"Skidding Oil Prices: A Blip or a Trend?"

Heading into this summer, many Americans were dreading this summer's gas prices as expert warned that they would be well over $4 a gallon. In the past few weeks however, prices at the pump seem to be doing just the opposite. Instead of a looming spike in prices this summer, experts now say that by midsummer we could see a national average of $3.50 a gallon. This sudden drop in gas prices has not been seen since 2008 when Lehman Brothers, the 4th largest financial bank in the US, filed for bankruptcy while hurricanes shut down many refineries demanding oil for over a week.

Just like every good deal however, you always have to read the fine print. Allen Sinai, chief global economist and president of Decision Economics, warns that "this is a correction and not a shift in trend". In other words, this drop in price may last for most of the summer, but they will most certain rebound sometime in the near future. This is simply a movement along the supply curve helping to lower prices and not a major shift. And since prices seem to be falling, demand is certain to increase which in turn with drive the price of oil back up over time due to the law of supply and demand.

I think that although many of the experts in today's economy seem to have an idea in the short run of what will happen to our gas prices, no one can really tell what will happen in the long run. With wars in the Middle East threatening supply lines and even damaging some already, there's no telling what or who will affect our gas economy in months to come. Every day more companies, domestic and foreign, are growing and demanding more oil and gas while our supply seems to be risky with countries either dealing with civil wars or simply cutting production. Even Japan after it's national disaster maintained a strong demand for oil, and now that it's recovering from that, it's demand can only increase from now on. I really think that if our government would allow us to drill more on our own land, with the US helping to supply itself and even other countries with oil, our gas prices could be significantly reduced and economy strengthened. Until, we'll simply have to strap in, hold on tight, and hope that these lower prices can last as long as possible.

http://green.blogs.nytimes.com/2011/05/06/skidding-oil-prices-a-blip-or-a-trend/?ref=economics

“RIM Profit Falls Below Estimates”

Research in Motion, also known as RIM, was the company who invented the smartphone, which was the Blackberry. RIM is a member of an oligopoly with a couple other familiar firms such as Apple, creators of the iPhone, and Google, the creators of Android. Due to the fact, there is an extreme amount of competition between these firms, RIM has not been doing as well as they expected, especially in the past few months. In the last 7 weeks, analysts had reduced the profit predictions, but when the results of earnings were turned in, they were lower than the analysts had hoped.

Companies in this market are always trying to come out with the new hot item, and Apple beat RIM to it. The Apple iPad, which was released this year, sold over 3.27 million in the first quarter. RIM has now released the Blackberry Playbook, but judging by the results, it is no comparison to the iPad. Although it exceeded the analyst’s expectations of 366,000, it only managed to ship out 500,000 Playbooks. Unfortunately, not too many people were pleased with the Playbook, because it had multiple software issues, which users felt could have been taken care of before the product was put onto market. Unlike the other RIM merchandise, the Playbook was the only item to exceed RIM’s expectations.

The first quarter, which ended May 28^th, was not as successful as RIM hoped. Compared to last year’s results at this time, profits fell 74 million dollars, while there was an increase in revenue from 4.24 billion to 4.9 billion. As a result RIM’s shares fell by 14 percent. Due to this decrease in profit, RIM is planning on cutting jobs, which would lead to a decrease in labor.

RIM has yet to release a new phone, although RIM claims that they have made a major upgrade, which will help them out of this downward spiral. Unfortunately, with the new products on the market between Apple and Android, brand loyalty comes into question, with all of these other options, people do not want to wait around for a new product from RIM, when one is already available by the it’s competitors. Luckily RIM is having luck with international sales, the international revenue rose by 67 percent compared to last years results.

Unfortunately RIM is not doing as well as hoped, but they are confident in this new product, that has no been released. It would be to their best interest to make this product as flaw-free as possible, unlike Playbook. Also focusing on their international sales would be a smart idea, especially since overseas markets are growing, there would be a higher demand for smartphones. Luckily their company has not reached the shut down point, but it’s time for a new product from RIM, or people will choose other options.

http://www.nytimes.com/2011/06/17/technology/17rimm.html?ref=business

Ron Johnson leaves and Apple to boost J.C. Penney Sales

A recent New York Times article reports that in the past several years online shopping has become a huge competitor with retail stores. Because of this high level of competition, retailers are trying to find effective ways for shoppers to go to the retail store to make purchases, rather than just buying goods online. J.C. Penney, like many other retailers, has been struggling since the recession with the expanision of online shopping. In order to boost their sales, J.C. Penney has turned to Ron Johnson, head of Apple Retail stores, to lead their business.

On November 1st, Ron Johnson will become the chief executive of J.C. Penney and will be in charge of the marketing, product, and merchandising functions of the business. Johnson has been a huge aid the success of Apple in regards to their retail stores and it is expected that he will gain the same type of success for J.C. Penney. In the NY Times article, Deborah Weinswig, a retial analyst for Citigroup said, "If he can take a little bit of the magic and sprinkle it on to J.C. Penney, you could really create the next generation of retailing." Apple's retail stores across the country are far from boring due to all of the advanced technology. It is the hope of J.C. Penney that Johnson can put this type of "magic" into their retail stores.

If J.C. Penney puts more money into the cost of labor for more employees or spends more money on displays in their stores, more buyers will come to the retail store rather than just shop online. If J.C. Penney has more exciting sales techniques and sales floors, customers will buy more, thus and increase in the deamnd for J.C. Penney retail stores and their products.

Many were puzzled by Johnson's move from Apple to J.C. Penney becasue Apple retail stores are still thriving. Because Johnson did not seem to be in line for the chief executive postion at Apple and he had always wanted to lead a large retail company, the move seemed promising. Johnson's annual salary as chief executive of J.C. Penney is 1.5 million a year plus a 125 percent bonus if he meets certain targets. Ron Johnson's opportunity cost is shown through him leaving one company and going to the other to gain more. Though Apple is thriving in sales in their retail stores, Johnson loses his job at Apple and gains the retail leadership job he always wanted.

Johnson will have to adjust to the difference in businesses and competitiveness of the two companies. Apple has little competition, while J.C. Penney is in a market that has much competition. The idea that J.C. Penney is in a more competitive market refers to industrial organizations. Apple could be considered and Oligopoly because there are few substitutes for their goods and there are only so many companies in the U.S. similar to them, such as Dell or HP. J.C. Penney could be considered more of a monopolistic competition because there are so many substitutes for the products they sell such as apparel, shoes, house ware, and home decor. In addition, J.C. Penney has many competitors whether they are large mall retailers like themself or a small boutique or home store.http://www.nytimes.com/2011/06/15/business/economy/15shop.html?ref=economy

critique of "With Oil Prices Increasing, is it Time to Switch to Natural Gas?"

The original article is very well written and informative. The energy crisis and the need for the world as a whole to work together to discover new forms of energy is very high. There have been many discoveries, but the implementation of these new techniques has been limited due to many reasons. The author mentions that there has been a shift in the way that homes are heated in the northeast, and that this shift has been to switch from heating oil to natural gas. The author mentions the high cost of converting your home’s heating machinery to natural gas. I agree with all of the author’s commentary in this area but I would like to mention a few additional points. The reason for the shift between oil and natural gas could also be due to the fact that older homes are being demolished and newly constructed homes are being fitted with natural gas systems. This would cause the statistics over time to reflect some type of shift that may have been caused by nothing other than the cycle of home construction. Also, in homes that were originally fitted with oil systems, homeowners may opt for more efficient and modern natural gas systems when their oil fueled heating systems malfunction. Also, it is relatively easy to have a natural gas pipeline installed to your house, giving you a constant supply. In most cases, oil fuel must be trucked in to the home site, which can lead to many various inconveniences. To summarize, there are many reasons and situations why a shift may occur other than fuel supply pricing.

I agree with the author’s commentary on the newly discovered supply of natural gas, this makes sense with the fundamental law of economics, supply and demand. The supply increase leads to lower prices for consumers, but I would say that this is only a short-term effect. As the demand shift more and more to natural gas because of low prices, the supply will be strained and then the price will be increased. The current time is the best time to consume natural gas, but in the near future it will no longer be the best choice. Although there are large supplies of natural gas, it is still a nonrenewable resource, which will eventually run out.

The author made a very good point in the discussion of the companies controlling the oil and natural gas markets. The fact that the OPEC group engages in price-fixing is a large disadvantage to the oil consumer. The fact that natural gas is something that the US can primarily source in-country is of great advantage since price-fixing is legally prohibited in the United States.

Critique on Melissa Zeina- The Supply and Demand of Gas

Steven Christopher
Critique on Melissa Zeina- The Supply and Demand of Gas
Melissa’s article post of supply and demand of Gas is current and very interesting. She starts off by stating the gas prices have been at an all time high because of a simple problem of supply and demand because of recent disasters is Japan and in the Middle East. Melissa gives evidence by stating that gas prices have raised eighty cents sense last year. This is because the oil companies in the Middle East are having a very hard time providing the supply for the demand. “The main issue focused on here is the inequality of supply and demand. Supply is not changing, but the demand is on the rise.” (Melissa). Because the demand is rising, so much the supply, and the equilibrium price is changing. Statistically, if demand increases than so must the price of gasoline.
The problem with this is that the demand of gasoline will never diminish as long as it is the main fuel provider for the world. Since gas is a natural resource, there will always be a high demand for it until it finally runs out. But, this is not the only thing that is changing the demand of the gasoline, the majority of it is happening because of the international problems that were caused in Japan and the Middle East. “The Japanese economy is going to need its electric power from oil-based sources as a backup to their nuclear problems”. (Melissa). This means that Japan is going to be purchasing a vast majority of the oil supplies. Although there is a serious shortage of gasoline, the demand curve and price will continue to shift. Consumers will continue to purchase the gasoline no matter what the equilibrium price is set at.
Another relevant point that Melissa makes is that the demand isn’t just being caused from the disasters, but from increase of industrialization and production. As stated, “The two of the main countries that are increasing the demand of oil are India and China.” (Melissa). If predicts to increase their oil consumption by 6.5 percent this year alone than the demand and price of oil will increase. I agree that one of the main reasons that oil prices are going up is because of the large amounts of oil that the strongest world powers are using.
Finally, I agree with the statements that Melissa makes about consumption increasing as price does. Some countries do not have an alternative resource of power. Even though the definition of price elasticity states that if a price commodity rises, then demand will fall, it is not like that. The supply is what is determining the price of the gasoline, and the supply is remaining the same because they can only drill so much out of the ground. Demand is going to continue to increase. I disagree with Melissa’s statement that the large increase of price in the summer will lessen the demand for gasoline, at least in the United States. We have very poor public transportation such as electric powered trains. Americans rely on their cars to get them everywhere, and you need gas to do that. Gasoline will always have a high demand, high price, and small supply.

Critique On Apple Becoming an Monopoly?

The blog I chose to critique is Laden’s blog on whether Apple has become a monopoly. I think it is interesting the way that Laden questioned the idea of Apple monopolizing the music and computer industry I had never really thought of Apple that way. But, after taking a closer look and reading through Laden’s blog, I agree with this idea because a monopoly is defined as singular seller with complete control over the industry. Even though, I do not think that Apple monopolizes the computer industry because there are still competitors such as Dell, HP and Microsoft that still make and sell computers along with other competitors. The idea the market for computers is an oligopoly is a fair claim as well because the definition of an oligopoly is a market with a few competitors. There are only a few firms in this industry such as Apple, Hp, and Dell. So, Apple has its fair share of competitors in that area of the market. But, Apple does have a large amount of market power in the industry. This is a type of Market that is very difficult to enter as well due to all the money it requires upfront to make computers. This type of market requires a lot of technology knowledge and highly educated employees, which is difficult to fund. The computer market is hard to enter because there are strong competitors with good reputations making it difficult to enter such a competitive market. Although, Laden’s claim on Apple monopolizing the music industry seems to be valid. According the article written by James R. Stoup Apple has no real competitors in the music industry. Other competitors cannot seem to keep up with Apple’s great products. I agree with Laden’s idea that Apple has a monopoly over the downloading music industry because they have no real competitors giving them the ability to dominate the market. Another reason this market should be considered a monopoly because it is very difficult for other competitors to enter the market. This is a market that requires a lot of money up front to be able to make it in this particular industry. Since Apple is continuing to flourish it is unlikely that another firm would attempt to compete with such a strong company such as Apple. As Laden said, this is a legal monopoly because Apple is not forcing competitors out by putting them down or partaking in negative advertising. Apple is just working hard to keep consumers wanting more of their products.

http://www.applematters.com/article/has_apple_finally_become_a_monopoly_like_microsoft/

Critique on "The Rise of Netflix, the Demise of Blockbuster"

In the article of "The Rise of Netflix, the Demise of Blockbuster" the writer stated the change in new business techniques for the movie rental industry that companies such as Netflix, Hulu, and RedBox have picked up on. These days, you no longer have to drive all the way to a movie rental store such as Blockbuster to pick up the desired movie you want to watch. The movie you want to watch can come right to your house on either your TV or computer. Nothing beats watching your favorite movies with a few clicks of a button while sitting on your couch. Blockbuster stayed with their same business techniques that has almost put them completely out of business.

Everyone remembers Blockbuster had stores on the side of the roads in almost every town you happened to be in. As the years went on Netflix launched their company in 2003 which runs from the internet, RedBox's started appearing infront of local grocery stores all over the nation, and Hulu is another internet ran company. Blockbuster did not give in and follow these companies techniques and started losing much of their money.

The writer stated that companies like Netflix started because of Blockbuster's outrageous late fee's. A man named Reede Hastings started the company and went with a no late fee policy. Many people did not like Blockbuster's late fees which generated $300 million in profits annually. Later on, Blockbuster took away late fees and ended up losing even more money. In 2010 they brought back the late fees and it still did not help. No matter what Blockbuster did, they could not keep up with the newer companies.

I agree with this writers post that if a company does keep improving their business techniques and up to date then they will not succeed in later years. I think a company constantly needs to be thinking of bigger and better ways to improve. The writer quoted the famous economist Ludwig Von Mises and he said, "if a business is unsuccessful, it is often because they failed the consumer." I agree with that quote because I think Blockbuster failed the consumer by not keeping things up to date. As technology grows, things become easier and easier for us. Blockbuster did not keep up with times and stuck with their time consuming ways of movie rentals. Netflix, Hulu, and RedBox stepped in and figured out a way to make movie rentals easy for the consumer and less time consuming. In order for a company to succeed, they need to constantly be thinking of ways how they can improve the product they are selling or how they can keep the consumers happy or even make them even happier.