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A Peculiar Correlation
When (0.94) correlation is causation...
The shift in the percent of the US population that is capable of
work has tracked almost perfectly (0.94 correlation over the last 25 years)
with US gasoline sales...
Source: Bloomberg Data
Structural or cyclical?
h/t @EPomboy
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So declining gasoline sales forced people out of the labor force. Got it.
That's what you get when you take the weak way out and only look at correlation, not causation.
Netflix, EBT, and free cell phones forced people out of the labor force.
When you lose your job, and you can get disability or other assistance, the easiest way to save money is to cut out driving.
And there goes new car sales down the drain when nobody drives to work anymore.
I don'ts needs a car to drive to the job I don'ts have.
Dude- grammar, please- should read "drive to the job I don'ts gots".
Wait!!!!! THIS NUMBER IS FOR GASOLINE SOLD DIRECTLY TO CONSUMERS FROM A STORE OWNED BY THE REFINER! ie a Hess , Exxon, Irving etc gas station. THIS IS NOT TOTAL GASOLINE RETAIL SALES! MISLEADING DATA!
"So declining gasoline sales forced people out of the labor force. Got it.
That's what you get when you take the weak way out and only look at correlation, not causation."
No. The causation is people sitting at home on their ass, collecting the EBT, with no need/desire to drive to work, reducing demand/price for gas.
Do not read this.
I suspect China's gas/employment experience since 1989 is the obverse of this graph.
it is amazing how much we work just for the basics, but if one cuts out a car and the insurance & maintenance of it, it adds up to quite a bit
My dear girlfriend doesn't get this simple equation. She drives 400 miles per week to save $200 in rent and thinks she is saving money. Nevermind the $2,500 in car repairs and $500 for tires or the 6.66 hours/week of driving time - she is saving money! Pretty sure her mechanic has a crush on her.
Oh...Uh...I hate to break this to you...but...
Nevermind.
Correlation just does not necessarily give the indicators of just what the cause is and what the effect will be.
Make sure you wrap it - no breeding with an Einstein like her.
LOL, harsh but funny
This is precisely the reason I always suggested EVs would never make it in the long run; they don't have any servicable parts except a big, fat battery.
A traditional car has got so many parts (many of them moving parts) it is insane (and all the regs to go with it). Most folks don't realize the single most expensive part is the WIRING HARNESS.
An EV is an electric motor and a battery.
All the big auto's have shit tons of capital tied up in what would otherwise be largely obsolete product lines. And all the IP would shift from meeting EPA regs to the battery.
A battery company that figures out this problem will own the EV space because the auto manufacturers will have shit margins from then on after.
Cars are, and always have been, one of the worst investments a working man can make. Yet our society still insists on buliding itself around the whole idea of making that exact investment, even to the point of requiring it to get to a job in many, many places.
Just one more BS scheme that will come down over time ...
Regards,
Cooter
A car is not an essential item but a luxury. If a person chooses to live half a state away from where he works, that's his problem. Lifestyle choice doesn't make a car an essential item all of the sudden. A car is an essential item for a taxi driver who uses it to conduct business. A tractor is an essential vehicle for a farmer. For most Americans the only form of essential transportation is a pair of shoes.
..And there goes disposable income, which means less buying shit, less trucks rolling, and therefore less gas being used in commercial transport as well.
"Fundamentally transform America..."
~ obola, 2008
The Federal Reserve forced people out of the labor force.
0.94 is 0.06 away from a perfect positive fit in correlation.
"Positive correlation: If x and y have a strong positive linear correlation, r is close to +1. An r value of exactly +1 indicates a perfect positive fit. Positive values indicate a relationship between x and y variables such that as values for x increases, values for y also increase."
http://mathbits.com/MathBits/TISection/Statistics2/correlation.htm
FED assets versus labor force participation rate:
http://dareconomics.wordpress.com/2013/11/07/around-the-globe-11-07-2013/labor-force-participation-rate-vs-fed-assets/#main
I get it, but I liked NoDebt's analysis: reduced gas sales forced people out of the work force. It doesn't get any simpler: correlation is not causation, and if you don't get it then I can't help.
"So Grasshopper, can you tell me which is the dependent variable?"
"From the data, Master, I can not. It is insufficient."
Maybe you have it backwards. The people dropping out of the work force are the reason gasoline sales have fallen.
After all, why bother?
Yep you do not have to drive to work if you do not work. Thats a lot of driving gone so no need to buy gas.
Especially with electric buses!
No it has to be all those Tesla's we see everywhere!
That's gotta be it..
/s
ND was poking at Tyler for the stupid title. No doubt it is demand destruction. Broke ass families sold the gas guzzlers back in 08 and are opting for staycations (because eating is sort of a necessary thing).
Loocking at the picture, red line LEADS the changes that then are FOLLOWED by the blue line, so maybe your comment is important.
Not really. Looks like about half the time if that.
What is happening is that these are both dependent variables. They depend on something else happening, and that something else is not on the chart. Both lines follow that line to some degree of fit, but they follow it.
The line not drawn is probably economic activity. No not GDP, which is at best a proxy (not even that most of the time) but real economic activity, meaning brick-n-mortar spending of real money on real services and goods by real people with real cash from actual jobs.
That's the line not shown here. Everything correleates to and trails that line.
The lines not drawn are energy production and consumption.
Economic activity, GDP, growth, production, all correlate, more or less perfectly with a very small lag, with the amount of fossil fuels your country uses per capita. The only historical limit on fossil fuel consumption was price. Thus both lines are dependent on the price of oil.
"real economic activity," since the 1800s, means burning fossil fuels, nothing more, nothing less. All the talk of "production" is a sideshow for braindead economists who slept through high school physics.
"Maybe you have it backwards."
Impossible. I never get things backwards. Certainly not on purpose to make a point. ;)
Then falling oil prices leads to falling gas prices. Low gas prices leads to higher sales!
So plummeting crude must mean we're heading for full employment.
See, hazden gets it. What's so hard to understand about this?
Eventually. Patience.
Eventually demand will pick up:
https://www.youtube.com/watch?v=mNFwzSKMqCw
That spam bot and stocks is right. Everyone be staying home and making $12,749 an hour by using bowling pins and other odd objects on themselves in front of a camera.
Yeah because fuck working a job that pays enough to support a family. I'd rather diddle myself with a 1.5L bottle of pepsi for the world to see. (/sarc)
That's the funny thing about causal affects.. are people staying home and cam-whoring because it is preferable to genuine work? Or are they doing so because solid employment is hard to find, even for well qualified people?
I see the potential correlation between an unproductive economy and the percentage of the population who choose to cam whore. What I don't see is the causation.
Edit: Below a certain level of prosperity, I would posit that the incidence of an individual carrying out a criminal activity (prostitution, theft, fraud etc.) is likely to increase. The incidence likely increases exponentially as that lower bound of real earnings drops and approaches the zero limit. At least to a point where the probability of death by starvation, or suicide, or subsequent incarceration becomes high.
As far as people showing their body or genitals on the web for cash, I don't see it as particularly beneficial to society, but given that the alternative may well have been prostitution, I see it as a relatively benign consideration. If someone needs to eat, who the fuck are you to judge what they do with their body, and public image?
Wow, you really gave this a lot of thought.
Gas sales should be falling even further this winter as http://finviz.com/futures_charts.ashx?t=NG&p=m5 goes up so do their electric bills and gas bills. Nothing like a little DP on the consumer to help the economy of sales for crappy depreciating electronics.
Meh. No correlation, commuters are just switching to electric cars.
All 48 of them.
I thought it was 57.
Edit: Just reread. The correlation coefficient is 0.94 ~ 1. A very strong positive correlation.
Impossible to refute this mathematical relationship, at best you can consider the methods for obtaining the data (or the data set itself) to be insufficient. The causation is, however, open to debate.
A good example of this principle is within macroeconomics and pertains to the Philip's Curve.
PS: Since there are now folks downvoting established mathematical principles (such as correlation, which say nothing about what causes what, but rather the relationship between two sets of data points), I am tempted to go full MillionDollarAnus and just start trolling.
The correlation coefficient for everytime I cum, I have an erection is 1. But it isn't 1 when looking at everytime I have an erection, I cum.
If more people truly understood this simple principles of correlation vs. causation, the world would be a much less ignorant place.
Edit: this goes for everyone, including unscientific Economists. (Hi William Philips you assumption making fuck-face.)
For the irony deficient, you can take my comment as sarcasm/irony.
Bleh. Fair enough. My irony/humor meter is virtually non-existent these days. The excesses of human stupidity I see across all swathes of society (in one form or another) have all but ensured that.
Why work when you can blob out for free.
the chart is grossly misleading. fact checking at zh has gotten really bad.
Xplain or forever hold your peace
the above chart deals with product supplied by usa refiners only and has been discussed (and debunked) here before at length. here are the real numbers.
http://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=MGFUPUS2&f=M
why zh continues to push the bullshit line of crashing demand is beyond me.
...any idea what (purporting to be gas sales) is actually on display in the chart?
i don't understand the question.
What the fuck does the chart show then?
Is that better?
the correlation between the average American's savings and the amount he spends on gas.
geez!
(sarc)
The chart shows gasoline sales by refiners to the public. If you buy gas at Exxon or Shell, it is counted in the chart. If you buy gas from Costco, or a mom & pop store, it is not counted in the chart.
Good comment from buzzsaw.
That's one pretty solid criticism.
Another explanation (which might be completely outside the realm of shrinking economic growth) could be the role of technology.
An increase in technology levels could be correlated with both a reduction in the labor force (as more routine jobs become automated) and the necessity for gasoline (as cars become more efficient.)
Now I don't advocate that this is the case, but it is certainly a possibility which needs to be entertained and thus, positively proven, or disproven.
Any idiot can toss two correlated data sets up and assume a relationship. Sometimes digging deeper reveals unexpected causes.
which chart? i'm not being dense. if you mean the chart posted by zh kaiserhoff explains it below. if you mean the chart in the link i posted then i still don't understand the question.
Everybody has a damn chart...but what do they 'say'. That is the question. From the multitude of charts, this is what I 'glean':
1. Refiners to Retail is falling (who else sells to retail chains?)
2. Gasoline production in the US is pretty flat
3. Exports are up.
4. Imports are not a huge fraction.
........................................and the conclusion is................ZH is right, the demand is falling in the US (retailers are selling less), while production is staying steady from the US refineries (if they cut production then their costs rise and then bam, they are a casualty of the sytem now) and this leads to gasoline exports.
Come on guys, I thought this group was more capable of assimilating complex data together and getting the picture.
The chart above represents gasoline sold in the US by US refiners. We now import a shit-ton of gasoline from overseas refiners.
My understanding is, one reason is because Europeans use a lot of diesel (many of their cars run on diesel) and don't need all the gasoline their refineries produce. So they send it here where we use it.
Combine that with the fact that we have shut down a lot of our refineries, because of (a) crushing regulations and (b) refineries are capital-intense, and we prefer to use our capital to stuff holes in bank balance sheets and play a lot of financial shenanigans.
"The chart above represents gasoline sold in the US by US refiners. We now import a shit-ton of gasoline from overseas refiners."
That would be false http://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=pet&s=wgtimus2&f=4
Well, let me restate. Imported gasoline represents a substantial fraction of the gasoline sold in the US. It appears from your chart that imported gasoline represented a growing fraction of total US gasoline sold from 2000 to 2006, at which point the percentage of imports began to stabilize relative to domestic gasoline production.
But that is an interesting chart. It certainly implies that total gasoline consumption has dropped substantially, albeit not as substantially as the chart posted by ZH.
We are exporting, NOT importing. The pipelines have been reversed from import to export at least here in Texas...
I agree with this. Also one has to wonder of total gas production, how much ends up as government sales and not to retail. I would imagine the DOD is a massive consumer.
DOD has been a gigantic consumer since 2002. Good point. Trying to find exact statistics isn't easy, I just tried.
Someone doesn't seem to like you. I wonder if they get all giddy each time they click the down vote.
the dod alone uses ~ 500K barrels per day if memory serves
Actually, looking at that chart, it implies that imported gas represents a very small percentage of total gasoline sold. This was not my impression. It would be nice to find some comprehensive statistics from the EIA, instead of these tiny slices.
Well that depends, if you're looking for actual data that you can look and come to an intellectual conclusion...well no that doesn't exist. Now data that supports whatever political agenda you want, hell ya we can get that.
You had it right the first time, Buck.
The chart above represents gasoline sold in the US by US refiners.
Refiners sold off their retail outlets. That's all, and it's why that declining number is just silly.
Well isn't it convenient that the fall in demand began precisely with the economic collapse in 2008...
Your motor gas imports have fallen http://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=pet&s=wgtimus2&f=4 so if domestic production is down, and imports is down...well then somthing seems fishy in the supply line, especially when you factor in motor gas exports http://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=pet&s=w_epm0f_eex_nus-z00_mbbld&f=4
Your numbers also say consumption is dropping. Has been since 2007.
2007 8,886
2008 8,810
2009 8,623
2010 8,520
2011 8,370
2012 8,190
2013 8,331
2014 8,206
thousand barrels per day.
Refiners sold off their retail outlets, because of declining margins and the "convenience store" trend that they found hard to manage. Their production of gasoline has increased, while retail sell through declined.
Bogus numbers.
http://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=W_EPM0F_YPY_NU...
Useful chart, thanks.
It does show a gradual decline, but nothing like the nose dive in the posted article.
Yeah, the ZH post is well...click bait for people to link in their FaceFuckBook
eh...? Did you actually look at the numbers on the chart?
3,569 -> 1,492 thousand barrels/day over the period 2010 -> 2014. Dropped to 42%. That's a pretty big drop over 4 years.
Over the same period in the retail sales chart it goes from ~46000 -> 17000 thousand gallons per day. Dropped to 37% over 2010 -> 2014. A similar drop.
So basically US refiners have drastically cut the making and selling gasoline. What're you importing it instead?
Many workers need to huff just to go to work, hence the correlation.
Well yes, but oil and natural gas have considerably large applications outside of transortation fuels. Come on, who can this not be bullish?
What do you mean by "capable"?
So QE was about reducing carbon emissions?
Well, yes, just some people's share... ..however.
Wasn't this vetted by fellow ZH'ers over the past few years -- Refiners getting out of retail making this metric a little, well, useless?
Exactly.
Hopelessly bad metric over the time span shown.
Could it possibly be that most people drive to work? /s
Silly Rabbits, car-trix are for kidz!
Let them eat bicycles!
eia.gov says "In 2013, about 134.51 billion gallons1 (or 3.20 billion barrels) of gasoline were consumed2 in the United States, a daily average of about 368.51 million gallons (or 8.77 million barrels)."
The graph says that in 2013 about 20 million gallons a day was "Refiner" retail.
That's some difference.
http://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=A103600001&f=M
Theres the table with the data.
If you really can't afford gasoline, Alibaba carries a multi-use siphon pump that looks suspiciously like an Autsin Powers penis pump, for about $2.00.
http://www.alibaba.com/product-detail/Multi-Use-Siphon-Pump-Transfer-Gas...
The local Shell station has those convenient overhead gravity flow hoses,
so you can release about half a gallon from each hose, until the manager comes out screaming, with a case of the heebie jeebies;)
That's not my bag, baby.
Had one of those it is a POS...
everyone is going to JACK-in-the-box and Chipotle and Cheesecake factory with their low gasoline bills?
I think its those chaps in funny colored tights riding bikes.
Rather girly if you aske me!
We ride about 50 miles a night averaging around 25 miles an hour, and a hundred plus miles on the weekend. Some of the strongest riders I know are girls, and they've "chicked" more than one male rider in their lives. If that makes me a girlie man... so be it.
It's the seats.
Doc are you a Cat 1 or Cat 2 racer? I call bullshit on 25mph. Puts you in a category of <1% of all cyclists.
So, people will work for gas .. because you can't buy it with your foodstamp/ebt card!
Daddy - tell me the story again about when there used to be grocery stores ...
Think the USA exports a massive amount of gasoline to mexico. Crash in metals pricing makes refining much more cost effective. Believe we import a "shit ton" of oil from Canada and Venezuela because of this advantage. Also the USA has a "shit ton" of takeaway capacity (pipelines, ships, gasoline trucks.)
Also gasoline is a waste product and really isn't used for all that much but for transportation.
Also natural gas prices are dirt cheap in the USA...thats a feedstock for "crackers."
I also think the cost of grid storage (all electric drives, solar cells and batteries) are collapsing in price as well. Again...don't be the debt holder.
This is the way Democrats will save the world from pollution, green house gases, and natural resource depletion. Please don't think I'm making a joke when I say this.
Business needs oil,oil needs business.
The workforce is on permanent vacation.
Have someone bring me all the things I need...I'll pay later.
DOE numbers are a sham......a year ago the EIA wasn't even surveying ND or PA for natural gas production
but forgive me for digressing ...
refiners have been divesting of retail operations for years...go back to your base variable data and try again
When the Cavaliers score more points than their opponents they win...I've backtested that hypothesis and the R sqr is 1
Por que?
http://www.eia.gov/dnav/ng/ng_prod_wells_s1_a.htm
http://www.eia.gov/dnav/ng/ng_prod_sum_dcu_snd_a.htm
Obama's green initative. Force people out of work, through Obamacare,disability,outsourcing, flood of illegal workers, and gain carbon credits.
My graduate statistics professor was always adamant, "statistics can NEVER prove causality!" Even a perfect 1.0 correlation didn't prove causality - just a perfect relationship. Never-the-less, it's obvious from the graph that labor force participation rate affects gasoline sales. Supply and demand would seemingly be the mechanism at work here, but with all of the price manipulation rampant in the markets now-a-days, I wonder who benefits most from declining gasoline sales? As my professor would ask, could not other factors that are driving down the labor force participation rate also be driving down gasoline sales?
Absolutely correct.
It is the law of ENTROPY
A fairly ugly print fot the labor force participation rate on Friday seem to be implied from the chart.
Excuse me, but labour participation rate decreased by some 10% while the sales declined by 60%+. What are you to prove via the chart?
Sorry ZH, I used to be addicted to you. But I find this a pure demagogy.
For every shift of 1% in labor participation, you can expect a 6% change in gasoline purchased. If ya don't have a job, ya don't drive to work.
To make the comparison easier, consider a plank, balanced on a fulcrum; for every 1 inch on side moves up, the other moves down. Move the fulcrum and one side will move more than the other. Leverage is like that.
Enjoy your demagogy.
Craig
What about those who keep working? Do they walk mostly?
so people need to be moved farther away from their workplace and restricted to driving gas guzzling v8s. the increase in gasoline usage should get a coupla more people into the workforce.
I remember when gas was 17 cents a gallon. (1962, Ft. Worth)
You sat in your car and gas jockey pumped the gas. Then he cleaned your windshield and checked your oil. If you needed air, or water, he'd supply it free.
The gas stations had two sets of drinking fountains and two sets of bathrooms.
I remember in 1972 when Dad would send me down to the gas station on my bike with $1 for 1 gallon of gas, ciggarettes, and a chocolate bar, and I came home with $0.35 in change. That same shit now cost $4.5 + $10 + $1, or, approximately $15, or, 22 times (2200%) of 1972 prices. Beautiful thing this Central Banking bullshit.
I hear ya, but there is taxes in there too.
This shitpile is gonna go Mad Max, someday soon .... I say we get into pig crap/methane and large wheeled vehicles with no mufflers, and beat the curve !! are ya with me ??? or chicken shit
I have no idea wht this is about except that someone looked for correlations, not necessarily correlations that make sense.
Buckaroo.....NO we do not import a shit ton of gasoline, in fact our imports are aproximately 450MBD....close to the the volume of motor gasoline we export, so net imports not much, 1/2 a percent of total supply. .see here http://www.eia.gov/dnav/pet/pet_move_wkly_dc_NUS-Z00_mbblpd_w.htm
Finished motor gasoline supplied to the market....over the long haul this equals consumption....equals about 8,800MBD (in common terms that is 369,000,000 gallons per day) currently, compared to (aprox.)7,100MBD in Nov1992, 8,700MBD in Nov2002, 8,800MBD in Nov2012;..... see here http://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=WGFUPUS2&f=W
So even the shape of the curve in this chart is grossly mis-leading as to consumption.
If this chart was meant to desceive it accomplished its mission....if meant to make a valid point of some sort, it is a total, complete failure by someone who does not know f... all about the downstream oil industry.
The world would be better off without 99% of the opinions permitted expression. Including this one.
So let me get this straight. Falling participation leads to lower gas prices...or is it lower gas prices causes lower participation. Who's the insomniac at zerohedge that doesn't have anything better to do?
Now that I believe except the capable part... more than the labor participation rate is capable of work.
The labor force participation rate appears to more related to those who governments and corporations are willing to hire as opposed to those who are willing to work.
Who the hell is stupid enough to go to work when you don't have to eh? This is my 20th year of vacation bitchez. Ok so I go to college for fun. Whoopie