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Economists Stunned By "Irrational Consumers" Who Used Gas Savings To Buy More Expensive Gas
Over the past year, we have repeatedly given the quantitative answer that has stumped so many: where did all those overhyped US "gas savings" go, because they certainly did not go into the broader economy, or toward discretionary purchases, as countless economists had said they would. The answer: more gas.
Gallup confirmed as much most last week when it reported that Americans' reported changes in spending have remained stable in most categories of goods and services over the past year - except for gasoline, with 35% reporting they spent more on gasoline in the August-September period.
Paradoxically, Gallup found the inverse of what had become erroneous conventional wisdom: "not only were Americans not spending more, they are spending less than they did in the past year on discretionary purchases such as retirement investments, leisure activities, clothing, consumer electronics, dining out and travel."
But while we knew the quantitative answer, namely that Americans bought more gas with their gas savings, we were missing the qualitative one. Courtesy of the NYT we now learn that not only did consumers not redirect their spending to other discretionary items, but engaged in an act that has stunned economists around the globe: they don’t just buy more gasoline; they bought more expensive gasoline!
And this is how a product that was essentially a staple good, suddenly provided the satisfaction of a discretionary splurge, even though it is virtually the same just more expensive.
The NYT explain this observation which is just the latest mockery of macroeconomist models, and once again shows why theory never applies to the real world.
A new report by the JPMorgan Chase Institute, looking at the impact of lower gas prices on consumer spending, finds the same pattern as earlier studies. The average American would have saved about $41 a month last winter by buying the same gallons and grades. Instead, Americans took home roughly $22 a month. People, in other words, used almost half of the windfall to buy more and fancier gas.
The refiners will be delighted:
We know how that extra money was probably spent thanks to a separate 2013 study by the economists Justine Hastings of Brown University and Jesse M. Shapiro of the University of Chicago, who got their hands on detailed accounts of the purchases made by 61,494 households at an unidentified retail chain that also sold gas.
Professors Hastings and Shapiro showed that households adjusted their gas consumption much more sharply in response to changes in gas prices than in response to equivalent changes in overall income. In the fall of 2008, for example, as gas prices fell amid a broad economic collapse, consumers responded as if the decline of gas prices were the more important event, significantly increasing purchases of premium gas.
And this is where the head of every tenured economist living in their ivory academic tower, and tweaking economic models they themselves created and thus know the goalseeked answer apropri based on their own preset assumptions, explodes.
This is not rational behavior. Americans spent about 4 percent of pretax income on gas in 2014. One might expect them to spend about the same share of any windfall at the pump — maybe a little more because gas got cheaper. Instead they spent almost half.
Americans, in short, have not been behaving like the characters in economics textbooks.
Inconceivable: after all academic central planners are in charge of the entire world - what would happen if suddenly it becomes common knowledge that the entire "New Normal" experiment has failed because the lifetime academic hacks inside the Marriner Eccles building don't realize their theoretical models have zero applicability in the real world?
At least when it comes to the "premium gas" paradox, there is an explanation:
Researchers have found that people treat money as earmarked for particular kinds of spending, a tendency behavioral economists call “mental accounting.” If someone is buying rounds at the neighborhood bar, people tend to treat the money they didn’t spend as “beer money,” and sooner or later they tend to spend it disproportionately on beer. As a result, they end up drinking more beer than they had originally intended.
The JPMorgan study compares gas spending between December 2013 and February 2014, when prices averaged $3.31 a gallon, with gas spending by the same people in the same period one year later, when average prices were one dollar lower. The study found that the average American spent $136 per month on gas during the high-price period and $114 per month on gas during the low-price period. While the price of gas fell by roughly 30 percent, spending on gas declined by only 16 percent.
The study, based on the spending patterns of about one million JPMorgan customers, does not track the kind of gas consumers purchased. It shows that people bought more gas as prices fell, and that the increase in consumption is not sufficient to explain the entirety of the increase in spending on gas.
And perish the thought someone actually saved it, but no fear: the upcoming negative interest rates will surely fix that pesky glitch in the economists' model. Unless they don't, and economists end up scratching their heads at even more "irrational" behavior:
Moreover, this behavior was prevalent: 61 percent of the households made at least one irrational gas purchase. People “treat changes in gasoline prices as equivalent to very large changes in income when deciding which grade of gasoline to purchase,” they wrote.
At the end of the day, though, the joke is on the consumers themselves: as the FTC notes, for most modern cars "splurging" on premium gas is usually a waste of money. At least the refiners are laughing all the way to the bank, as economists the world over continue to scream that any minute now "irrational" consumers will finally make the spreadsheet's life easier, and engage in rational behavior.
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If the u.s. continues along its road in the MidEast, soon we will be able to pay extra for gas without even trying to be the least bit irrational.
BULLSHIT. We used the savings to pay for our Obamacare health insurance increases. What a fucking lie.
It's more like you put in $20-30 bucks of gas in your car regardless of price. I doubt Im the only one who uses cash.
when hookers get cheaper, you don't spend your "savings" on groceries
it's either more hookers or classier hookers.
everyone knows this.
If it costs twice as much....it must be twice as good.
I bought ethanol once cause it was cheaper.....then I calced my MPG....I never bought it again.
vincefostersghost (if that is your Real Name) -
1. damn good to see you. we thought you was dead.
2. Mehr fur's Geld!
enjoyen Sie bitte
I used my gas savings to buy more ammunition.
I hope I didn't upset any economists.
I'm not buying that people spent the difference on a higher grade fuel. Your vehicle only uses one type of fuel and any other type is a waste and could possibly damage the engine. Most people stick to one type of fuel - NOW - they might buy more of it. Instead of $20, they might spend $30 or fill it up. Now that gas as gotten so much cheaper, I tend to fill up more but in the end, I'm actually using less.
Butbutbut... the NYT is the most truthful and objective source of news available - it HAS to be true!
Yes, I threw up in my mouth a little bit.
Weeeeeeeeeeeeeaaalllll .... After all the NYT's "chief economist" is none other than .... ta dah! Paul Krugman
He was for it before he was against it and then turned against it again after he was for it, once he turned against it, but now is apathetic about it
The term "Keynesian economist" is an oxymoron, along with such classics like "honest politician" and "military intelligence."
But ain't economics a "science" like physics, chemistry and biology?
No, it's a sport ... like cow-pie throwing.
its all fun n games, till someone loses an eye.
then the game turns to "find the eyeball"
~"No, it's a sport ... like cow-pie throwing."~
Oh, that's a lie and you know it, Caleb! These days economists are scientific. They use dart boards!
NYT always reminds me of the communist mouthpiece newspaper my father used to read when I was a kid in Yugoslavia
ummm, most people are idiots. They probably see the lower cost and say "what the heck, I'll splurge and buy the good stuff this time". thinking it's a small luxury. Wouldn't surprise me a bit.
LOL yep. See below.
the bought the good stuff for their subprime new car.
I doubt it. People treat themselves with good food, clothing, and other gadgets. Even the most stupid people don't spend and extra money on high grade fuel that they don't need.
unfortunately I have seen many people do that in the US - even Europeans
Wrong, china man. A few of my neighboors did just that.
One of them said he always buys the branded, TV advertised "good" stuff. His truck is like his pet and nothing is too good for fido. I tried to explain how it's all a generic, futures traded product but I stopped in mid sentence. His eyes were already glazing over. No need to go on.
Wrong. I have a friend who puts in a higher-grade because he thinks it's better for his engine, eventhough it requires only 87. He drives a toyota. My Dad is a retired master Ford mechanic. I know better than to waste good paper on expensive gas. This speaks of how most toyota drivers think. This proves that people are dumb and will do things that defy all logic. I can see why tptb see most as sheep, because they are.
yes, people who put premium fuel in a vehicle that only needs regular are wasting their money...
Because of your one friend, your conclusion is most Toyota drivers use high grade gasoline? LMAO!!!
All those gas pumps are rigged to rob people every single day. They only pump accurately if you pump 5 or 10 gallons any more or less and you arent getting what the pump reads. When the pumps get tested to see if they are pumping and charging accurately, the only test parameters used are 5 gallon and 10 gallon test pumpouts. How would you even know if you were getting shaved by .1 or .2 gallons, especially on a large vehicle ? And if each pump robs people several hundred times per day, thats mass daily robbery of everyone who pumps gas.
Solution ? Give up car ownership completely, since taxes, insurance and gasoline remain overpriced and said costs erode living standard even further coupled with jobs that pay peanuts or less out there.
I have done that last year and feel much better and don't miss my expensive car at all
A gas can solves that problem. I once pumped 6 gallons into a 5 gallon can. I never went back there again. Also, avoid ethanol. It's worse than the BTU differential implies. My mileage always drops about 10-20%(10-15% in fuel injected-20 in carbureted) It clearly impedes fuel ignition, just like water on a fire. The distributors add water to the ethanol. Several years ago, I complained to the state about the crap I bought at H3ss. The state said it was just fine, no problem. Then, a few months later, I saw a article about cars stalling immediately after leaving their stations in Maryland. They blamed it on rain at their tank farm!
H-4-D
So why are there other grades available? Shell, BP Texaco etc would not have a more expensive product if it were not better. They are great companies.
So there!
I don't buy it either.I'm greedy when it comes to putting fuel in my car and I always go to the cheapest, avia, and every time I go fill up my car, those gas stations are full, you always stand 10 minutes in line.
They,re about 5 euro's cheaper then the rest.
And all the other gas stations? There are way to many here and if you go to other stations, sometimes you see another driver filling up but business is slow there.
And people are to scared to change a type of fuel for their car. A wrong type of fuel with a little higher octane can destroy your injectors and those cost 1200 euro's a piece and you've got 4.
Believe me... I know... my wife put the wrong type of fuel in her car twice in a row...
Higher octane fuel than required for your vehicle is a waste of money but it will not destroy anything. At worst it will not ignite during combustion and be spit out of your tailpipe unburnt. Whoever told that to your wife just had no explanation and decided to baffle with bullshit instead of dazzling with intellect.
If higher octane DID damage things, then it would be damaging your engine every second that you aren't running it at full throttle. This includes 87 oct. Further, modern computerized cars would sense the increase in unburnt fuel in the exhaust and adjust spark adjust and/or Air-Fuel Ratio accordingly.
I saw a women put diesel in her gasoline engined car. Does that count?
I would count how many cranks till the battery dies?
I thought it messed with the catalytic converter.
All the local school buses fill up at the most expensive station in town. Its so good only school buses go there. This is right across the street from the cheapest gas station around. Generally 0.40 funny moneys/gallon difference in price.
That's proof that we need to increase property taxes to fund the schools
Correction we need to increase taxes MOAR--it's proof we need Halliburton paid as a middle man to protect us in "Merika" against those who hate us for our "Freedums"--Halliburton got $5/gallon in Iraq while the local gas station charged the Iraqi residents 30c/gallon total, not a mere 40c more/gallon increase like the "skool" buses' special gas station.
It's for the children!
The reason those school busses always go to the same gas station is because the school district probably has a contract with that gas station to purchase gas from there only.
Had to give up the station wagon in July - needed $2k in repairs, only worth $250 (salvage). Have tiny emergency electric generator that uses PREMIUM gasoline - 91+ octane only. Once a quarter I fill the car tank with the 5 gallon can, refill the can and tank with premium. Otherwise, 85 octane for the car. Net result: occasional fillup for wagon gone (didn't drive it much towards the end), premium consumption as a function of total consumption goes up that much.
there are other users of gasoline besides cars
If people weren't dumb we wouldn't have advertising. Or most TV programmes.
Aren't we the lucky ones.
15 years ago, people called you crazy for talking about a 'New World Order'. Today, almost 50% of people in North America are 100+ lbs overweight, opiates are used as anti-depressants, a man is encouraged to have his gender 're-assigned', and women are encouraged to pretend they are black (or at least date a black man).
1984 or Brave New World? Why not both, seems to be the Elitists answer.
I am hoping moar and moar men transgenderize or go gay ... that leaves moar hot Babes for me ... and I mean the babes with REAL T&A, not the Trans-T&A Jenner thingies.
Amen. Supply and demand at it's finest.
Except his second point about women, I'm not black.
Both!
The Condor
Sorry usually get better performance and mileage with premium. Especially in the cold weather.
It's all in the blend. Now that summer blends are gone, my mileage has gone up about 10% on 87 octane, no ethanol. The EPA, oil industry's profit booster, forces us to use lighter blended fuels in the summer during the peak driving season. No, I didn't use the A/C all summer.
You have it backwards. They increase the ethanol content in winter blends- it goes from 10% in the summer to 15% in the winter.
I only go to stations where they honor my request to get the ethanol on the side....usually with a twist of lime.
It is called money laundering and fraud. Bankers should learn about it and stop accepting accounting at face value.
Whodathunkit? The economy is full of irrational morons addicted to premo gas and with no retirement plan.
So can we all just agree now that Keynes was right about expectations and build our Krugluddite utopia already?
This world needs one hell of an enema... I just hope the FED are up to the task and can come up with enough credit.
I can agree the study is full of shit. I bet if you asked 100 people if they were buying higher grade fuel than their car required due to the drop in gasoline prices, 0-1% would say yes.
So how is this anti substitution bias going to affect cpi?
Oh man! Come on, I hadn't thought that one through. And you of all people have to pop it on me right now of all times. Damn!
There will be no effect on CPI, because CPI is zero. I know this because President Peace Prize told me.
people buy real gas when they can because they hate that gasohol crap.
most people are fucking stupid and don't realize you can actually get more power out of e85 vs. "real gas" if the engine and tune is set up for it properly...
don't believe me? look up the dyno tables for the GM L83 EcoTec3 and get back to me... you'll notice 7% more hp and 8.6% more torque on e85 vs. gasoline... hmm, must be dark magic or something...
The energy you get out is a function of the BTUs per liter. Doesn't matter what the tune is, if you only have 1000 BTUs, then that's what you get. Ethanol has less BTUs per liter than gasoline.
The only way to get more, is if you somehow increase the efficiency. What you are saying is that you can tune an engine to get more of the lesser BTUs in Ethanol, than you can from the greater BTU per liter gasoline. hmmmmm.... Why are we burning gasoline at all then?
Let me guess. You saw this in a video on Youtube, right after the one about an engine that gives 286% return on whatever you put in, in terms of energy? (Never mind that it destroys the universal laws of thermodynamics. If it's on the internet, it must be true).
I guess I'm saying provide the source. Yes, must be dark magic or something, because it sure as heck ain't reality.
I like the innerwebs stories about cars running on water. They always make the freaks and kooks cream their panties over how big oil will soon go bankrupt
but...but...but... my neighbor's brother swears that his plumber's concubine's dentist's father-in-law has been running his car on water for years, and that as soon as he can get the recipe he will stop buying gas as well. i can hardly wait. i am sure it must be right, because it sounds like just the sort of thing that the evil oil companies would deny.
read 'em and weep...
http://gmauthority.com/blog/gm/gm-engines/l83/
verified here...
http://www.gmpowertrain.com/VehicleEngines/PowertrainProducts.aspx
btw, I get paid to do engine tunes for a living, and I'm damn good at it... trust me, the generalizations I see getting thrown around here re: ethanol are utterly incorrect...
the reason everyone is always wrong about this is that they only look at the fuel... well, fuel is important but it's more properly looked at as fuel, air, and spark (timing)... not to mention adjustable valve events supported by technology like variable valve timing... modern engines get way more out of ethanol blends than anyone gives them credit for because everyone has had bad experiences with older engine designs that had e85 / flex fuel systems slapped on as an afterthought... when you design an engine for this from scratch, however, the results are very different and very positive...
We the consumers are stunned, that the economists won't use the brains that God gave them, to see and understand what is really going on...
Im sure they will use an adjustment for this oversight!
A large number of modern autos require premium. Burn regular for short term or your engine will crap out if it requires the 93 octane.
it won't crap out, the ECU will just hit the knock threshold and drop you down into the low octane tables...
Well if you were so inclined to store fuel long term you'd want a higher octane as the longer chain carbon molecules will store for longer. Adding Stable helps too.
Good gas costs more because it doesn't have shit ethanol in it and yeilds almost 20% better fuel economy to my vehicles. That's what I want to buy but some places gauge you more than $1 per gallon extra so sometimes I go cheap. If I can get the good stuff for $3 I buy it but i've stared at $5 good gas when oil was over $100 a barrel and choked and passed on it. Now that oil is $45 it's making more sense but still way more pricey than that 87 octane ethanol shit. I will not leave a tank full of that shit in my motorcycle this winter to fuck up the carb. My mitsu eclipse says premium and my old Caddy wants premium too.
"Lies, damned lies, and statistics"
Completely rational. Incomplete data & invalid assumptions.
+ 8% increase in mileage
Newer chevy idles rough on low octane...
The pump says my 5 gallon gas can now holds 5.5 gallons!
Higher octane stores longer
Re: "Higher octane stores longer"
Not necessarily. Adding ethanol can increase the octane rating, but will make storage more difficult with respect to problems related to moisture absorption.
Guilty! I did that. I went from regular to mid on a couple of $15.00 fills. So? I know I have read that the higher grades contain additives and detergents not found or at lower amounts than in regular gas. I noticed the difference in how the engine runs. The knock sensor will sense the octane change and advance the timing a bit. Good for another 2 or 3 horsepower. A little bit of clean for the fuel injectors. Either that, or buy the $3.49 fuel injector cleaner and add twice a year. I had a logical reason to do so, but I could only guess why others would do it. Maybe because they are trying to keep up with the Kardashians?
I have an Ford F-150 with flex fuel option. Whenever E-85 is cheap enough to make up for the not-as-good mileage, I'll buy a whole tankful. Sadly, I didn't own the truck while living in Iowa, when the state was giving a sweet subsidy of around 50c/gal on that. My last visit to Arkansas gave me that opportunity at close to 45c/gal. The truck's computer loves it (more peppy) and it cleans the fuel system. 17.5m/g vs 21m/g still made it a bit more economical.
BTW, I never need to upgrade to mid or premium. I have lots of friends with cars they zooooooom up all around here, so I get why they pour the $$ into the gas - until the next price hikes when sabre-rattling resumes.
It means that American motorists are happy with the price, and when the price goes down they will buy the more expensive grade at the price they were willing to pay.
What the petroleum majors will read from this is consumers are not paying nearly enough.
My own theory is that motorists will likely pay up to $4/gal without blinking. It's fine. No big deal. And they'll pay $5/gal with a lot of bitching, but they absolutely will pay. They'll pay $6/gal and be really angry, but they'll pay. And at $7/gal they'll start to look at other ways of doing things -- and that modest effort will abruptly fail because doing without gasoline will involve riding a bicycle or taking transit -- so they'll still pay.
I don't think there is an upper bound price at which American motorists don't pay.
No. Upper. Bound.
I don't drive much, so I don't care. But from my observations over the years that's where it sits.
No upper bound.
Gasoline does the equavalent of one person's hard physical labor for one month. If you dont believe me, put one gallon of gas in your car, drive it straight away from your house till you run out of gas, and push it back.
How much would you pay for one persons hard physical labor for one month? For fast food workers in NY, their relatively easy jobs pay $15/hr. at 160 hrs a month, thats $2400. So gas at $2.40 is a deal.
The problem with your analysis is that gasoline "labor" as not as generally useful as human "labor". The price premium on human labor is the result of that reality.
It's not a physics problem, but a question of overall utility. Some energy questions can be reduced to physics, but not the one you outline.
EDIT: But I don't mean to undermine your point. I heard someone comment once that most people have no concept of the amount of potential "work" (in the way physics uses the term) contained in a single gallon of gasoline. That ONE gallon can hurtle a 2 ton vehicle down the road at 80 MPH (fast enough to make it a very effective kinetic weapon) and do so for at least 20 MILES -- in any and all conditions day or night -- is simply impossible to appreciate to the untrained mind. People simply do not get it. That we have "not got it" for over 100 years is part of why we are going to be so utterly undone if gasoline ever becomes hard to get, and why motorists will pay for it with no practical upper bound on the price.
Its useful as a though experiment. And as a way to point out there is no substitute for gasoline as a liquid transporation fuel.
As regards transportation, that is 101% correct. Coal had some utility as a solid fuel, but it only allowed for external combustion engines (steam). Not nearly as trouble-free as internal combustion. Not by a stretch.
Though I secretly harbor a desire to see the return of steam-powered cars. You know that would rock really hard.
Cougar, you're sniffing gasoline fumes, dude.
At $5 to $6-$7/gal for US gasoline, that implies oil at $187 to $230-$290/bbl. US oil consumption as a share of GDP would rise from 2% today to 7% to ~9-11%. The economy historically rolls over into recession at ~3.5-4%, which, BTW, is where we were from 2013 to last summer-fall before the price of oil crashed.
At oil consumption of 7-11% of GDP, the US economy would be in the worst depression in world history, and gasoline consumption would collapse thereafter with employment and vehicle miles driven.
So, back off the gasoline inhalation, take some deep breaths of fresh air, and go find a good bottle of bourbon instead.
I'm not talking about market dynamics or GDP. I'm talking about consumer psychology.
And they will pay it. They don't have any other choice but to pay. Hide behind any obfuscating market mental masturbation you want to, they will pay.
As for the market, I think you could have $7/gal gasoline in most domestic markets very easily with $40/bbl crude, probably even less than $40. The profits for the oil majors would be really exciting, I'm sure they would be all over it and wouldn't be shy about bringing their friends in Congress along. The means to pull that off would be simply to unhinge supply questions from demand -- drop the supply, keep the demand steady, and watch what happens. In the absence of any organized political will, nothing will happen and people will simply pay.
There is no practical upper bound under that scenario. You can wave your hands around the matter of inelastic demand, but guess what, demand for gasoline is in all practical ways inelastic. People are trapped, they will bitch and moan but when forced to face their stark reality -- they will pay.
Now that corporations run the US government I wonder how long it will be before they test that hypothesis. Because you know, they are thinking about it. Every day, thinking about it. Every day wondering what the people will pay.
And in their point of view, they're leaving money on the table. The US "consumer" is the main course at a corporate dinner.
Cougar, I get all your economics professor talk, but your memory is short.
Back when gas was over $4, SUV sales tanked. People switched to better mileage vehicles. Also, buses were suddenly full up. As soon as gas went back down under about $3.50, they forgot and went back into trucks/suv's big time.
$6-7 gas would change consumer behavior a lot. You'd see public transportation jam packed. People would garage and/or sell their gas guzzlers and buy lots of prius's. Of course, most have to get to work, so they'd still buy gas.
There's a Wal-Mart Neighborhood Market going up nearby. This is their belated reaction to high gasoline prices of a few years ago. It's located within walking distance of 2 dollar stores, a grocery, Walgreens and CVS. It's about a mile from another dollar store and grocery. After all of those years of cheap gasoline and building on the edge of town, they finally woke up after losing market share to the 'close-in' dollar stores. The funny thing is, I was in that first grocery store and overheard the butcher talking to a customer about the new Wal-Mart. The butcher said he thought stores did better when they were on the edge of town! Still living in the 'cheap gas' past. High gas has pushed people back into towns. I'm seeing it happen. They will NOT pay $7/gallon. Wal-Mart was forced to change it's strategy at the $4/gallon FED-created price. Then there are the articles about young people eschewing cars altogether. If I lived within walking distance of this Wal-Mart, I wouldn't need a car either. People can, and do, change their behavior.
sure. no upper bound.
gotta go gotta go gotta go
but what descretionary purchases get cut to make that happen?
refiners may be laughing to the bank. but where does that leave mega-mart and icrap?
America does not need iCrap or Megamart. At all. The S&P500 need them, but nobody cares about the S&P500. These monolithic entities are part of our current and ongoing collective delusion and will vanish like mist in the face of a generalized implosion. If $7/gal gas means you don't get a new iPhone for 4 years, and you don't go skiing this winter, and we cancel Disneyland, and you wear your clothes another year without replacement even with the cuff a bit frayed at the edge, so be it. Nobody will blink.
We've gotten used to the banks taking our money away. Next will be the refiners doing the same thing. After that -- who knows.
But it's a long line. They all will come wanting. Be ready.
Speak for yourself dipshit. Some Americans aren't like you and don't think like you.
Most Americans are just like you.
"Now that corporations run the US government I wonder how long it will be before they test that hypothesis."
ohhhhh. Now they run it. ...............
Economics Has a Replication Problem http://www.realclearscience.com/journal_club/2015/10/16/economics_has_a_replication_problem_109413.html
“Economics research is usually not replicable.”
There are many gas stations that now have 91 Octane that is ethanol free. Ethanol has a reputation for damaging fuel system components, so it may be a good choice to use ethanol free 91 octane gass if prices come down.
http://pure-gas.org/
My honda accord just had it's 20th birthday. All on ethanol/gas misture. No problems worth mentioning. I've heard all the talk about how ethanol melts gaskets, etc, but where is the evidence?
More BMWs, Mercedes, Audis, Range Rovers, Porsches, and the like were purchased in recent years by the top 0.5-1% to 2-3%, so the marginal increase in spending for gasoline is because these cars require premium gasoline and drivers drove a little more this past summer.
It has little to do with the discretionary preference to "splurge" on premium gasoline.
In Germany a Shell station recently tried to pump more air than diesel into my auto.
The kid barricaded behind his glass window could only "deal" with what he saw on his "machine".
One does not pay for air.
For the past years they have been cutting the Diesel with cheap Biodiesel .. now they are just getting desperate doing both.
"cutting" diesel with "cheap biodiesel"... good grief I have fucking heard it all on this board... the _only_ drawback to biodiesel is that it has higher NOx emissions (about 9%) vs. traditional petro diesel, and that can be easily fixed with cheap cetane enhancers...
is everyone here a fossil stuck in the '60s or something? fuel and engine tech are _light years_ beyond the crap I see being passed for facts on this board re: ethanol and biodiesel... it's like being stuck in a time warp of stupidity...
also, sometimes you get whiffs of stale french fries when you burn that stuff....
Nice try Shell. In your case not even the TTIP was used.
1200km diesel range on a tank in a W221 compared to only 800km range on the same tank and track is a difference.
Now that's some funny shit. That means Americans, until now, were putting low grade gasoline in their high performance engines. They probably wondered why the engine was knocking and the engine light was flashing.
no, it ran just fine because the engine control units a) have both high and low octane tables, and b) are smart enough to move you between them depending on what the knock sensors. O2 sensors (in some cases even factory wideband) are telling them...
In my case, there's a lower bound beyond which it will ping. Yes, I'm a dinosaur stuck on stupid. Otherwise, I would know that my motor was just singing my praises for buying cheap gas, not actually pinging from poor combustion.
Burp! Burp! Burp! The article was alot of gas...
People were using the shittiest gas they could pass off as gas for their cars. Low octane guys in luxury sportscars. Now they can afford to feed their cars properly. And now everyone is driving more because before you could say, oh I'm driving 1.5 miles back and forth from the grocery store, so 3 miles round trip, 15 mpg, 5 bucks a gallon, so two bucks to drive back and forth from the grocery store? Then driving downtown, to the bar, to a restaurant, to your kid's school, to a park, to a bbq, you're spending 5 bucks per trip straight gas without blinking. So yeah, now gas is cheap, so now everyone gets to drive everywhere they were wanting to drive before. Pent up driving demand. They are saving on gas so now they can go wherever they want to go because it's so cheap, and you may as well burn it now because it might get expensive again so you gotta burn it as much as you can. So pent up demand splurging itself and burning itself out now. Drive now, it will cost you later. Perfectly rational. And people replaced their shitty cars with higher octane consuming vehicles, what with all the cars out there and all that. Like yeah, ten people got Teslas, per ten thousand BMW's and Lexus SUV's sold.
me kinda thinks all the research in this article is BULLSHIT. people didnt buy 'better' gas. what a load of shit....
I still know a lot of people who think that if you put 91 octane gas into a low compression engine, it will somehow run better.
Fuckin' donkeys.
I don't buy into their findings
maybe some people upgrade their gas
but enough to throw off the statistics?
I doubt it
Lets not forget who we are dealing with here. Billions and billions of sheep who think that driving a farrari means that you are a success.
When all it really means is that your a psychopathic manchild who never grew out of playing with toys.
My Father worked in the Oil industry for years(Texaco). I can tell you virtually all Tankers pull from the same terminal, so regardless of Gas station you are getting the same fuel....only exception was Mobil....The big difference is if the Tanker had been flushed after hauling Diesel fuel and then going to pick up Unleaded fuel... If not then having numerous gallons of diesel fuel left in the tanker and dumping unleaded on it with cause performance issues....Regardless of 87, 89 or 93 octane.... This is very common....Also, I seen where you think you are getting 93 octane but it's really 87 octane....happens more then you think.....All fuels have additives regardless of octane....Paying for Premium is a waste of money for almost all car owners with few exception IMO.....
yep, gas is gas... the octane rating is set based on the detergent formula used...
Stupid article.
The assumption that there would be no reason to change to a higher grade of fuel is just nonsense.
It would make more sense to ask why people buy colored water from Warren Buffett
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Up in Canada, they're paying $1.03 a litre which translates to $3.89 US/Gallon.
Gas was $1.10 last year when oil was $110.
Remember when you heard the $?φ?@†$ oil companies bleating out excuses? Now they don't even bother. They know we know, they know, they've got us by the balls.
Gaz Prices Excuses!
1) A hurricane is coming!
2) A hurricane is here!
3) A hurricane might be coming!
4) A hurricane was here!
5) There was a fire in the refinery!
6) The refinery was down for maintenance.
7) The gas prices today are the oil prices from 6 months ago! They’ve got to ‘go through’ the system!
8) It’s winter gas production time! (Ignore the fact that you’re using the summer gas that was made last winter.)
9) It’s summer gas production time! (Ignore the fact that you’re using the winter gas that was produced last summer)
10) There’s a war over in the middle east!
11) There might be a war over in the middle east!
12) Somebody blew up an oil well over in the middle east.
13) Somebody might blow up an oil well over in the middle east.
14) Brent crude is going up!
15) The Brent/WTI ratio!
16) The US dollar is appreciating
•?•
V-V
50% of the price goes to the feds in Canada. That means there is littlke incentive for the powers that be to encourage compliance with market prices. The feds are a partner in the crime and their cut is VERY important to them.
That said, we are still cheaper than Europe.
This does not bode well .... for electric cars ?
Buy premium .... that's what the cops and the corrupt socialist politicians buy .... with your money !
An Iranian gas station owner told me .... in franchise school .... the instructor set fire to a plate of regular .... and a plate of premium .... the regular left a ring of soot .... FWIW ?
consumers aren't "irrational" they are merely "seasonally adjusted"
if those sorry researchers stopped using "seasonally adjusted" gas prices, there would be no paradox whatsoever. it would be clear gas prices haven't decreased after all.
Either way you're buying a tank full of corn piss from taxpayer dollars shoved into farmers pockets. Same reason everything is sweetened with corn syrup. Bad for boats, motorcycles and your body.
I cannot wait for the reset so the human chaff can be blown to the winds.
There is just too much stupidity for me to handle. The world would be better off with at least a 50% decline in population.. all at once. There is a certainty that most of that loss will be the stupid human animals that hold humanity as a whole from advancing.
Please, would someone press the red button soon???
Please???
Be careful what you wish for. If reports about the coming Ice Age turn out to be true, you may be among them if you live far enough north. They are cyclical occuring every 11,500 years with shifts in earth's magnetic poles. It won't be of the severity that killed the dinosoaurs. But it will do some serious damage.
Oh for crying out loud... to maximize performance in power, fuel economy, emissions, and so on modern cars are using higher compression ratios. They have knock sensors to allow the computer to adjust to the anti-knock rating of the fuel being used. When gasoline is expensive people will use the lower octane fuels and get by. When it's not so expensive they'll buy what the car's owner's manual says will produce the best performance.
Sure it's not every car that needs 93 octane but it would be enough to show up in data.
Also the higher octane fuels have more additives to dissolve deposits and the like. When prices drop it may be people's time to run car on fuels that will clean out the gunk. It isn't myth. It's just a myth that's it's constantly needed. It's a good idea once in awhile. When is that time? When suddenly premium costs less than 87 used to.
Anyone who has ever worked in an industry that makes gasoline powered product knows the problems that show up when fuel prices go up and customers start using the cheapest crap gas they can find. When it's not so expensive they'll spend the pennies not to risk their equipment.
I buy the more expensive gas because it doesn not have the ethanol in it and it gets more MPG and fuck up the engine parts. So, it is actually cheaper to use.
The ethanol fucks up the gaskets and plastic parts. It makes them brittle and they give out. Also, you can't use the ethanol in the small engines devices like lawnmowers without completely destroying them. Regular Americans have figured this out already and are behaving perfectly rationally.
If Gov.com ever makes 15% ethanol gas mandatory, instead of the current 10%, we'll be riding bicycles in a couple of years.
I am pretty sure the economists at NYT just got their explanation wrong. What happened wasn't that drivers upgraded to a more expensive grade of fuel, it was that they were less choosy as to which station to buy their gas at, and sometimes went to more expensive gas stations to avoid the wait. ie they were more willing to spend a little extra to avoid longer wait times since they had more gas money in their pockets ie they were not total idiots and spent money to gain time.
"discretionary purchases such as retirement investments" - Wow, never really though of retirement investments as coming out of my discretionary money, I always viewed it as mandatory..
Oh, and BTW...if ANYONE considers $41 dollars a month a "windfall" they are some broke azz beeches.
Extremely well done propaganda in support of the $4 gasoline meme. If it's cheaper they'll just buy the more expensive grade. Damn I love it! That's even better than they'll just buy big V8's again and increase global warming. That's brilliant!
My experience echos some other posts. Manufacturers are trying to get around fuel mileage regulations by installing turbochargers on six cylinder engines. For that reason, my new car requires 91 octane premium. Otherwise, I would certainly choose Regular. My first choice was eight cylinder, but it wasn't offered.