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

Whenever 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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WikiLeaks is at the cutting edge of irony

From Glenn Greenwald’s piece in Salon:

WikiLeaks suggested the “other source” was Daniel Domscheit-Berg, a former WikiLeaks associate who WikiLeaks claims took, without authorization, many WikiLeaks files when he left.

I am a fan of what WikiLeaks does but not so much of Julian Assange.

I’m sure he’s very upset about this.

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

Never, 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.

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.

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?

Probably not, but it’s still impressive.

It’s a winner!

I hope you don’t see an ad more offensive than this today

The always-brilliant website Sociological Images found this appalling ad for an Australian “luxury” real estate development. My first response after “This has got to be a hoax,” was how unsafe these places are when you have a resident scared out of her wits tied to a chair and calling the cops. This doesn’t make me want to live there, it makes me want to live anywhere BUT there.

Nothing says great living quite like the threat of rape.

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.”

Restaurant chain learns mass-murder doesn’t make for funny advertising

For some reason The Hacienda restaurant chain thought an ironic reference to Jonestown was the basis for an ad. Billboards in South Bend, Ind., read “We’re like a cult with better Kool-Aid’ and ‘To die for.” (Did someone tell them South Bend is a hot-bed of irony? They were misinformed.)

The ads were up for two weeks before the company finally got the message this wasn’t such a good idea.

“Our role is not to be controversial or even edgy. We want to be noticed – and there’s a difference,”said Jeff Leslie, vice president of sales and marketing at Hacienda, which also owns the La Senorita restaurant chain in Michigan.

Kudos to Mr. Leslie for not taking the easy way out and throwing his agency under the bus.

The article contains a great look at how this cluster frack came about:

Every year, Leslie said company leaders look at their restaurants, the economy, their customers, and the competition to determine an idea or theme to use for advertising.

This year, Hacienda decided to use “You belong.” You have a place at home, a place at work, and a place to dine, gather and celebrate at Hacienda. As they brainstormed about how people belong to clubs and teams, they discussed how an entity can develop a cult following of like-minded people.

Some people may dress alike or eat the same food or visit the same restaurant or drink the same drink – like margaritas, Leslie said.

“You start playing with headlines,” he said, “and that’s how we ended up with the outdoor board. But we are not getting the reaction we expected. It went the wrong direction, hit a nerve, and we have come to realize we should not have done this billboard. We lose the core message.”

Remember: Anyone can make a mistake but to really screw up you need a committee.

Illegal immigration + video game = stupid

You’d think the formula would be self-evident but … noooo. Last year Spain’s Popular Party put up a game that let players bomb illegal immigrants. This year we have Smuggle Truck a game for iPod and iPad from Boston’s own Owlchemy Labs.The aim of the game is to keep immigrants in the bed of a truck as they speed through the border lands. Hit a bump or jump a canyon and men, women or kids fall off.

No sooner was the game announced then controversial hijinks ensued. No surprise that many immigrant rights groups found it offensive. Well, no surprise to you and me. Owlchemy said in a post on its website:

"Smuggle Truck was inspired by the frustration our friends have experienced in trying to immigrate to the United States. With such a troublesome issue being largely avoided in popular media, especially video games, we felt the best way to criticize it was with an interactive satire."

“Such a troublesome issue being largely avoided in popular media, especially video games”??? Ah yes, video games – always my first source for satirical commentary on the news.

Bad week for Groupon – UK says ad exaggerated savings

The Advertising Standards Authority STRIKES AGAIN!

The ad on the Groupon MyCityDeal site offered customers a four-course meal for two with a bottle of wine, or two pints of any alcoholic or soft drink, at the Wagon and Horses restaurant for £24, rather than £92.

Groupon claimed this was a 74% discount, however, one customer complained the number was exaggerated.

In its defence, Groupon said the calculation of the offer price was made on the basis of the most expensive items on the menu at the time it signed the deal with the restaurant.

The ad’s small print, which had been incorporated following a similar ASA adjudication last month, said the discount is based on "highest price".

Groupon tries to spin away from its Super Bowl ad

After offending pretty much everyone – including the Chinese government – with its horrible ad which said, “You can’t save Tibet but we can save you money at a Tibetan restaurant, Groupon is hoping spin will save it from having to say it’s sorry.

Groupon founder Andrew Mason wrote in his blog:

"We would never have run these ads if we thought they trivialized the causes — even if we didn’t take them as seriously as we do, what type of company would go out of their way to be so antagonistic?

A really, really stupid one. That’s what type.

Kudos to Groupon for so quickly going from a neutral brand to one with significant negatives. Not easy to do when your sole public purpose is to help people save money. The ad also pulled off the unique trick of being the first thing that both the Tibetan exiles and Chinese government have ever agreed on.

Here’s my favorite piece of fallout: Even the owner of the Himalayan restaurant mentioned in the ad, is pissed at them. 

Kenneth Cole is early favorite in Biggest Marketing Mistakes of 2011 competition

Really? You really thought this was funny? Really? Actual humor would have been, “Anderson Cooper was beaten up because people thought he was our new spring collection.” No, wait… I wasn’t intending to make light of a serious situation. Why is it I can’t put “Anderson Cooper” and “serious situation” in the same sentence with a straight face?

Disney puts straw in exactly the wrong place on this Princess™® sippy cup

I’d ask “What were they thinking?”,  but I’m pretty sure thinking wasn’t involved in the process. Or, as Mrs. CollateralDamage put it over at her widely read blog BrokeHoedown

I do not even know how to caption this. I found it difficult enough to just write the alt text for the image.

Wow.

Is DiGiorno Pizza’s “Wyngz” the WORST product name ever?

Well, probably not. But it’s up there, that’s for sure. As Steven Colbert explains, the name is the result of a horrible combination of Federal regulation and Kraft’s desire for something trademarkable™. According to the Feds, if a “wing-shaped” or “bite-size appetizer product” doesn’t contain any “wing meat” it cannot be labeled as a “chicken wing.” And Pizza and Nuggets sounds like a kids meal. Memo to the fine folks at Kraft’s marketing department: You really didn’t need to ™, ®, or © the name. No one else will ever use it.

Here’s another issue: How do you order one of these? (We’ll leave the question of why for another day.) Is it a Wyng™? Or is Wyngz™ itself the singular and the plural is Wyngzes™? Also, these are described as “boneless Wyngz™.” Does that mean there is a version with a Wyngz™ bone still in it?

FDA announces recall of “Toxic Waste® brand Nuclear Sludge® Chew Bars”

NOMINITAVE DETERMINISM IN ACTION!

There’s really nothing you could possibly add to that headline but if you want to read the FDA announcement go here.