Obama goes back to Bush playbook and declares war on “price gouging” oil companies

"I’m concerned about higher gasoline prices. The government has the responsibility to make sure that we watch very carefully and investigate possible price-gouging, and we will do just that." — George W. Bush, 4/17/2006

Congress is vowing to take actions that it believes will reverse runaway crude and gasoline prices. Oil rose above $136 a barrel on Monday – more than double what it cost a year ago – and gas hovered around $4.07 a gallon.” – CNN, 6/24/2008

"We are going to make sure that nobody is taking advantage of American consumers for their own short-term gain." – Barack Obama, 4/20/2011

gasprices21Whenever the price of gas spikes the call goes out from Washington to investigate price gouging. Unfortunately, this leads to one of the great intellectual challenges of capitalism: Defining price gouging. Problem is no one can separate “taking advantage of consumers for short-term gain” from what is usually called profit taking.

To quote Collateral Damage Sr.: "In a society that has a free market fetish, if not a religion, what is price gouging? Is nine percent profit gouging the price? Or 15 or 50 percent? At what price point does profit change into gouged profit?"

Well, here are a few samples from people who have tried to split that particular hair.

First, former Rep. Bart Stupak, (D-Mich), from 2006:

When we were doing the Energy Policy Act last fall, in the town of Midland, right by my district there, gas went up 90 cents in one day. Now, is that not gouging?

If you take a look at it, from September 2004 until September 2005, refineries have increased their prices 255 percent. Isn’t that gouging?

I mean, I think we all know what gouging is. What we need is a federal standard so we can hold the oil companies’ feet to the fire and make sure we know what factor goes into every gallon of gasoline, so at least the American public will have some transparency and get a fair shake on what goes into a price of a gallon of gasoline.”

Next up:

New York State law prohibits price gouging during a state of emergency. The law specifically provides that, in order to prevent any party from taking unfair advantage of consumers during an abnormal disruption of the market, the charging of "unconscionably excessive" prices is prohibited.”

I like that one the best because it is by the former Attorney General/Governor of New York, Eliot Spitzer. Did he wonder about price gouging as he paid all those ladies of negotiable morality?

And finally this one from the very accurately named blog, Neutral Source:

There is no objective definition. Economists–who specialize in price theory and the behavior of markets and can study these things ad nauseum–have no definition for it, either. In fact, economists have avoided the term as if it were a social disease. A review of all the microeconomics textbooks on Neutral Source’s bookshelf reveals that none have as much as an index entry.”

Price gouging, like porn, is in the eye of the beholder. One thing everyone agrees on about it is that it is always committed by someone else.

For businesses price gouging is "when my competitor gets away with charging more than I thought to charge."

For the general public, price gouging is when a company that I don’t work for or have investments in is charging me too much. Profits are when my company is making enough money to not lay me off.

Actually addressing this problem would involve fundamental changes in our system that are much needed but which no one is willing to actually contemplate. Instead we will get more of this Kabuki Theater. The next act will come when the oil companies declare their quarterly earnings. This will be followed by bi-partisan denunciation of  their “excessive profits” and a number of bills will be proposed which will go nowhere.  Then the oil companies will attempt some sort of PR move to show that they are really nice guys and that will be that.

 

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Transocean cites safety record in doling out bonuses despite 11 deaths and totally screwing up the Gulf

Even the slogan is ironicNever, ever, let it be said that mere facts will come between an executive and his or her bonus. Transocean which – along with BP – is responsible for 11 deaths while creating the worst environmental disaster in US history, used its safety record as the reason for giving out exec bonuses.

According to the company’s financial proxy:

"Notwithstanding the tragic loss of life in the Gulf of Mexico, we achieved an exemplary statistical safety record." Based on the total rate of incidents and their severity, "we recorded the best year in safety performance in our company’s history."

Transocean’s PR person (now there’s a job for you) said, "The statements of fact in the proxy speak for themselves” before adding the requisite comments about feeling bad for all the little people.

It is worth noting that the company’s execs did NOT get their bonuses the year before because of safety issues. It really isn’t reasonable to expect them to go two years without bonuses. That could lead to the departure of all the great talent that got the company to where it is today.

Let us not think that Transocean is alone. Our good friends in the banking industry have been doing the exact same thing even while they were destroying the economy.

The past few years have been very rewarding for bank employees. OK, maybe not the government rescues, stagnant loan books, layoffs and litigation. But none of these disasters hurt pay at banks.

A review of call reports filed with the Federal Deposit Insurance Corp., compiled by BankRegData.com, shows that average compensation in the last few years rose — and at the same rate as it did before the crisis. Employees of the largest banks realized the largest gains. The increases significantly outstripped inflation and can’t be attributed solely to shifts in pay schemes or recovering profitability. Banking in general shielded pay from its cost-cutting ax.

Ah, personal accountability in action.

As American Banker points out: “Over the last eight years, average compensation for a full-time bank employee has risen 35% to $83,050, twice the rate of inflation. In 2003, the banking industry’s 1.3 million full-time employees took home $78.3 billion. In 2010, its 2.1 million employees took home $168.1 billion.”

How much of that do you think went to the tellers and branch managers?

Oh and don’t forget: It’s all those millionaire public-sector employees’ fault.

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Did someone say, “Bikinis with push-up tops for 8-year-olds?”

Abercrombie & Fitch is selling the ‘Ashley push-up triangle’ top  which features thick padding in the cup to give the illusion of a larger chest size. What’s news about that? It’s for girls 8 to 14.

Yes, for a mere $24.50 you too can pimp out your not-yet-tween girl and remind her that its all about the cup size.

Ambercrombie bikini

It’s good to see that old A&F (where my grandfather once went to kit-up for safaris) is keeping true to its newer brand promise of making money off the sexual exploitation of children. (If they’re going to do that shouldn’t they be a division of American Apparel? Here are the details on the latest in a long line of sex harassment suits against CEO Dov Charney.)

A few other things A&F has done to live up to its brand promise:

  • Ads that feature shop assistants in lieu of models, often posing semi-nude.
  • An ‘Impact Team’ to ensure all employees comply with its ‘look policy’.
  • Paid $2.2 million to settle a suit over allegations it forced its employees to buy and wear its clothes while on the job.
  • Paid $50 million to settle a discrimination lawsuit brought by pretty much every non-Caucasian who made the mistake of getting a job with A&F.
  • Paid $13K to an employee forced to work out of site of the public because she had a prosthetic arm

Is this the worst ad placement ever?

hanger

Probably not, but it’s still impressive.

It’s a winner!

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Dove ad makes a big before-and-after mistake

 

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Image via Sociological Images

Now clearly all the women in this ad from Oprah’s magazine are supposed to be showing off the wonderful “after” effect of using Dove soap. It’s just that the women (who are shaped like actual women – bravo, as usual, to Dove) are arranged by their skin’s melatonin content and therefore seems to say that the woman on the left … Well, you can see it for yourself obviously.

As the great blog Sociological Images notes:

I continue to be puzzled that multinational corporations with resources for large-scale marketing campaigns so often stumble in awkward ways when trying to include a range of racial/ethnic groups in their materials. This seems to occur by not sufficiently taking into account existing or historical cultural representations that may provide a background for the interpretation of images or phrases in the advertising. In this case, the arrangement of the models combined with the text above and below them unfortunately intersects with a cultural history in which White skin was seen as inherently “more beautiful” than non-White skin (not to mention thinner bodies as more beautiful than larger ones).

BTW, have I mentioned what a great blog Sociological Images is, lately? Have I urged you to read it daily, as I do? What’s that? I haven’t? Well, shame on me.

Round-up of the week’s odd marketing stories

  • Anti-Religion ad banned: Last month the South African Advertising Standards Authority banned an ad from a church for claiming miracles, this month UK’s ASA banned posters from the British Humanist Association asking people to check the “No Religion” box on census forms. The reason? They had the “potential to cause widespread and serious offence.”
  • 575-pound spokesman for Heart Attack Grill dies: ‘Heart Attack Grill is an unabashedly unhealthy restaurant – the menu consists of huge burgers, milkshakes and fries cooked in lard – and having such a big man as a spokesman was part of its tongue in cheek “glorification of obesity.”’
  • LA Clippers celebrate Black History month after Black History month ends: Not surprising really. As AdFreak points out “given [team owner Donald] Sterling’s standing as a poster boy for racial intolerance and bigotry, I’m amazed he missed it by only two days. By all accounts, this meathead is about as racially progressive as Archie Bunker. This is a guy who paid $2.73 million in 2009 to settle a federal lawsuit that claimed he discriminated against blacks and Hispanics when renting apartments in L.A.”
  • Del Monte unveils individually plastic wrapped …bananas. In case that wasn’t silly enough, the company claims the biodegradable wrappers are part of a “green initiative.”
  • Aussie schools sell booze for fundraising:  “The Australian National Council on Drugs (ANCD) has written to every school principal in the country asking them to reconsider the sale, use and promotion of alcohol products when raising money. In the open letter, chairman Dr John Herron said there were concerns students were being used as "couriers" between school and home for advertising material, forms and payments for alcohol as part of fundraising activities.”
  • Church banned from advertising miracles

    No MiraclesSouth Africa’s Advertising Standards Authority has told The Christ Embassy Church to stop making claims on national television that it can treat diseases such as AIDS through faith healing. “The ruling came after the Treatment Action Campaign (TAC), South Africa’s main HIV/AIDS lobby group, filed a complaint against the church, which has paid programming on the private e.tv channel featuring people recounting how they have been cured by Christ Embassy.”

    How would the ASA rule on other miracles? Can a church say that it will provide you eternal salvation? Forgive your sins? Make you one with the universe? Have interesting sermons? Once you get rid of miracles what else does a religion have to sell?

    Really, if the US stopped companies from advertising miracles it would kill the beer and diet commercials immediately. It wouldn’t stop there, either. Any number of film directors would no longer be able to claim their movies were “good.”

    The other fascinating thing in this is, “What is a commercial?” What if a religion simply broadcast religious services? This is a very germane question. Last year,

    the ASA ruled that the content of the Christ Embassy television show was not an advertisement, but sponsored programming, and it therefore did not have jurisdiction over its content. The TAC then appealed, which led to the ASA ruling that found the programme to be: an advertisement, as defined by ASA’s code; promoting faith as a means to cure illness or disease; promoting Christ Embassy as the place to seek this cure, and; violating ASA’s code because it offers a product to cure a disease for which it has not received Medicines Control Council registration.

    The church would be appealing on the grounds that the television programme was not an advertisement and that the church did not intend registering with the Medical and Dental Council. "The product is called faith," [Attorney Sean] Sim told the Mail & Guardian.

    Art by Nathan Coley