dropped to 8.9% in February, its lowest point since April of 2009. Check out the lack of “yes, but”s that I gleaned from a CNNMOney.com article:
- The drop was NOT caused by people giving up hope. The number of people who do not count as “unemployed” because they aren’t looking for work remained steady at 2.7 million.
- The drop was NOT caused by temporary government hiring. Quite the opposite- state and local governments cut 30,000 employees.
- The drop was NOT expected! CNN’s analysts had predicted a rate around 9.2%.
This is a huge positive sign for the economy with virtually NO hidden downside. So stop reading now.
…because oil is heading back up again and it caused the Dow Jones Industrial Average to plummet 1.2%. Oy. It’s the weekend, folks. Let’s all head out and party until we forget that last bit.
What is “curated”?
“Curator” is not a new word. I’ve heard it used in relation to museums and art galleries all my life. According to merriam-webster.com, a “curator” is:
one who has the care and superintendence of something
However, I’ve seen the word “curate” pop up in two new contexts in the past month or so. The first time was in a recent CNNMoney.com article that I commented on in a post last month. It referred to U.S. Best Buys as taking a “curated” approach to retail: Best Buy looks at all the electronics products available and chooses certain products and brands to put on their shelves. That is “curating” a retail space. Think about how different chains carry different brands and how you can NEVER find New York Vanilla ice cream at Wal-Mart, only Target and DANG IT TARGET CLOSED HALF AN HOUR AGO.
…okay, I’m calm. Anyhow, I saw the term “curated” in a subtly different context today: a geekosystem.com articleabout the upcoming Nintendo handheld, the 3DS. Apparently Nintendo will host a “curated content” short-form video service for the 3DS. This means that Nintendo will make active decisions about what to offer on the service and when. Movie trailers, game trailers, interviews, advertisements… all of it will be intentionally selected to further Nintendo’s goals while appealing to their target audience.
“Curating” content and retail offerings is part of a trend towards businesses consciously maximizing every resource. Has this “curating” existed forever? Of course! TV networks, newspapers, a sales catalogues have always “curated” their content. But by boiling it down to a buzzword we can put new emphasis on this facet of business. Now where’s my New York Vanilla ice cream?
Baltic Dry Index
I’m a big index fan. I enjoy tracking numbers up and down from day to day and week to week. Not month to month, though. Who has the attention span for THAT? Kidding.
The newest index I discovered is the Baltic Dry Index, or BDI. The BDI measures the demand for room on cargo ships that transport dry bulk materials. A lower index means that fewer bulk materials are being shipped, which can be inferred to mean that less production is occurring around the world. A higher index means that ships are filling up due to more materials being shipped.
According to this old slate.com article, the BDI is an excellent leading indicator of market health because it measures transport of the first indicators of economic growth- raw materials. In an age where everyone wants to know what will happen ten moves before it happens, leading indicators are extremely valuable.
Nowwwwww the bad news: According to this easy-to-read chart on bloomberg.com, the BDI has been on a clear downward trajectory since October. I will dig deep and venture one guess as to why this does NOT mean that the economy is headed down down down: perhaps countries are sourcing more from their own materials reserves as oil prices rise? Eh? Who likes my idea?
Rich People Loooooove Fast Food
I live for stories like this. According to this article at CNNMoney.com, rich people are eating more fast food. I totally get it. Chipotle tastes good no matter how much money you earn. My wife and I ate it four or five times per week for several months back in 2005. But this post isn’t about my eating habits past or present. It isn’t even really about rich people eating bad food. It’s more about the interesting organizations I learned about in the article’s references.
The article cites American Express Business Insights as saying that among American Express’ top 10% most affluent customers, fast food purchases are up 4%. The aforementioned AEBI is an organization that leverages American Express’s vast transaction data warehouse to deliver all kinds of data to consumers.
The other interesting nugget hidden in the article is a quote from the Luxury Institute. Who? The Luxury Institute is an organization that studies spending habits of extremely wealthy consumers. They have published white papers with titles like “Wealth & Luxury Trends: 2011 and Beyond” and “12 Rules for the 21st Century Luxury Enterprise”. It’s really interesting what you find when you follow a news article a little further!
