This page has been archived and commenting is disabled.

About The "Gas Prices Are Low" Meme

Tyler Durden's picture




 

Much has been made recently of the 'implicit' tax cut that a sliding gas price is providing for the beaten-down, confidence-sapped, credit-using consumer. Sure enough, gas prices are at their lows of the year. But, unfortunately, recency bias is our enemy once again since the price of regular gas is still 8.5% above its average since the crisis began - and that with miles-driven still slumping. Not quite as 'tax-cut'-inspiring when viewed that way...

 

 

Chart: Bloomberg

Bonus Chart: Miles Driven vs gas price... (via Advisor Perspectives)

 

 

Click to View

 

- advertisements -

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Tue, 11/12/2013 - 21:09 | 4148306 SILVERGEDDON
SILVERGEDDON's picture

Save gas - fart in a jar. 

Tue, 11/12/2013 - 21:26 | 4148339 atm0sphere
atm0sphere's picture

release moar methane

Wed, 11/13/2013 - 06:13 | 4149148 Headbanger
Headbanger's picture

No, it's "fart in your tank"

There were bumper stickers saying that soon after the first OPEC "oil embargo" in '73 .

Tue, 11/12/2013 - 21:12 | 4148312 Flakmeister
Flakmeister's picture

It is cheap....

Tue, 11/12/2013 - 21:40 | 4148367 Dr. Engali
Dr. Engali's picture

Cheap is relative. The 48 million Americans under the poverty level would disagree with your statement.

Tue, 11/12/2013 - 21:41 | 4148369 fonzannoon
fonzannoon's picture

for 48 million people gas prices are already in hyperinflation.

Wed, 11/13/2013 - 02:27 | 4148563 Flakmeister
Flakmeister's picture

For 1.5 billion Chindians it is expensive, what is your point?

Gas used to be expensive, $0.35 gas in the 60's or 1/100 of an oz of gold would be $12.70 a gallon...

Then again if wages had kept pace with GDP since 1970, median family income would now be ~$104,000....

Edit; For perspective, in 1998 average price was $1.03 a gallon or 1/295 of an oz of gold at the time....

Wed, 11/13/2013 - 00:31 | 4148823 aVileRat
aVileRat's picture

Flakmeister is correct. Adjust the nominal price at a pump back to 1998 prices.

Ex-inflation, the price of WTI is pretty much on par (ha!) with the marginal price of US$78/bbl. If you follow the recent spate of Divestitures and mothballed exploration projects in America (remember we are oil independent now!!! all oil is economic now!!! ) and global supply shut-in's. The story is very different.

Inventory numbers will likely show that driving days have fallen further as more take the po-bus or cease transport alltogether due to zero job growth beyond the structural transitions to low-wage big box outlet depots. Inalisticity in the oil price for retail pass through is one of the last things to go down, and when it does that is a sure sign that the bottom has fallen out of stimulated inflation.

The oil correction today is pretty much proof positive we are not very far off from that big dip being processed in the 2015 pits.

Or Yellen could just rip and print another 800B, and all the twitter stock holders can buy all the WTI they can afford with those mark to paper profits. Oil right now is like gold miners, not worth the script to produce. Just ride the waves.

 

 

 

Wed, 11/13/2013 - 07:48 | 4149205 Running On Bing...
Running On Bingo Fuel's picture

It's cheap? The author missed the most important economic point. The spread between commercial fuel(diesel) and retail fuel(unleaded).

Given the drop in the price of crude both blends should have softened but the price of diesel has remained high. Diesel has the ability to deflate the cost of goods.

Let's try and do a better job when looking at the bigger picture. Shall we? Or I'm going to come in here swinging.

Over.

Wed, 11/13/2013 - 13:46 | 4150554 Flakmeister
Flakmeister's picture

Diesel is what the world really runs on... 

Given the typical refining assays and the 3-2-1 crack spread, refiners are going to go out of their way to sell to the highest bidder and those on the GC are....

Tue, 11/12/2013 - 21:23 | 4148333 fonzannoon
fonzannoon's picture

Gas prices are low if you save in the S&P 500 index instead of the bank

Tue, 11/12/2013 - 21:27 | 4148341 max2205
max2205's picture

Come on TD...spin it like Shummer would!

Tue, 11/12/2013 - 21:28 | 4148343 johnQpublic
johnQpublic's picture

well, milk is still 3.99 a gallon

in those terms, gas IS cheap

though i dont like gasoline on my cereal nearly as much as i like milk

of course organic milk is 6.59 a gallon and is my preferred choice

so drink a half gallon of good milk or a gallon of crap

glad i dont have kids

Tue, 11/12/2013 - 21:35 | 4148354 toady
toady's picture

Milk is $1.87 a gallon. I know, I have kids.

Where do you live, NY?

Tue, 11/12/2013 - 21:37 | 4148361 ghengis86
ghengis86's picture

Nah, milk is cheap even with kids; just stop pumping them full of milk! A half gallon of almond milk lasts about a week around here. It's amazing how little milk you 'need' once you ditch the GMO corn cereals coated in GMO sugar/HFCS.

They get water or...usually just water. No soda, not much juice, maybe some cider this time of year, iced tea...that's about it.

Still have to cart them around, but the soccer fields, tennis courts, playgrounds and other fields are within a mile or two in our small town.

Tue, 11/12/2013 - 22:10 | 4148446 quasimodo
quasimodo's picture

Our three kids drink milk, however it's only grass fed organic, and yes we do encourage water as well. 

The HFCS is everywhere and one has to be vigilant about buying products that do not contain that shit.

Wed, 11/13/2013 - 01:37 | 4148918 safe as milk
safe as milk's picture

in manhattan, organic milk is about $3.99/half gallon. whole foods non-bvh milk is $1.99/ half. c-town gets about $1.29 / half for generic milk. not only does almond milk not taste as good as real milk but the quality of the protein in it is inferior. my daughter eats non-gmo cereal and prefers water to milk. we go through about half a gallon of milk per week but she also drinks yogurt and kefir.

Wed, 11/13/2013 - 10:58 | 4149727 Magnix
Magnix's picture

Milk is $1.99 a gallon at ALDI in Dallas, TX

Tue, 11/12/2013 - 21:28 | 4148344 Dr. Engali
Dr. Engali's picture

Low gas prices mean nothing if incomes are even lower. What is the percentage of energy eating up the average pay check? That is what really tells the story. If people don't have any money, they aren't buying any gas.

Wed, 11/13/2013 - 01:55 | 4148944 Flakmeister
Flakmeister's picture

That metric peaked in 1980 for gasoline....

http://www.eia.gov/todayinenergy/detail.cfm?id=9831

And for home heating/cooling in 1982

http://www.eia.gov/todayinenergy/detail.cfm?id=10891

But there is a catch, in that this is compared to  average not median income... 

Tue, 11/12/2013 - 22:09 | 4148442 t0mmyBerg
t0mmyBerg's picture

I get a chuckle out of listening to the "gas is cheap so more consumer spending" meme on TV.  I find myself getting excited recently by buying gasoline for under $3!!!  I remember in 2008 panicking on a trip and filling up because I thought it would go over $3 for the first time.  That was only 5 years ago.  Recency bias indeed.

Tue, 11/12/2013 - 22:20 | 4148465 quasimodo
quasimodo's picture

Here in corn country, the 87 non ethanol is 30 cents more per gallon than the 89 10% blend. I refuse to burn ethanol blend, and could give two shits less if the 87 was a buck more per gallon. 

Ethanol industry can KMFA. Ethanol is a fucking scam and does a helluva lot more harm than good, and if it were not for the GD gov freebies would have fallen flat on it's face long ago. The ground here in northwest IA and the whole midwest area for that matter is screaming bloody murder after being treated the way it has over recent years when these guys plant corn on corn on corn, never rotating or putting ground in crops like alfalfa or clover every so often to replenish nutrients and run off.

We had a wet spring this year around here, with a few hard rains. I think it woke a few folks up when they saw acres of top soil laying in the ditches and low lying areas. I just had to chuckle when I saw all those ditches with the spots of corn and soybeans growing there from being relocated. 

Yeah, I know. It's a double edged sword. This area has prospered pretty well during the downturn as of late, and when the ag land bubble bursts, and it will, shit gonna get real around here in a hurry.

Tue, 11/12/2013 - 23:03 | 4148565 Flakmeister
Flakmeister's picture

Thanks for the perspective...

Wed, 11/13/2013 - 01:29 | 4148906 willwork4food
willwork4food's picture

Visited Mason City a year ago.  I was surprised how much a home costs. Seems like the economy is booming over there- even during the drought.

Wed, 11/13/2013 - 13:14 | 4150416 t0mmyBerg
t0mmyBerg's picture

In a U of Illinois article I was forded by Ag Trader Talk today, thye mentioned that a 535 acre farm sold in central Illinois (presumably the high quality land) for 14.5 Million.  Now it may have had a 7500 square foot house with a htheatre in the basement and it may have a hog operation and a whole lo tof machinery and equipment and other buildings and goodies but that is on the face of it $27,000 per acre.  I have to imagine the land is no more than 20,000 of that but still that is a LOT for farmland.  And I agree it WILL revert to under $10k at some point.  Maybe under 5.  Same article put the breakeven price for soybeans at 10.57 given land rent prices and non-land costs associated with farming.  That is up from a sub $5 break even in 2004.  Amazing times we live in.

Wed, 11/13/2013 - 00:20 | 4148799 HowardBeale
HowardBeale's picture

Seems fair in a world where profit "justifies" murder, that anyone who misinforms the Citizenry for personal gain thus renders him or herself a legitimate target for assassination; a shot to the head would be generous and just; a hanging by the neck would be merciful and reasonable; a dismemberment by chainsaw would be righteous and enjoyable, and thus, it is the latter that shall be favored when the time comes. May those in the golden cocoon realize their sins in time to offer penance and the names of the future de-parted...

 

As William Wallace and Company might offer: "McCulloch!"

Wed, 11/13/2013 - 01:24 | 4148899 BullyBearish
BullyBearish's picture

It's OK...the owners are just moving it from our gas pocket to our Christmas gift pocket before they get it...all!

Wed, 11/13/2013 - 01:28 | 4148907 dunce
dunce's picture

Obama and chu were both advocates of higher gas prices to reduce consumption and carbon emissions. A booming economy would mean much more miles driven and more carbon emitted so the democrats do not care about high gas prices. The zombie economy has done more than the EPA to reduce our carbon transportation footprint.

Wed, 11/13/2013 - 01:58 | 4148953 Flakmeister
Flakmeister's picture

Catch-22...

The economy can only boom when gas prices are a lot cheaper...

1998 was the all time low for relative oil prices... 

Wed, 11/13/2013 - 11:12 | 4149792 Flakmeister
Do NOT follow this link or you will be banned from the site!