Oil and gas determined to drop as costs pinch customer demand

Oil costs are soaring and gas prices are approaching amounts not seen since the summer of 2008. Speculators continue to drive up the numbers at gas pumps, never mind the fact there are no gas shortages in the U.S.. However reality will intrude on the markets, analysts say, when gas becomes too expensive for U.S. consumers to afford.

Prices on oil

The sweet crude for May delivery went up to its highest amounts since September 2008 on the New York Mercantile Exchange. It went up to $111.90 a barrel. United States gas prices reached an average of $3.70 this week, their highest level since the summer of 2008 also. Several studied the rise in oil costs. There were several factors that brought on it. A looming government shutdown is worsening the dollar, which makes dollar-based commodities for instance crude oil more affordable for traders betting with other currencies. It doesn’t seem like the Libya conflict is about to end. The country has already stopped producing most of its oil. However as U.S. customers pay just a little more every day at the pump, the United States is awash in oil. In the week that ended April 1, United States oil inventories went up 2 million barrels the U.S. Energy Information Administration explained. There was an increase in over 14 million barrels a day in the crud refinery.

Supply and demand ignored

It used to be that OPEC was to blame for this. This hasn’t affected it at all though. There was an oil conference in Paris where the United Arab Emirates oil minister spoke. He said that prices have hardly any change anymore due to OPEC. OPEC gives enough oil to the industry according to Mohammed bin Dhaen al-Hamli. The only reason for oil prices rising is due to traders. They are betting on a worst case scenario rather than paying attention to the facts. Oil speculators are being aided and abetted by the Federal Reserve, which has been giving hedge funds and pension funds money at zero percent interest so they can bet on increasing commodity costs. Oil futures are $15 and $20 increased than they need to be at according to analysts. The next betting frenzy could be triggered by elections this weekend in Nigeria, where output of 2.2 million barrels a day could possibly be disrupted by violence.

Oil tipping point

There are signs that oil and gas prices have risen to a level that United States consumers can no longer afford. In just the last four weeks, there has been a 3.7 percent drop in gas demand. Some analysts are saying that oil prices will reach a tipping point soon, unless another crisis in the Middle East or a Nigerian meltdown play into the hands of oil speculators. Oil was around $90 a barrel until the second quantitative easing plan (QE2) started to fail the Fed had in place. The whole plan might change in June when the QE2 ends. This might end up leaving crude oil around $85 to $95 a barrel total.

Articles cited

Wall Street Journal

online.wsj.com/article/BT-CO-20110408-707562.html

New York Times

nytimes.com/2011/04/09/business/09markets.html?partner=rss&emc=rss

Industrial Fuels and Power

ifandp.com/article/0010617.html

Fortune

finance.fortune.cnn.com/2011/04/08/oil-at-the-tipping-point/

Repaying the first-time home buyer tax credit

Taxpayers who claimed the $7,500 first-time home buyer tax credit two years ago need to be ready to pay come tax day 2011, reports the Philadelphia Inquirer. On Monday, April 18, the first of 15 annual payments is due on that loan. Article source – First-time homebuyer tax credit: Get ready to pay by MoneyBlogNewz.

Using the first time home buyer credit

A segment of new United States homebuyers were eligible to claim a tax credit equal to 10 percent of the purchase price of a home, up to a maximum of $7,500. The tax credit could possibly be divided by unmarried homebuyers or married individuals filing separately could get $3,750 each, according to the House and Economic Recovery Act of 2008. Any homes bought between April 8, 2008 and January 1, 2009 was able to get the credit.

The tax credit was very popular for several individuals. The problem was that it was being called “credit.” Really it was just an interest-free loan be given out. Yearly, for 16 years, the first-time homebuyers may have equal installment payments to be repaying the government. A $7,500 first-time home buyer tax credit will break down to $500 per year, unless the home is sold before the total amount is paid off. When selling the home, the balance is due immediately. It isn’t paid over time anymore.

Tax breaks homebuyers can get

The first-time home buyer tax credit was not the only thing Congress did. There were two other tax credits extended. The first offered an $8,000 credit to first-time buyers who signed contracts between January 1, 2009 and April 30, 2010. As long as the contract had been signed by April 30, the sale could be completed by September 30, 2010, and the taxpayer could qualify for the credit. There was also a $6,500 credit accessible. This was for long term homeowners that bought, between November 7, 2009 and April 30, 2010, a new or existing home.

Both of these additional tax credits require that homebuyers repay the entire amount – either $8,000 or $6,500 – if the home is sold within three years of the purchase date or the property becomes a secondary a secondary residence within the same time period. It is simple to sell within three years nevertheless. There are ways around it. The sale of home may end up with a profit. If that profit is less than the amount of the tax credit, then only the profit needs to be paid back.

All the IRS returns trouble

Married couples filing jointly have been hard on the IRS. There have been lots of glitches in this, the Inquirer states. With the Form 5405: “First-Time Homebuyer Credit and Repayment of the Credit,” several filed before February 22, 2011. That means manual returns were required taking a long time to process.

Internal Revenue Service projections indicate that about 1 million United States households could be repaying the $7,500 first-time home buyer tax credit. You can go to IRS.gov and look at the “Where’s My Refund?” connection to discover out more if you don’t have your refund.

Information from

Housing and Economic Recovery Act

frwebgate.access.gpo.gov/cgi-bin/getdoc.cgi?dbname=110_cong_bills&docid=f:h3221enr.txt.pdf

IRS

irs.gov/newsroom/article/0,,id=204671,00.html

Philadelphia Inquirer

philly.com/philly/phillywomen/119915874.html

How Canada helps first-time home buyers

youtube.com/watch?v=lg_i8SRhMO0

Professional compensation soaring as wages flat line

Payment for chief executive officers at United States corporations increased 12 percentage points in 2010 to reach a median figure of $9.6 million. In the final quarter of 2010 corporate profits grew faster than they have in over 60 years-30 percent. As CEOs get richer, the workers making them rich get poorer because the rising cost of food and gas is taking a bigger chunk out of stagnant wages. Source of article – CEO pay soars as flat middle class wages erode with inflation by MoneyBlogNewz.

The harder the work the more for the CEO

At a time when millions of Americans simply hope they keep their jobs, average CEO pay has risen to surpass pre-recession levels. Even as employment is increasing, employee pay isn’t, however CEO pay is. Over 13 million people are currently looking for work, yet CEO’s are getting by on what they already have and increasing their own wallets. CEO’s have no reason to hire employees when they’re making do with who they have. Economic bailout sectors were given to CEO’s in 2010 at an average of 12 percent. In the mean time, average pay for private sector workers grew about 2 percent. 8.8 percent was the average joblessness rate in March. Most economists predict the jobless rate will continue to remain high for years.

The CEO stock portfolio increases

The highest paid CEO in the U.S. this past year was Phillipe Dauman of Viacom who pocketed $84.5 million in just nine months. Ray Irani of Occidental Petroleum made $76.1 million last year, making him take the place of the second highest paid CEO. Forbes also states that Oracle’s Larry Ellison brought in $39.5 million making him the 3rd highest paid. CEOs are gaining the largest raises since 2007, with stock choice thanks to Wall Street. Several CEOs accepted stock options during the recession when they held little value, knowing that huge paydays lied ahead when the market recovered. The stock market has recovered and now the CEOs are cashing in and making the large bucks. USA Today reports that many of the CEOs cashing in their stock opportunities were making well over $20 million.

The increase in commodity costs hurts the middle-class

Middle-class has not gotten any pay increase, yet prices have risen. This combination makes it hard for middle class to enjoy the CEOs pay raises. The Bureau of Labor Statistics says that the average hourly wage for workers hasn’t increased by a penny in so-much-as five months. While U.S. workers who nevertheless have jobs aren’t getting raises, employers in developing nations are hiring new consumers who are pushing up demand and prices for food, oil, cotton and other commodities. The direction of costs of goods and wages are going in different direction. Gas costs alone eat up more than half the average worker’s wage increase. The average middle-class employee buys about 12 gallons of gas a week alone. Individuals have reported that filling a gas tank is costing $40 more per month than it did last year. Yet the average weekly raise only increased by about $18.

Articles cited

New York Times

nytimes.com/2011/04/10/business/10comp.html?_r=2#38;ref=business

USA Today

usatoday.com/money/companies/management/2011-04-04-1Aoptions04_ST_N.htm

NPR

npr.org/2011/04/10/135272006/paychecks-cant-keep-up-with-rising-prices

Tax deductions you need to not try at home

Monday, April 18 is tax day 2011, and some Americans will attempt to slip some very creative tax write offs by the Internal Revenue Service. From flattop haircuts to human sperm contributions, auditors have seen it all. Don’t take these as examples, however marvel at the ingenuity – or laziness, or lunacy – that went into these crazy attempts at tax write offs. Source for this article – Bizarre tax deductions to brighten your tax day by MoneyBlogNewz.

Minister looking for real estate

Bankrate reports that CPA Ken Sibley knew a male who tried to claim travel and entertainment expenses as tax deductions as a minister. After trying for years, the minister never found real estate investment properties, even though he was trying to. This could not be considered business expense. It could have if anything were purchased.

A wedding is not a charity

Getting married isn't enough to deduct expenditures. It cannot be a part of business expenses being deducted. Clients attending the wedding doesn't make it business related. A Massachusetts CPA said it will not work, regardless how you swing it. And remember: your betrothed isn’t a charity, so there is no way can count wedding expenditures as charitable donations, either.

Expenditure taking 30 years

New Jersey CPA Don Meyer spoke of the business manager of a famous entertainer who arranged for the purchase of a $2 million office building. It would be business expense and deducted as one. The manager wanted to use it that year for it. The business manager was at a loss though since the complete expense would take over 30 years to recover. The law would not change regardless how much money there was to spare.

Don't try to count a dog

A home-based business can produce legitimate tax write offs, but claiming pets as security expenses won’t fly. Home security systems in general do not fly with the IRS, either, says the Hunter Group of Fair Lawn, N.J. One woman said that if someone came into her home and killed her, she would not be able to pay taxes anymore which mean she should be able to deduct her home security system.

Do not try to deduct adult magazines

Tax deductions for dues and subscriptions to professional and trade publications do work. You have to be in that field though. According to Quizlaw, these would go under miscellaneous as long as the 2 percent floor rule is met. This means it must account for 2 percent or more of the adjusted gross income.

Business strategy for a self-employed real estate agency should not contain adult magazines in business deductions. A Massachusetts CPA Explained this isn’t something you should be doing.

Once, Don Meyer had a prostitute client. That was different. Declaring her income was significant to her. She said her job was in "public relations."

Citations

Bankrate

bankrate.com/finance/taxes/10-craziest-tax-deductions-for-2011-1.aspx

IRS

irs.gov/businesses/small/article/0,,id=204169,00.html

Quizlaw

quizlaw.com/federal_income_tax/can_i_deduct_dues_and_subscrip.php

On deducting haircuts and sperm donations

youtube.com/watch?v=uW6HWOekZ3M

Refund anticipation loans could become endangered species

Regulatory actions are making refund anticipation loans harder to come by for customers that want them. Banks are under increasing regulatory pressure from the government not to fund the loans, which makes it harder for businesses that offer them to secure the credit. Consumer supports have been opposed these loans for some time. It is said they are very detrimental to consumers.

Tax preparers running out of options for financing

The legal underwriting needs for tax refund loan programs are becoming harder to meet making it hard for H&R Block and Jackson Hewitt, along with other tax preparation services, to discover financing. HSBC was forced by the Office of the Comptroller of the Currency to close its program financing H&R Block. This caused H&R Block to shut down its refund anticipation loan program, the Washington Post reports. The loss of that product causes H&R Block to lose a ton of money in a three month period ending January 31. The business, according to NPR, lost $12 million. In April 2010, Chase stopped financing short term loans for tax refunds.

Change in IRS rule brings loan product to a halt

The Internal Revenue Service had a rule that let a person's tax refund status be checked by a refund anticipation loan creditor. This is what really hurt things. That law was repealed past year, and the belief that a financial institution might not check on the borrower’s credit worthiness meant that legally mandated underwriting needs cannot be met. This year, there were Refund anticipation loans offered in the River City Bank and Republic Bank and Trust in Louisville, Ky. The Ohio Valley Bank in Gallipolis, Ohio also offered them. At the end of this tax season, both River City Bank and Ohio Valley Bank are planning on leaving the market. That means that there can be only one bank that offers them in the whole nation soon.

What you should learn about refund anticipation loans

refund anticipation loans are fairly simple. Someone goes to a tax preparation service to have taxes done. This consists of Jackson-Hewitt and H&R Block. If they are due an income tax refund, they can take out loans against their refunds. Usually, a fee of about $65 and the amount of the refund could be taken out. These are very much like payday loans. They’re loans against future earnings for several to use. There’s a fee and penalties on the loans, just like payday loans, while there is no credit check. Low-income places will get the loans more than others which get a lot of criticism. However, most people who take the loans have a pressing need for cash and don’t want to wait.

Citations

NPR

npr.org/templates/story/story.php?storyId=134403451

Washington Post

washingtonpost.com/capital_business/2011/03/25/AFNQJVkB_story.html

Nasdaq rebalancing decreases volatility prospective of Apple

The Nasdaq stock exchange announced Tues that it’s rebalancing its Nasdaq-100 index next month to correct the outsized influence of Apple, Inc. Nasdaq recalibration lessens the load of Apple shares on the cumulative worth of the Nasdaq index by two quarters, which equals one half. Nasdaq’s stirrings will shrink the propensity of financial institutions of the hedge fund type to cynically disrupt the natural rhythms of Apple stock so that average Joes can count on a more reasonable possibility of return on investment down the road.

Percentage of Apple on Nasdaq to decrease

There have been increases for the last few years in the Nasdaq-100 with every Apple stock increases. There have been a lot of those. There has been over a 250 percent increase in Apple shares since the 2009 market crash because of the Mac, iPhone and iPad. Since then, Apple’s stock has risen about another 150 percent to represent more than 20 percent of the total worth of the Nasdaq-100 index. Nasdaq officials spoke on Apple stock. In the index, it is twice what it should be. On May 2, Nasdaq will rebalance everything. This will make, on the Nasdaq-100, Apple shares only 12 percent. Apple stock ratios will be better for calculations on the Nasdaq-100. All will be well. This can be a large change. It will change 81 other business positions. Apple rivals may gain due to this. Microsoft will rise from 3.4 percent up to 8.3 percent. Oracle will rise to 6.7 percent, Google will rise to 5.8 percent, and Intel will climb to 4.2 percent.

Huge manipulation of market with rumors about Apple

Any future manipulation by hedge fund traders that could hurt the Nasdaq-100 or short Apple will be prevented by the lower ratio of Apple shares. Jason Schwartz at Seeking Alpha describes a recent instance in which unconfirmed conjecture about Apple based on vague sources subjected Apple stock to irrational price swings. In February, when Apple was trading at $360, hedge fund Yuanta Securities floated a rumor based on “supply chain contacts” the iPad 2 would be delayed until June. Bloggers spread the rumor, and Yuanta Securities used it to aggressively short Apple shares. It only took 2 days to decrease Apple stock. It had a $20 decrease. Shortly afterward, Jobs, who was given six weeks to live by bloggers, declared the iPad would go on sale March 10. Investors who should have known better felt duped, and Yuanta padded its returns. However the chicanery affected the worth of the entire Nasdaq-100.

Getting rid of the Apple rumor impact

Money managers are started to redo the money they have even though the Nasdaq rebalancing will not take place for another month. A drop occurred on Tuesday in Apple stock during this. It brought on a $4.19 decrease from $337 to $341.19. Manipulating the market with Apple will no longer happen. It has already stopped. Analysts do not expect the latest iPhone delay rumors (which would freeze the iPhone market and hurt Apple if they were true) to work because Apple stock remains about $15 below its high and is trending upward again. A window has been opened for average investors and traders to get into Apple shares and the business is expected to exceed expectations again when it reports first quarter earnings this month.

Information from

Fortune

tech.fortune.cnn.com/2011/04/05/a-good-day-to-buy-aapl/

Mac Observer

macobserver.com/tmo/article/nasdaq-100_to_cut_apples_index_share_nearly_in_half/

MSN Money

money.msn.com/market-news/default.aspx?feat=e52a3c86-3053-48e5-91eb-970765febdcc

Seeking Alpha

seekingalpha.com/article/260887-hedge-funds-bloggers-and-the-origin-of-apple-rumors

Dodd-Frank will cost almost $3 billion, states GAO

What will the cost of consumer financial reform under the Dodd-Frank Wall Street Reform Act be? Working class individuals will be on the hook, but not for anything. In accordance with a Government Accountability Office (GAO) report, that burden will amount to as much as $2.9 billion over five years, the price of Wall Street reform.

security in finances needs more than taxpayer dollars

The Wall Street Journal reports the Dodd-Frank Act won’t need taxpayer dollars completely to work although working class individuals feel like this is the case. Of the 11 agencies that will be responsible for putting the Dodd-Frank laws into practice, six are either fully or partially funded by revenues and assessments from companies and/or entities that the Dodd-Frank agencies oversee. Revenues such as assessments are used to pay for other ones. These consist of the three that congressional appropriations covers and the Consumer Financial Protection Bureau that the Federal Reserve will fund.

U.S. government gets more money from banks

Banks, credit unions, investment houses and short term loan outlets are slated to pay the U.S. government more to operate under Dodd-Frank laws. Concerns of over-regulation hurting competitiveness have come out because of this. The Republicans have used the GAO report to prove that the economy won’t be able to manage the Dodd-Frank laws very well.

The GOP will be talking about the first year of the Dodd-Frank Wall Street Reform Act as it will cost about $975 million to support all 11 agencies. That’s the baseline used to project the five-year, $2.9 billion price tag. There will need to be a total of 2,600 full-time workers hired for the laws. This includes a total of 1,225 workers for the Consumer Financial Protection Bureau being started.

The other stuff the GAO report has to show

The House Financial Services Subcommittee on Oversight and Investigations had a presentation from the GOP recently. The Journal explains these points from it:

• There was a Fed estimate done earlier this year. It stated that $77.5 million will be needed to implement the Dodd-Frank Act with 290 new full-time employees. The Financial Market Infrastructures Oversight, the Office of Financial stability Policy and Research and the Financial Market Infrastructures Risk Analytics have all been offices created. These three offices are necessary if the Dodd-Frank laws are to run correctly.
• The first of the three Fed sub-offices, the Financial stability Oversight Council, will pay seven full-time staff up to $7.9 million beginning in fiscal 2012.
• To be able to perform Dodd-Frank duties, the Office of Financial Research needs to hire 135 full time staff in the fiscal 2012 paying $74.5 million.

Information from

Senate

banking.senate.gov/public/_files/070110_Dodd_Frank_Wall_Street_Reform_comprehensive_summary_Final.pdf

Government Accountability Office

gao.gov/

Wall Street Journal

blogs.wsj.com/washwire/2011/03/28/dodd-frank-2-9-billion-over-5-years-gao-says/

GOP on what Dodd-Frank might cost small businesses

youtube.com/watch?v=6iB2fWk7Rho