If I were a woman, I’d be Claire Voyant

Remember when I told you I could predict the future (Scuttlebiz, Dec. 30)?
“The following events will occur somewhere in our metro area during 2008 … A longtime local business, which some residents consider an 'institution,’ will close.”

Well ...

“The owners of Fat Man’s Forest announced they plan to close the well-known store and restaurant on Laney-Walker Boulevard … The business was started in 1948 … and became a retail institution in Augusta.” – The Augusta Chronicle, Feb. 5 .

By now, if you’ve been reading your newspaper* you would know that the Usry family is in the process of selling the Laney-Walker property to a undisclosed buyer for an undisclosed price.

Details of the sale will eventually become public, but right now, no one but a handful of people connected to the seller and potential buyer know what “the deal is.” Being someone who is of the not-connected variety, I have a chance to prove my prognostication prowess with another prediction: The buyer will be MCG Health Inc. (or one of its affiliates) and the price will be $2.23 million (give or take a couple of hundred thousand).

The Usry family has publicly said it expects the sale to close during the spring, so you’ll have to wait at least a couple of months before you know whether I have a sixth sense or whether I’m the fool you’ve always suspected. I’m predicting the latter.

SHOT IN THE ARM: In addition to potentially contributing a nice chunk of change to the Usry family, MCG Health, the company that operates the hospitals and clinics for the Medical College of Georgia, contributes an estimated $835 million in the community.
That’s according to a recent report by the Georgia Hospital Association, which revealed that MCG Health had direct expenditures of about $339 million in 2005. When run through the federal Bureau of Economic Analysis’ multiplier, the total economic impact reaches $834,998,297. Voila!

KEEP ON ROCKIN’ ME, BABY: Raleigh, N.C.-based aggregates firm Martin Marietta Materials said in its quarterly and year-end earnings report last week that it has begun the modernization and expansion project at its massive Augusta quarry.

The project will make the gigantic hole sandwiched between the Augusta Canal and River Watch Parkway one of the largest rock quarries in the nation. The 150-year-old quarry, which already produces 2 million tons of rock, gravel and sand, will produce 6 million tons a year after the $20 million equipment upgrade is finished in early 2009.

Not only that, but the investment “is expected to reduce production costs on a per-ton basis,” company Chairman and CEO Stephen P. Zelnak Jr.** said last week as the company reported record year-end earnings, sales and margins.

The company’s profit fell short of analyst s’ expectations, however, causing its stock to plunge 10 percent after the release of the earnings.

No wonder companies are increasingly converting from public to private ownership. Apparently, it’s not good enough to have a stable and profitable business. If you can’t deliver consistent earnings growth to the gods of Wall Street in good times and bad, you might as well be running a lemonade stand.

NO PROFIT PROBLEMS HERE: OK, here are some numbers to make you feel insignificant. Consider the Martin Marietta fourth-quarter profit (the money left over after all the bills have been paid) of $56.5 million.

Now, that’s less than the $62.5 million profit the company made during the same period last year, but it’s still an average of $18.8 million that the company earned each month from September to December.

OK , now here’s the mind-blower: Exxon Mobil Corp., the world’s largest publicly owned oil company, also reported record fourth-quarter earnings last week: $11.6 billion . That’s billion, with a “B.”

While the folks at Martin Marietta were making more than $606,000 a day, the good guys and gals over at Exxon Mobil were making more than $374 million a month (a little more than what MCG Health spends in a year), or $12 million every day.

HERE’S A THOUGHT: What would happen if Exxon Mobil, and all the other U.S. oil companies, were owned by the federal government?

Nationalized oil is a foreign concept, but not a new one. Many oil companies are government-owned, including the Kingdom of Saudi Arabia’s Saudi Aramco, the world’s largest oil company.

Before I go any further, let me say this: I’m not a fan of government performing any function that can be performed better and less costly by the private sector.

Still, could nationalizing the U.S. oil industry help funnel cash into federal coffers and help pay down the nation’s spiraling national debt and maybe, just maybe, help keep gasoline prices stable? And isn’t oil kind of a national security thing?

Not being an expert in petroeconomics – or anything else, for that matter – I decided to pose the question to people who might provide an intelligent answer.

“No!” was the response from Augusta State University economics professor Mark Thompson.

“Believe it or not, these companies compete with one another. If the government stepped in, what incentive does the government have to compete and keep prices any lower?” he said.

I also asked Lehman Brothers’ chief energy economist, Edward Morse, who sent me two lengthy papers he had written on the subject. Boiled down, the papers make the same point as Mr. Thompson.

Mr. Morse cited the example of BP (the once state-owned company known as British Petroleum) and Kuwait Petroleum Corp. (which is still state- owned). In 1980, the companies were the same size. Today, BP’s $300 billion in sales is 10 times greater than KPC’s.

“State companies show very poor shareholder return in comparison to private companies that are challenged by competitive pressures,” Mr. Morse said.

I called him and asked whether it is possible to structure a state-owned oil company in such a way that it could be competitive?

“That’s a three-hour conversation,” he said, shortly before saying goodbye.

Drat. From now on I’m sticking to easy topics. Somebody, anybody, send me some gossip.

* Or listening to local broadcasters read the newspaper to you.
** An Aiken native, by the way.