Is 3.80 The Scariest Number For The Bulls?

Tyler Durden's picture


'Nothing can stop us now' appears to be the message we are being fed as Bullard et al. confirm we should rest assured that the Fed will pump as long as there's a sun in the sky. However, there is a little fly in that ointment that just keeps on popping up. As Barclays' Barry Knapp notes, gas prices have risen high enough to hurt stocks if history is any guide. Gas prices, which have risen every day since January 17th are pressuring the critical $3.80 level that has capped valuations for the equity market in the last three years. The last times gas prices have risen this high, consumer spending growth has stalled and just as we have noted previously, it appears the only thing that can tame the enthusiasm of a liquidity-addicted equity market is a cash-strapped consumer pulling back. The double-edged sword is simple, Knapp notes: any slowing of economic growth that stems from higher gas prices may prevent companies from meeting earnings projections; whereas sustained expansion would increase the risk of inflation and put pressure on the Fed to scale back its QE4EVA. Rock meet hard place.


Chart: Barclays and Bloomberg

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Sat, 02/23/2013 - 18:29 | 3270389 Motorhead
Motorhead's picture

Gasoline chart, bitchez!  (Or, triple top, bitchez!)

Sat, 02/23/2013 - 18:38 | 3270401 The They
The They's picture

My scariest number is $26

Sat, 02/23/2013 - 18:44 | 3270413 UnpatrioticHoarder
UnpatrioticHoarder's picture

The chart is Peak Oil's bumpy plateau in graphical form - proof of the impossibility of sustainable economic growth

Sat, 02/23/2013 - 21:03 | 3270619 Stock Tips Inve...
Stock Tips Investment's picture

Energy investments in America are very large. The effects of this boom on our economy will be very positive in the following years. Do not fall into pessimism and leave aside the negative ideas. America is much bigger than their problems.

Sat, 02/23/2013 - 21:34 | 3270669 Spastica Rex
Spastica Rex's picture

Americans are much, MUCH bigger. Thank McDonald's for that. But can the harvest of human body fat really keep up with the global decline of existing oil wells? Only the future will tell.

Sat, 02/23/2013 - 21:36 | 3270672 akak
akak's picture

US 'american' blobbing-up.

It's the mattering thing.

Make me laugh.

Sat, 02/23/2013 - 23:01 | 3270854 francis_sawyer
francis_sawyer's picture

The 'BLOB UP' Soap Company... Has a nice ring to it... I LIKE it!...

Sat, 02/23/2013 - 23:21 | 3270869 akak
akak's picture

99.44% Pure Citizenism.

So pure, it floats.

Blobbing-up dirt since 4 July, 1776.

(And on Easter Island, for several centuries before that date, due to the magical time-traveling flying rickshaw of Benjamin Franklin inventionism of fabled US 'american' citizenism past.)

Sat, 02/23/2013 - 21:40 | 3270677 hangemhigh
hangemhigh's picture

@Spastica             3270669

Eagle Cap dude...... i like it..............we can render all of those honey boo boo 300 pound lunkers into whale oil and call it 'Oilent Green'

Sun, 02/24/2013 - 04:31 | 3271137 _ConanTheLibert...
_ConanTheLibertarian_'s picture

Do I smell a hype? Those never end well.

Sat, 02/23/2013 - 18:44 | 3270414 UnpatrioticHoarder
UnpatrioticHoarder's picture

The chart is Peak Oil's bumpy plateau in graphical form - proof of the impossibility of sustainable economic growth

Sat, 02/23/2013 - 19:02 | 3270431 tenpanhandle
tenpanhandle's picture

seems the stockmarkets real scary number is plain and simple dow 14K and S&P P/E at 14

Sun, 02/24/2013 - 01:21 | 3271036 Lore
Lore's picture

Tilt your head slightly, and you can see a hockey stick for Unnatural Global Warming.

Sat, 02/23/2013 - 18:42 | 3270410 Gazooks
Gazooks's picture

inverted cow teat formation

Sat, 02/23/2013 - 20:38 | 3270571 Atomizer
Atomizer's picture

Do you want to know funny? I can remember this petrodollar PONZI SCAM FROM 2008. Back then, I drove a V-12 BMW 750 [until she accidentally crashed it]. Under premium gas filling. It would total a 30 gallon tank at $70- $80 dollars.


Fast forward to 2013. My 2.5 liter peasant mobile costs me $54 dollars @ 12 gallons of premium fuel. No inflation exists in the US. We are on a soft landing to disengage with QE3/ MBS bullshit. I still own my two Lincoln gas hog vehicles, just wanted to put things into prospective.

Sat, 02/23/2013 - 21:57 | 3270701 DoChenRollingBearing
DoChenRollingBearing's picture

Just filled up tonight: $75.00, probably the most it has ever cost me.  $4.69 / gal (premium).  When it is over $70 just to fill my tank, a little bit of the Bearing dies inside...

Sat, 02/23/2013 - 22:00 | 3270707 akak
akak's picture

Try $128.00 for my last fill-up.

Now that's pain!

Sat, 02/23/2013 - 22:15 | 3270749 DoChenRollingBearing
DoChenRollingBearing's picture

YOW!  I'm dyin'!  Oh, make it stop!


On the other hand (and depending on WHERE up there you live), maybe you don't have to drive as much...

Sun, 02/24/2013 - 11:05 | 3271361 orangedrinkandchips
orangedrinkandchips's picture

shit fire. 


I would love to get a truck, a used beat up that runs well but never at these prices.


fuck that. 


I cant imagine a bull run like I hear everywhere with gas prices this high.

Food prices for the wholesale is outrageous....all due to oil



Sat, 02/23/2013 - 22:35 | 3270802 Taint Boil
Taint Boil's picture



Hey, just for the record unless your car is specifically designed for high octane gas (premium) there is NO benefit. 


Premium Gas = Male Enhancement Drugs 

Complete bullshit for 98% of cars on the road. If you’re driving one of the 2% ….  Well you would already know this.

Sat, 02/23/2013 - 22:41 | 3270812 akak
akak's picture


Hey, just for the record unless your car is specifically designed for high octane gas (premium) there is NO benefit.

That is only half true.

While that fact does generally apply to all new vehicles, it is not necessarily the case for older, less efficient engines.  My mileage is increased by almost 20% by using premium over regular in my 15 year-old pickup, as I have proven to myself many times.

Sun, 02/24/2013 - 00:20 | 3270979 ekm
ekm's picture

Premium has no ethanol, hence valves work much betters.

Sun, 02/24/2013 - 01:29 | 3271045 smart girl
smart girl's picture

Keep to the same gas, otherwise adjust spark plugs for new octane.

Sun, 02/24/2013 - 10:22 | 3271323 Taint Boil
Taint Boil's picture



You know, I must have been wrong, so ignore what I said and continue to fill up.

Sun, 02/24/2013 - 10:50 | 3271347 Silver Garbage Man
Silver Garbage Man's picture

I have most of my life savings in silver......I'll bet gas gets cheaper priced in silver as we move forward, while it continues to rise in dollars. It's easy to see this coming if you are smart enough to know you don't know it all.

Sun, 02/24/2013 - 12:14 | 3271501 TPTB_r_TBTF
TPTB_r_TBTF's picture

I'll bet there's gonna be a war; therefore, i'll take the other side of your bet.

Sun, 02/24/2013 - 09:11 | 3271269 de3de8
de3de8's picture

Boy can I relate! 3/4 ton p/u given to son to drive to school only a few miles away providing safe transport while fuel cost not that big a part of equation. Meanwhile I drive my tomato can at 42 mpg to survive. Yeah baby a rising standard of living! More stealth stimulus where they welcome higher fuel costs forcing the Sheeple into gas sippers extending the bailed out auto cos unsustainable business model just a little while longer.

Sun, 02/24/2013 - 09:21 | 3271276 duo
duo's picture

When I bought my VW turbodiesel in November, diesel was $3.99.  Tuesday, when I filled it again, diesel was still $3.99, and 13 gallons still got me 450+ miles of city driving.

Sun, 02/24/2013 - 03:16 | 3271096 Buck Johnson
Buck Johnson's picture

I know, fuel prices is about to hit 4 dollars a barrel in the midwest and we aren't even in spring yet let alone summer.  We are going to have a market crash this March if not April.

Sat, 02/23/2013 - 18:33 | 3270395 Seize Mars
Seize Mars's picture

Carl Jung called events which occur with high correlation (but no causation) "synchronicity."

In this case I think both variables (gas prices and equity prices) are both "caused by" inflation. So they are both "from" the same source. imo.

Oh, and "Bitchez, bitchez."

Sat, 02/23/2013 - 18:35 | 3270396 PUD
PUD's picture

God forbid "con"sumers stop "con"suming mountains of useless landfill on credit. OMFG!!!

Sat, 02/23/2013 - 18:43 | 3270397 francis_sawyer
francis_sawyer's picture

2013 = 2007... February 27th will be the 'Arnold Rothstein' signal that the fix is on...


Sincerely Yours,

Titanic Thompson

Sat, 02/23/2013 - 18:38 | 3270400 Charles Nelson ...
Charles Nelson Reilly's picture

Think I saw The Ben Bernank pull out of Fed headquarters on Friday in one of these

I knew it was him because it had vanity Virginia tags that said "MONEYMKR"

Sat, 02/23/2013 - 19:04 | 3270406 mind_imminst
mind_imminst's picture

The FED cannot stop QE. If history is any guide, the FED will keep printing and destroying the wealth of the middle and lower classes. The government will be cajoled into price controls, punishing evil "speculators", and outlawing competing currencies. We all know the script.

Sat, 02/23/2013 - 19:11 | 3270451 eclectic syncretist
eclectic syncretist's picture

What are you going to do now Bernanke, you stupid motherfucker??!!!  Print a shitload more debt IOUs FRNs out your bankster drilled ass?  Don't you know that's what created this mess in the first place?

Sat, 02/23/2013 - 22:00 | 3270706 DoChenRollingBearing
DoChenRollingBearing's picture

@ mind_

Yes, the time to start getting prepared for Hard Times was yesterday.

Sat, 02/23/2013 - 18:42 | 3270409 balolalo
balolalo's picture

This sure looks like the good ole peak-oil bumpy plateau.   

I wonder how long fracking can keep this game going?  

drill baby drill 

Sat, 02/23/2013 - 18:47 | 3270417 jballz
jballz's picture

I would like to know when the domestic oil boom is going to get us back to a nickel a gallon.

Can we stop selling the excess to the chinks already? We gave them the blueprints for th bicycle, that seemed to work fine for a long time. Then we gave them ijobs and now they want our fucking gas.

No more exporting distillates until we are under a dollar.

Get on your bikes and ride, bitchez.

Sat, 02/23/2013 - 18:54 | 3270424 jballz
jballz's picture


That's racist!

You should be ashamed of yourself.

Besides, it's the Jews fault, not the chinks. Haven't you been reading ZH comments long enough to have figured that out?

Sat, 02/23/2013 - 19:00 | 3270427 jballz
jballz's picture

good point. +100

Sat, 02/23/2013 - 22:01 | 3270712 DoChenRollingBearing
DoChenRollingBearing's picture

Of course it's the juice fault.

Sun, 02/24/2013 - 18:10 | 3272306 El Crusty
El Crusty's picture

 not saying that i agree with his choice of words but you should be ashamed of yourself for jumping on the P.C. bandwagon.  sugar-coating the truth is never a good idea.

Sat, 02/23/2013 - 19:07 | 3270446 Gamma735
Gamma735's picture

While the Fed prints money oil behaves more like a currency instead of a commidity.

Sat, 02/23/2013 - 20:51 | 3270597 Things that go bump
Things that go bump's picture

The oil that comes out of our ground isn't our oil, any more than the oil in Kuwait is the Kuwaitis. It is sold on the open market and hell take the hindmost.

Tue, 02/26/2013 - 14:31 | 3278428 Dr. Engali
Dr. Engali's picture

The domestic "oil boom" will die if oil goes under $80 per barrel for an extended period of time. It's not cost effective to take it out of the ground for any price below that. So kiss $ 1.00 gas goodbye... it's gone forever.

Sat, 02/23/2013 - 19:01 | 3270434 Gamma735
Gamma735's picture

Tyler, can you chart Gas Prices, S&P500 and the different QEs?

Sat, 02/23/2013 - 19:03 | 3270437 ekm
ekm's picture

That's the only thing that matters, absolutely the only thing that halts QEs: CRUDE OIL PRICE


I've read a long time ago an article about how macro guys at big, like big hedge funds do their calculations. It seems that there are only a handful MACRO managers at hedge funds, since only few people can handle the duty.


Calculations were based on Brent Crude at $80 as the threshhold of pain for the world economy. Any dollar above brent $80 for longer than 6 months, the economy would literally stall. However at brent $90 and above for longer then 6 months, the western economy and the world one would simply start contracting.

Brent has been at $110 for as far as I can't remember at this point. The way I see it, the western and the world economy has contracted by 3-5% during the last 18 - 24 months, only due to crude oil price.


That's why I say, all the oil in tankers will be unloaded very, very soon. WTI will go as low as $15 temporarily this year, my prediction.

Sat, 02/23/2013 - 19:31 | 3270479 reload
reload's picture

You keep articulating this scenario: and I keep trying to get my head around it ! A flash crash of spec long pain? Maybee-but production costs and the ample reasons we could see problems with production and delivery from the ME just have to put a strong bid under the market in the 70/80 dpb range (Brent).

I also wonder if the floating tankered inventory is a defacto boost to the strategic reserve for use/rationing in case of supply disruption.

Time will tell, I think I understand your logic (& can observe ample demand destruction here in the UK) but I still struggle to see a collapse in price.



Sat, 02/23/2013 - 19:38 | 3270487 ekm
ekm's picture

Let's assume the flash crash won't be allowed to happen. Then:


Shortage of energy (from the real economy) = Starvation.


It happened in 2008 because Bush gave the order. Those tankers are owned by primary dealers and other major euro banks who cannot exist without gov support since they are insolvent. Indirectly, those tankers are owned by the governments.


They will flood the market, otherwise...starvation.

Sat, 02/23/2013 - 20:06 | 3270520 Nid
Nid's picture

Are the floating inventory tankers accompanied by Naval vessels?

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