August 5, 2011

Dear NJGCA Member:

Here's what you'll find in this edition of the NJGCA Road Warrior, and thank you for reading:

EXECUTIVE DIRECTOR'S MESSAGE: GREETINGS & SAL-UTATIONS!
•Increasing the Debt Ceiling and how it affects you!

NEWS AROUND THE STATE
•Economic outlook is grim for remainder of 2011
•Budget Watch: Camden County seeks to create regional police force to save funds
•NJGCA in the News: Risalvato, Crisalli talk hard cash
•New 54.5 mpg regs will force automakers to rely on technology

TRAINING CLASS SCHEDULE
•ETEP TRAINING CLASS SCHEDULE!

MEET THE FOLKS AT LIBERTY GAS
•Looking for a new brand for your station? Take a look at the opportunity below!

MEMBER BENEFIT PARTNER MESSAGE
•TMP Energy Solutions: Another Way to Save On Your Energy Bills!

REAL ESTATE FOR SALE OR LEASE
•Interested in acquiring or leasing a property?  See below!

A SPECIAL MESSAGE FROM BELLOMO FUELS
•Serving New Jersey since 1910 -- Over 100 years of supplying gasoline retailers like YOU!

POLITICAL PARTICIPATON: THE NJGCA PAC
•Participate in the NJGCA PAC today and help us keep our Agenda rolling in Trenton!

THE MEMBER TOOL BOX
•On the NJGCA Homepage
•Know your Territory Manager!

 EXECUTIVE DIRECTOR'S MESSAGE: GREETINGS & SAL-UTATIONS! 

INCREASING THE DEBT CEILING AND HOW IT AFFECTS YOU

Anyone who has met me in person knows that I’m typically straightforward and (sometimes to the discomfort of my wife, family, and staff) that I can be painfully blunt with people.  Why shouldn’t I be?  There are only so many hours in a day and I have no time to waste playing games. 

So imagine how I’ve been feeling the last few months watching this unbearably awful soap opera going on in Washington.  I used the term soap opera deliberately because that’s exactly what we’ve been held witness to as Congress and the President played games over our debt situation while the rest of us sat on the sideline seething.

Unless you live under a rock, you know that it’s been bad and it took literally to the last day before the situation was ‘resolved’.  However, I’m not going to waste this week’s address by going over the endless ‘he said, she said’ diatribe of the debt ceiling negotiations.  Doing that wouldn’t inform you on the bill signed into law earlier this week nor explain how all of this will impact you personally and professionally. 

Rather, let’s look at this rationally and review the facts.

No one would deny that government spending is out of control.  To cite an overused cliché, the US government is spending money like a bunch of drunkin’ sailors, yet that would be utterly insulting – that is, to actual drunkin’ sailors.  What the government is doing is far worse.  Under both parties, Congress and the President have spent enough money to cause us incredible financial harm.  

Don’t believe me?  Consider that it took about 220 years for America to accumulate $5 trillion in debts, from the founding of the nation to about 1996.  We then accumulated another $4.5 trillion from 1996 to 2008.  Since 2008, the government has added an additional $5 trillion in debt….in just 3 years!  Believe me, there’s isn’t any credit card counseling that can cope with that kind of spending!

Yet that’s only part of the story.  While we are swimming in trillions in public debt, the powers that be were debating how much MORE we’d be allowed to take on.  That’s because, historically, Congress has placed a ‘cap’ on the amount of money that can be borrowed.  Up until a week ago, that ‘cap’ was roughly $14.3 trillion dollars, but we’ve exceeded that cap faster than most government experts anticipated. So what happens if you exceed the cap?  You default on your obligations and the credit rating agencies drop your bond rating, making it more expensive for the government to borrow more money.

In simpler terms, the rating is like your credit score.  If you have $20,000 on a credit card and are flirting with the $21,000 limit, your credit score is going to drop.  If your debt on that card exceeds that limit, you’re going to get hit with fines for defaulting, but it’s also going to mean that any future borrowing will be at a higher rate.  Why?  Because you’re now a credit risk.   Think of it like getting a rate on your mortgage; the higher your debt to the value of your home, and the lower your income to overall debt, the higher your interest rate will be and the more you’ll owe the bank in the long run.  

That’s basically what’s been going on here.  The United States currently has a AAA bond rating, which enables the government to borrow money at a lower interest rate.  If the rate increases, it becomes more ‘expensive’ to borrow money since we pay it back at a higher rate, costing taxpayers more.  

So how do we fix this problem?  Well, the fight over raising the debt ceiling is at the heart of that question.  What was finally passed by Congress was a ‘compromise’ bill that essentially permitted for some additional short-term borrowing in exchange for a cut in spending over ten years.  The government is permitted to borrow $400 billion immediately, an additional $500 billion within 50 days (unless Congress ‘stops’ them), and language that would allow increases of $1.2 to $1.5 trillion if certain conditions are met.  A new panel, a kind of ‘Super Committee’ made up of 12 members of Congress, will draft a deficit-reduction plan by Thanksgiving – Which we all know is going to be as political as it gets.  The hope is that the amount that is cut will be larger than the amount of the debt limit increase – But we all know that’s not going to happen.

In all my years in politics and around government, there has NEVER been a time when free-spending-politicians didn’t look for an additional excuse to waste public dollars.  These increases amount to a near-blank check that permits them to continue spending money on YOUR credit!

All of this is why you, as a citizen and taxpayer, should be upset about this entire fiasco.  But what about you as a small business owner?  It doesn’t get any rosier.  

By raising the debt ceiling and authorizing more borrowing, the government will essentially force the economy to slow down.  That’s due not only because of the borrowing, but also because there is a lot of uncertainty out in the market as financial experts wait to see what kinds of cuts that Congressional panel comes up with.  Ultimately that effects consumers who have had their confidences thoroughly shaken by this entire ordeal and are afraid to spend money.  

As a small business owner, you depend on those consumers to patronize your business.  When they don’t come and visit your shop or station, it means lower profit margins and reduced volume.  It can also mean lower job hiring in other areas of the economy, which will reduce overall market spending even further.  

In addition, there’s the real possibility that the government will need to raise additional revenues to make up for the increased borrowing.  That means new taxes and a shift in revenue raising.  How will that affect you?  It depends on how crazy Congress gets, but when they typically look to increase taxes, they usually look to business owners with hungry eyes and hands out.  An increase in the federal gas tax is certainly possible if revenues fall (they’re already complaining that they aren’t getting as much as they used to because cars are now more fuel efficient than ever) and the government may even explore NEW ways of taxing you (like adding a mileage tax). 

What about gasoline prices?  Indirectly related to this are inflation and how an increased deficit will mean that the value of the US dollar may continue to fall against other world currencies.  If the dollar weakens enough, it could mean that companies will need to spend more dollars to buy the same barrel of oil – and not due to market forces but due to monetary policies.  If that happens, then it’s possible for gasoline to cost more just in reaction to a devaluation of the dollar.  

What’s the bottom line? A lot of factors are involved here.  But if things slow down enough, if job growth falls, and if tax policies add additional burdens for a private sector that is already struggling, many experts believe that we could slip into another recession. 

It’s not a pretty picture. While the political experts and the talking heads out there will like to spin this 1,000 different ways, the bottom line is that taking on more debt creates more problems than it solves.  You as small business owner know this better than anyone does.  If you ran your business like the government runs the public books, you’d be out of business.

If there’s one good part about the entire crooked deal, it’s that they’ve also included a resolution on a Balanced Budget Amendment that has to be complete by the end of the year….but don’t hold your breath since it will take a two-thirds vote in each house of Congress to get to the States for ratification.

Lastly, there were rumors for a time that a bill which would significantly reform ethanol subsidy policy would be included in the bill.  The ethanol bill would eliminate the subsidy for ethanol as well as the tariff on Brazilian ethanol.  It would also expand tax credits for ethanol into 2015 and provide money to expand the country’s ethanol infrastructure.   Ultimately though, the Debt Ceiling Bill did not include any changes to the policy.

However there is still hope for this reform before the end of the year.  The Debt Ceiling Bill tasked the aforementioned Congressional ‘Super Committee’ to come up with over a trillion dollars in cuts and/or revenue increases by Thanksgiving.  If the panel fails to make the cuts, huge cuts would be enacted on Social Security and Defense spending.  There has been talk that there will be a variety of tax reforms coming out of this committee, and it is very possible that this ethanol bill, which has bipartisan support, will be included.  

Thanks for listening - See you next week!

Regards,
Sal Risalvato
Executive Director

NEWS AROUND THE STATE

8/3/2011:
Economic outlook is grim for remainder of 2011
With unemployment still high and stagnant growth, analysts are recalculating economic expectations for the rest of the year.  Experts believe that conditions may lead to a second recession in the face of soft consumer confidence and rising debt.  Click above to read the full report.

8/3/2011:
Budget Watch: Camden County seeks to create regional police force to save funds
A proposal to create a regional Camden County police force is gaining traction as the City of Camden is the first to agree to join the new police department.  While other municipalities in the county have yet to agree to join, state and local officials hope that pooling resources together into a single police department will ultimately save taxpayer dollars and better allocate resources.  Other counties considering similar arrangements include Somerset and Morris Counties.  Click above to read the full story.

7/31/2011:
NJGCA in the News: Risalvato, Crisalli talk hard cash
As the number of consumes paying with credit and debit cards has increased since the 1980s, many analysts believe we are moving toward a cashless society, where electronic transferring of money will become the only way of purchasing goods and services.  Executive Director Sal Risalvato and NJGCA Member Tony Crisalli chimed in on this phenomenon.  Click above to review the article.

7/29/2011:
New 54.5 mpg regs will force automakers to rely on technology
With new CAFE standards requiring automakers to average 54.5 mpg by 2025, automakers will have to broaden the use of the latest technologies in order to comply with the new laws.  Manufacturers will have to take existing features such as start-stop hybrids and expand their use to a greater number of vehicles, while adopting new technologies such as ultracapacitors and micro hybrids.  However, this will also mean that the average cost of a new vehicle will have to rise.

CLICK HERE TO READ MORE ARTICLES IN OUR “NEWS AROUND THE STATE” ARCHIVE 

MEMBER BENEFIT PARTNER MESSAGE

TMP Energy Solutions
Another Way to Save on Your Energy Bills

We have had a number of NJGCA members successfully reduce their rate per kWh   signing up through our energy saving program. We know it’s difficult to collect 12 months worth of previous electric bills to get an “accurate” analysis when comparing a variable rate to a fixed rate, but we now have another option available. 

This new solution is a power purchase option; the other program is still in full force and has saved members thousands of dollars. If you sign up for the power purchase option, you will be grouped with other NJGCA members until the minimum KW demand is acquired. By pooling the member’s usage together, you will be able to take advantage, as large energy users do, and receive a lower kWh rate.

Each member will receive their own contract. Each member is responsible to sign and return the agreement the day it is received in order to secure the price for their group.

Please do your due diligence, so when you receive the proposal and the agreement you will be able to make an intelligent decision.

If by chance, you still want us to assess you bills, to give you a price to compare, we will require12 months of your most recent utility bills.

There are no bills required, but we would still like to have one bill per meter on file to check account #’s, meter #’s  service addresses and other pertinent information incase there is a problem.

The term of the agreement is for 12 months. During this term period, you will have price protection against any energy price increases along with a low fixed kWh rate.

If you are interested in becoming part of this power purchase option, please contact Phil Apruzzi at the NJGCA.

Remember when you sign up your energy through the NJGCA Energy Program, TMP makes a considerable donation to the NJGCA Scholarship Fund through their proceeds. This has no affect on your rate, and costs you nothing out of pocket.

We hope to help hundreds of NJGCA members reduce their utility costs by participating in this and our other cost reduction programs.  Our purpose, in the endeavor, is to help NJGCA members lower their energy costs while supporting the NJGCA Scholarship Fund. 

Contact Phil Apruzzi at 973-376-0066 or email Phil at phil@njgca.org. Mention that you are interested in saving money on your energy bills. NJGCA & TMP Energy Solutions will handle all the rest.