 | | Friday, August 26th, 2005 Baltimore, MD
Jackson, WY
Missoula, MT | Divide and Conquer |  - Divide and Conquer
- Hawaii Sets Gas Cap
- Archimedes Lever: A Cashless Society
| 
"The present is pregnant with the future."
- Voltaire |
Dear Wealth Daily reader:
There's an old political maxim that says: "When your opponent is self-destructing, get out of his way."
That's how China views America at the moment.
 In Iraq, "the flies have effectively caught the flypaper." With the US caught up in Iraq, China has gone shopping around the world for oil assets. The communist country was initially unsuccessful with Unocal. But their latest prize is PetroKaz.
Now China is looking into the heart of darkness for more energy to feed its breakneck economy, Africa.
Earlier this year China forgave $1.3 billion in African debt and lifted certain tariffs on goods imported from 25 of Africa's least-developed countries.
Now senior African officials are in Beijing to discuss China's large trade surpluses. But China certainly has few problems with any countries with oil to sell.
Last month the Nigerian National Petroleum Corporation agreed to sell 30,000 barrels of crude a day to China.
Also PetroChina submitted bids for two oil blocks in the 2005 licensing opening this month and has expressed interest in taking over the Kaduna Refinery and Petrochemicals.
State-owned China National Petroleum Company has already invested $14.4 billion in oil projects in Sudan, which accounts for 6% Chinese imports.
CNPC has sent 10,000 Chinese workers to build a 900-mile pipeline to Port Sudan on the Red Sea. CNPC has interests in Algeria and is involved in building a pipeline in Libya.
But China's interests in Africa goes beyond oil. Africa is also a key source for raw materials, such as gold, aluminum, platinum, and iron ore.
In this little world of horror, China is the Audrey II of the planet. The more we feed her, the bigger and hungrier she gets.
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Hawaii Imposes Gas Cap
Next week Hawaii will begin enforcing a cap on the wholesale price of gasoline, hoping to ease the pain of soaring costs at the pumps.
It will be the first time a state has imposed limits on gasoline prices since the energy crisis of the 1970s and comes as retail fuel prices soar to record highs. But critics warn that the cap could lead to supply shortages.
The state Public Utilities Commission said the initial price ceiling is due to take effect Sept. 1.
Gasoline prices in Hawaii are the highest in the nation, averaging $2.846 per gallon. Prices on Maui have already topped $3 a gallon this week.
The PUC has set the first cap at $2.1578 per gallon, or about $2.76 including taxes in Honolulu for regular unleaded gas.
The ceilings will be in effect through Sept. 4. The following week, the commission will announce a new set of caps.
While it may be tempting to put the cap on rising gas prices, experts call it a short term fix, and a long term disaster.
| Archimedes Lever: A Cashless Society | I Hate Cash!
That's right. I hate it. But don't get me wrong. I love money but I hate cash.
Cash is a pain. You have to count it all out and then you have a bunch of big heavy coins in your pocket. It's an arcane way to pay for goods and services.
I prefer to use my check card. In fact I use cash as little as possible. That way I don't have to keep track of a bunch of small pieces of paper and tiny round metal tidbits. Also using my check card makes it easy for me to see exactly where I spend my money. All I have to do is check my balance online.
And I'm not alone. Credit and check cards will account for 43% of all purchases in the U.S. this year. Visa estimates that cash transactions will total $1.2 trillion worldwide this year. Credit card purchase volume has been expanding about 15% per year for the last five years, and check card purchases are growing twice as fast as credit cards. |
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I've even gotten rid of my wallet. No more sitting on a fat wad of leather for me. Instead I carry around a business card holder. In it I keep my license, credit and check cards. And that's all I need.
Credit and debit cards have made it easier than ever to pay without cash. But even current payment systems are complicated and time-consuming. Credit card purchases need to be authorized and signed for, and then receipts need to be stored.
Customers like you and me want convenience. And merchants want efficiency and a cheap way to process payments. And that's where we're headed.
Soon traditional currency, such as cash and coins, will only be collector's item. What I'm talking about is a cashless society. And it's slowly catching on.
 Take for example the E-ZPass. This is one of the best on-the-go payment methods around right now. The E-ZPass is an electronic toll collection system used in seven Northeast states in the U.S. including in my home state of Maryland.
In some places drivers with E-ZPass don't even have to slow down to pay tolls. They drive at the speed limit in a special lane. Above the lane are receivers that pick up a signal from a transponder on the driver's dashboard. The transponder automatically deducts the toll from an account drivers have opened.
This is the kind of convenience and efficiency the future is going to bring us.
Imagine this. You're at the grocery store. You put your items into the cart. After you're finished you simply walk out the front door. Sensors recognize the items in your cart and automatically deduct the purchase price from your checking account. The same idea can be apply to any shopping experience.
It makes sense that companies across industries, including banking, technology, consumer electronics and wireless carriers, would want to make it easier to separate you from your money.
One of the earliest examples of wireless payments did not come from a bank or a credit card company. It came from an oil corporation.
If you can remember Exxon introduced a key chain gadget called Speedpass in 1997 Consumers waved the Speedpass in front of the pump to pay for gas.
Making wallets unnecessary seems logical. And combing a payment method with something you have to carry anyway (your keys) is super convenient.
Purchases made by newfangled touchless methods are projected to increase 18.5% this year from last year and 34% in 2006. The market is expected to exceed $1 billion by 2010. Simply put: It's ripe with potential. |
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Here are a few cashless methods consumers are already using today:
Biometrics
How it works: Customers register their fingerprints with a bank account and, at checkout, scan their fingers to pay for a transaction.
Cost: Free for consumers; merchants pay $200 per scanner.
Provider: Pay By Touch, BioPay
Adoption: Pay By Touch already has 100 customers in ten states, most are in grocery stores
Pros/Cons: Fingers can't be lost or left behind at home. However, concerns over privacy and the fact that the technology is still new makes merchants and consumers a little distrustful.
Short-Range Radio Frequency
How it works: Credit cards or small gadgets embedded with a microchip are waved in front of readers instead of swiped and signed.
Cost: Free for consumers; merchants pay $150 to $200 per scanner.
Provider: JPMorgan Chase's Visa and MasterCards, MBNA's MasterCard and Exxon Mobil's Speed Pass.
Adoption: ABI Research expects between 35 million and 50 million embedded cards to be accepted at up to 50,000 locations by the end of 2006.
Pros/Cons: Faster than paying by cash or credit, but the lack of a PIN or signature requirement gives way to privacy concerns.
Transponders
How it works: Dashboard transponders automatically deduct payments from prepaid accounts when moving through, past or under a reader.
Cost: Consumers pay a $10 deposit for transponder
Provider: FasTrak, E-ZPass, SunPass, EZ Tag and FastLane
Adoption: Traffic Technologies estimates 15 million users nationwide.
Pros/Cons: Drivers don't have to dig for change, but each system works independently. Drivers can't use a transponder from one system on another. Even within a state, not all roads and bridges have transponder technology.
Mobile Phones
How it works: For vending machines and other automated systems, consumers call a number and radio signals trigger the machine to dispense the product. The charge for the product and the call appears on the phone bill. Consumers can also wave cell phones that are embedded with a chip or Bluetooth-enabled at a receiver to buy product.
Cost: Consumers pay for faceplates or tags for phones, which run about $5.
Provider: Nokia, NTT DoCoMo, Motorola
Adoption: In South Korea and Japan, there are over 3 million users and 20,000 locations accepting cell phones as payments.
Pros/Cons: Fast and convenient, since cell phone usage is everywhere. If lost, the provider can lock the phone to prevent purchases. But for Bluetooth phones, hackers can use antennas to intercept signals and steal account information.
Some methods are becoming commonplace, like E-ZPass, but others seem to be straight out of a science-fiction fantasy. Still, for shoppers, these systems are like something out of The Jetsons, and that's pretty cool.
Archimedes Lever is brought to you by Luke Burgess |
- Luke Burgess
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Wealth Daily Profit Letter, Copyright (C) 2005, Angel Publishing, LLC. All rights reserved. No statement or expression of opinion, or any other matter herein, directly or indirectly, is an offer or solicitation of an offer to buy or sell securities mentioned. While we believe the sources of information to be reliable, we in no way represent or guarantee the accuracy nor the statements made herein. Neither the publisher nor the Editor are registered investments advisors. Subscribers should not view this publication as offering personalized legal or investment advice. Unauthorized reproduction of this newsletter, or its contents, by Xerography, facsimile, or any other means is illegal and punishable by law. Please note: It's not our intention to send email to anyone who doesn't want it. If you would like to remove yourself from this mailing list, please see the instructions at the bottom of this message. NOTE TO OUR READERS: Angel Publishing, LLC and Wealth Daily Profit Letter do not act as an investment advisor or advocate the purchase or sale of any security or investment. Investments recommended in this publication should be made only after consulting with your investment advisor and only after reviewing the prospectus or financial statements of the company in question. | |
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