06-03 15:00: RANsquawk Today's Trading Edge
Sadly, everyone has seemingly forgotten that the lessons of the past can help prepare us for the future. For example, one would assume that the sting of owning an truck or SUV during the financial crisis would stick with consumers long enough to deter them from falling back into the same trap again just because oil was trading lower... then again, just as assuming market participants would remember that time period, one would be wrong.
So here we are once again. Last year, SUVs outsold any other type of passenger vehicle in Europe for the first time, and the trend has continued into 2016 as Bloomberg reports.
The same is occurring in the US, as today light trucks, vans, and SUVs account for 60 percent of the total vehicle sales, a level only reached briefly in 2005 when Brent averaged $55/bbl - meaning that once again low oil prices have lured consumers back into buying less fuel efficient vehicles.
In April, the average car sold achieved a fuel economy of 25.2 mpg, down from a peak of 25.8 mpg set in August 2014. As Bloomberg notes, at current trends, 2016 will mark the first drop in average US fuel economy since at least 2007.
"Fuel economy improvement is really flatlining. The gains completely stopped right at the same time that oil prices started to decline" said Sam Ori, executive director of Energy Policy Institute at the University of Chicago.
As further evidence that consumers having amnesia, light trucks as a share of total US vehicle sales is also hovering around record highs since 1976
China is not immune to this of course, as according to official data, vehicles such as light trucks and SUVs accounted for almost 35 percent of Chinese passenger sales in April, up from 10 percent in 2010, and less than 5 percent a decade ago.
"Consumers are thinking that a period of plentiful oil supply is here to stay" says Christof Ruhl, head of research at the Abu Dhabi Investment Authority.
US demand for fuel peaks between the Memorial Day holiday in late May and Labor Day in early September when Americans usually take vacations, so given the trend of consumers going to bigger, less fuel efficient cars, it's easy to determine that demand will perhaps help oil prices rise during that time. However, a lot depends on the global economy and the supply side of things, neither of which look to be helpful at the moment, as US and China manufacturing PMIs are slumping and Saudi Arabia plans to boost production even more.
All we can say to this is that just as with the last financial crisis, cheap oil is there until its not, and vehicle manufacturers have demand for all of those trucks and SUVs until another crisis hits and they find themselves back in need of a bailout for over committing to those product lines.
As for the markets, well, we know how that ends as well.
Which reminds us of Rudyard Kipling's poem "The Gods Of The Copybook Headings", specifically this portion:
Then the Gods of the Market tumbled, and their smooth-tongued wizards withdrew
And the hearts of the meanest were humbled and began to believe it was true
That All is not Gold that Glitters, and Two and Two make Four
And the Gods of the Copybook Headings limped up to explain it once more.
As it will be in the future, it was at the birth of Man
There are only four things certain since Social Progress began.
That the Dog returns to his Vomit and the Sow returns to her Mire,
And the burnt Fool's bandaged finger goes wabbling back to the Fire;
I don't see the pictures.
Moi non plus
Who is this "Array" guy and what has he done to Tyler?
This may hold true in the US but in Europe, where 90% of the cost of gas is tax, the price of oil makes very little difference to the price at the pump. So if the trend towards SUV's applies also in Europe it is because tastes are moving in that direction but absolutely nothing to do with the price of gas, because that only ever moves by a few cents.
Hey WTF happened ???
Most of the planet is being driven by "hey we gotta change this."
Once upon a time things were "new and improved", but recently there's a lot of "same product, new packaging." Apparently everything has attained some sort of "perfection", so actual improvement is replaced by gee-whiz visuals. Or simply something different to break the boredom.
I feel cheated, the fourth thing was cut off.
SITE IS ALL FUCKED UP - SOMEONE BE WANTING TO TUBE THE ONLY REAL NEWS FEED WORTH A SHIT.
ZH went mobile, my dong fell off.
WTF with the new format? Really sux.
So soon to pronounce judgment.
Long lifted trucks on 84 month terms.
Should have waited until after hours to switch over to the new format, half the items doesn't load properly.
Should have waited until...they actually tested it on a variety of hardware configurations. Or better yet...
Should have waited until 2028, by which time either I'll be dead or immersed in a VR world.
Maybe they should have increased the web designer's salary to reach minimum wage.
Site has gone from the retro 2005 look to 2007. How about getting a programmer who knows how install good looking themes. You'll get more traffic and I'll click on the ads that are interesting.
Attention: Site is currently being updated to the server in the bathroom.
Perhaps Hillary wiped it with an overly wet towel, causing certain components to warp and malfunction.
Huma juice
Hate the new comment format WAAAAAAAAAAAAAH
Hate the new comment format WAAAAAAAAAAAAAH
Those new 500+ HP muscle cars are AWESOME
Very numb feeling unless you have at least 500HP due to the weight of these pigs.
Those new 500+ HP muscle cars are AWESOME
Needed 500+ HP vehicle to haul my PM stack.
Then lost it in a lake.
Dammit.
Thanks for new format...NOT!
Cash4Clunkers 2, Electric Boogaloo.
Anyone know how to logout of this site? Logout button gone.
Welcome to Hotel California. You can check in at any time...
#1 reason why I drive a pickup... Because the FWD cars they build are so shitty that they are worn out before you get them paid for. I can drive a pickup for enough miles to go through two similar priced cars.
Small suvs get over 30 mpg nowadays. My gf's is a 33 or so highway if driven at the speed limit or slightly above.
As for the new format...... it's not bad but I'm not "feelin'" it.
The diesel grand cherokee gets 30mpg. And you can drive that well off road and haul 7200lbs with it.
Fiat is discontinuing the compact Dodge Dart. http://www.nydailynews.com/autos/news/bye-bye-chrysler-200-dodge-dart-ar... Not even Tom Brady's commercials for the Dart could save it.
GM is canceling the compact Buick Verano. http://www.usatoday.com/story/money/cars/2016/05/28/gm-killing-off-its-t... According to GM, "The announcement underscores the changing consumer market dynamics where there is a growing demand for SUVs in North America." Not even Peyton Manning's commercials could save the Verano.
I'm more than happy with my 20mpg and I do not care. I give no fucks, I will drive what I want to. The day they fuck with that, I'll go diesel and burn heating oil.
Never gave up the gas guzzling fleet. I still remember the RIP BMW V12 that my wife crashed in driveway. Was pushing $4.89 premium grade, didn't care. It had a 30 gallon tank. I didn't have to drive very far, just errand driving. The tank lasted about two weeks.
Today, returned from Myrtle Beach to Charleston, SC. Left on 1/4 tank. This SUV pisses gas like a firehose. I arrived safely in on fumes to our local gasoline station. I told the wife, that was close. I haven't pushed this to the three chime gas zone alarm ever. Only had two miles left before bone dry.
Her reply, you should of just stopped asshole. I replied, you would have gone to fetch the gas. She just laughed. :p
When everybody gets an Electric Car, Petrol will be as cheap as chips, and
electricity will be through the roof. Yeah, I know what your thinking.....
Large Generators will be banned, so you can forget about running your house off one.
Not liking the format. Talk to the website owner of ihatethemedia. They pulled the plug and went back to old format.
iOTW REPORT.com is experimenting. It makes me want to take a rake to a school chalkboard. Just my meaningless opinion.
I don't want to mobile chat. Very annoying tab chasing the BlackBerry Passport screen. FYI.
Man, I remember back in 2009 when gas prices were going up and people were unloading their SUV's and Hummer's at a huge loss in order to buy a Hybrid vehicle. You could go to a used car lot and pick up a Hummer that cost $70K for as low as $25K. Everyone though the day of $2 per litre was coming. People were buying Hybrids and selling their SUV's at such low trade in value that they will NEVER see the savings in the Hybrid simply because they sacrificed so much on unloading their SUV's. Well guess what, gas prices are down and these same idiots are now switching back to SUV's and trucks. North Americans really are a stupid lot.
People are stupid. Every time oil goes down or fuel prices decline big trucks and SUV's are back in vogue. When the cost of fuel goes up the resale values of those big hogs goes way down.
People don't learn, otherwise they wouldn't be willing to continue to throw away their wealth powering large vehicles when something smaller is sufficient. I say let them do it, just as long as they don't cry when the vehicle they purchased last time becomes worthless because of high priced gasoline.
Can't save people from their own poor judgement so I quit trying long ago.
As for those who claim that a big truck lasts twice as long as a small car and hence costs less I call bull shit. Treat the car with something resembling responsible maintenance and it'll last.
You still have errors in formatting. Regardless of whether the post is rich text or basic the breaks aren't showing up in the post.
I tried to edit and add CR's to create blank lines and it won't stick, even when I enabled rich text.
Farm Production of Alcohol Fuel (A Complete Guide)
http://running_on_alcohol.tripod.com/id33.html
Get a still bitchez!.....(I don't have one.)
In 2013 I bought a new car. The Michigan roads tore it up to the point where it felt like a 7 year old car by mid 2015. Now I drive a truck. Sorry greenies but cars simply get destroyed by these roads.