Published on: November 2, 2022
Lots of conversation about California's decision to ban the sale of new gas-powered cars as of 2035, and individual communities' decisions to not allow the building of new gas stations.
One MNB reader wrote:
I’m sorry, but as with most things done in California, this is a wrong-headed approach. They need to let the market decide. Business owners won’t invest millions of dollars on a new gas station/convenience store if the demand is not there. It will be a number of years before the internal combustion engine is in the rear view mirror. I’m glad I don’t live in that state. Unfortunately I live in New York which is not far behind.
From another MNB reader:
Regarding your article on the “planning” of California Communities Ban New Gas Stations; here’s my perspective:
This would cause less Supply and therefore greater Cost to consumers.
CA will surely then complain that costs are too high and throw more Taxes on the companies that sell oil – which will only increase consumer costs…
Current refinery availability v demand is creating higher costs to consumers – so the “blue-print” is there.
Demand will change to what level is TBD.
CA does such a Great Job in “planning” that we continue to have our annual fires – despite all the “planning” that goes on …
How about that wonderful plan for the high speed train from S.Cal to Las Vegas – is that an example of planning?
I can go on.
CA has a plan to improve energy availability? What are the details?
MNB reader Martin Salerno wrote:
I would feel better for the current owners of gas stations in California if they passed some sort of law enticing these gas stations to incorporate electronic charging units at their stations.
Incentivize the small business owner to convert to this new energy model, not just put them out to pasture.
I have no problem with the idea that as societies go through major transitions, governments should try to figure out ways to ease those transitions in ways that are good for both businesses and consumers.
Speaking of transitions…
Yesterday, an MNB reader weighed in on what he believes is California's general fecklessness by writing:
There is a far bigger issue. CA electric grid has insufficient size today, with blackouts common. No planned hydro, atomic, or fuel cell stations. Solar and wind have no projects announced. The grid isn’t up to more electric demand, period. All else is just rearranging Titanic deck chairs.
But another MNB reader took issue with this, and sent me a link to something called the Redwood Coast Offshore Wind project, described this way:
In 2018, the Redwood Coast Energy Authority (RCEA) ran a competitive tender to select a partner to form a public-private partnership for the development of a floating wind project in Northern California. The RCEA selected a consortium led by Principle Power and including Ocean Winds, Aker Offshore Wind, H. T. Harvey & Associates, and Herrera Environmental Consultants Inc.
The resulting public-private partnership is now developing a 150 MW floating wind farm 40 km off the coast of Eureka, CA (Humboldt County), that will use the WindFloat® technology to access a site with waters up to 900 meters deep.
And this reader wrote, he is proud to live in Humboldt County.
I would suggest that the words "public-private partnership" are key here … here is some more information:
Since the formation of the public-private partnership, the partners are working with stakeholders, including fisherman, tribes, environmentalists, and regulatory authorities to identify the most suitable location for the project. The proposed project site, which will feature between 5 and 15 wind turbines depending on project and wind turbine size, avoids or minimizes impacts on marine navigation corridors, major commercial fishing areas, and environmental resources while maximizing power generation potential thanks to the siting flexibility offered by the WindFloat® platform technology … The project is expected to drive significant investment in local infrastructure at the Port of Humboldt Bay, which can become the leading hub for the offshore wind industry on the West Coast of the United States, requiring skilled labor and thus creating significant local economic benefits.
You can find out more here.
This strikes me as the best kind of public policy initiative - including all stakeholders, with an eye on the future.
The great Ross Macdonald once wrote, "We're all in the game. We all drive cars, and we're all hooked on oil. The question is how we can get unhooked before we drown in the stuff.” And he wrote those words in 1973.
It is about time we do something about it, and I, for one, admire California's willingness to try, even if sometimes the flesh is weak.
Respond to yesterday's FaceTime video expressing frustration that supermarkets are allowing fast feeders to make the case that they are cheaper places to eat; they may be less expensive on the surface, I said, but supermarkets always are a better value, and supermarkets that don't make that case are either lazy or complacent.
One MNB reader responded:
Wish your Facetime posting this morning would be seen in millions of homes, not to hassle grocers but to make the nutrition value argument.
I'd love it if millions of homes would see it, too … but retailers can and should make the case themselves.
Another MNB reader wrote:
Got a chuckle from your message this morning. There is another factor that causes grocery stores to lose out to fast food restaurants. Recently went to dinner at our son’s house. My 8 year old grandson, wanted to know what we were having for supper. His mom told him that we were having lasagna and he replied, “ I’m tired of eating groceries”, let’s go to McDonalds!
On another subject, from MNB reader Tom Murphy:
Regarding the article about the new online shopping/delivery service announced by SEG: With all due respect to you and Meredith Hurley, SEG's Director of Public Relations & Community, I believe the majority of customers could care less about the proprietary differentiation (in this case, mixing technologies) that occurs behind the curtain. For myself, I believe the service quality is the differentiator and I doubt that SEG has a proprietary advantage on that! Too late to the party and too much competition to call this proprietary no matter how you define it.
And, regarding my CVS criticisms, MNB reader Annette Knapp wrote:
First, our town of 8K is losing its only stand-alone pharmacy - a Rite Aid. There is a Giant Food Store across the street that seems to be eating its lunch. Folks on the neighborhood Facebook group have been warning people that they never had anything in stock at the pharmacy and to go elsewhere. They weren't wrong.
Next town over is a CVS (two miles-ish away) - stopped in there about a month ago to pick up some Scunci hair ties. Pharmacies always have the best selection of hair do-dads. No customers up front. I go to check out and the cashier asks me if I'd like to use the self-check out that they just installed. Um, no - you're right there dude. So, he comes around to the self-checkout and checks me out from there instead of the register. I was not sure what to make of that, but it was bizarre. I felt like I was imposing on him during the 'splaining session. It makes me wonder how long that CVS will be sticking around too.
Yesterday we took note of a New York Times story about manufacturers raising prices beyond their need to cover costs. I commented:
I have to think - in fact, I hope - that the companies taking advantage of their customers, feathering their own nests at a time when a lot of people are struggling, end up having to deal with consumer blowback.
I have no problem with companies doing their best to cover their costs by raising their prices. But if you use the moment to exploit customers in an effort to increase your own numbers, raise your stock price and - not coincidentally - increase your own compensation, then I sort of have a problem with you.
On the other hand, if you are a company that understands that you are best served by being perceived as an agent for the consumer, then I'm on your side.
One MNB reader responded:
Manufacturers have had no choice of late but to raise prices. Our company had 3 in the span of 12 months! Fuel, labor, and supply chain costs have all gone up. In normal periods, manufacturers can gain profits through greater distribution, innovation, or through manufacturing efficiency; all of which have long lead times and capital expenditure to come to fruition. Some like to think it is all due to Corporate greed. But if that were true, then why now? Why not in other times or all the time. The answer of course is competition in a system of Capitalism is that keeps corporate greed in check.
What we have today are governmental and economic policies run amuck. Modern Monetary Policy which embraces almost limitless borrowing and spending has come home to roost and finally been exposed. Inflation simply put is too many dollars chasing too few goods. COVID and Ukraine did not cause inflation, but how our government reacted to them did. To many of our leaders were eager to pump money into our economy during COVID without thinking of the consequences. And their brilliant fix? Canceling student debt and the ironically named Inflation Reduction Act! Essentially to spend even more money, which is akin to putting out the fire with gasoline. Inflation has triggered a massive Social Security increase. Again, more government spending causing more inflation. Labor is demanding more compensation, causing more pricing pressure and inflation. We are in an Inflationary Death Spiral!
The Fed, in raising interest rates, is battling both existing inflation but also additional Congressional spending policy. I don’t see how we can avoid a recession before the Fed can get this inflationary death spiral under control. Of course, another option would be to reduce government spending, but I don’t see the political will in either party to do so. The real question is can we keep it from becoming a Depression the likes of which we’ve not experienced since the 1930’s. We are not too big to fail or to avoid economic realities.
So, if I understand you, everything everybody has done is wrong … except for the companies that seem to be raising prices beyond their need to cover cost increases.
Look, at one level you are right - capitalism means that companies can do what they want. Raise prices as high as the market will bear, and believe that there will be no repercussions in terms of brand equity or consumer acceptance.
But as a consumer, I have a right to impose and encourage repercussions.
That's also part of capitalism.
More reactions to the Kroger-Albertsons merger…
MNB reader Joe Axford wrote:
Starting to think Albertsons may want to get regional buyers lined up, just in case...
From another reader:
I doubt these companies would have entered into this agreement if they didn’t feel they could get it done. If everyone recalls when Albertsons purchased Safeway they were required to divest approximately 150 stores and the FTC allowed them to divest to a company that had I believe maybe 20 stores so they went from 20 to a 170 overnight and I don’t think they made 6 months and guess who got the stores back? So there was no divesture. My point is I think both Kroger and Albertsons know how to get this done.
Probably what Staples and Office Depot thought. As well as Penguin Random House and Simon & Schuster.
My point would be that both companies have lawyers and lobbyists who are going to make a lot of money arguing that they know how to get this done.
But wishing doesn't make it so.
Finally, yesterday MNB reported that there have been several stories out there about how Hooters is teaming up with NASCAR driver Chase Elliott on a new virtual chicken format that will deliver a variety of poultry dishes via Grubhub, DoorDash and Uber Eats.
The items will be delivered from some 196 Hooters locations around the country, but will not be available in those restaurants. The name of the ghost kitchen brand: Chase Elliott's Chicken Tenders.
I continue to believe that this is an interesting business model - using existing kitchens in restaurants to create new brands, and then using e-commerce to test their viability. One can imagine that if this concept takes hold, the next step would be to create physical locations that can build on already-established brand equity.
Though I have to admit that I'm not sure what Chase Elliott's chicken connection is.
Hard to figure out why a brand like Hooters would come up with a new chicken concept and not call it Legs & Breasts.
One MNB reader responded:
Saying the chicken is good at Hooters is like saying you read Playboy for the articles.
The pandemic shut down our one and only local Hooters. Guess they couldn’t make their “restaurant” work just on carry out meals.
(Also, good riddance to this sexist, exploitative business model - ugh.)
Who said the chicken is good?
And who is arguing with you about Hooters being a sexist, exploitative business model?