Americans spending gas savings on...gas

[Sid Hoffman]

Full article with video

You really need to click the link above to watch the video and get the full effect of his cynicism on this, but you still can probably get the idea from the title alone.

By Jeff Macke
Yahoo Finance
...
What I'm interested in, and what you probably care about if you're watching this clip, is why falling gas prices aren't leading to more consumer spending elsewhere. In theory falling gas prices are a "tax cut" for consumers. I consider it a given that Americans spend $1.05 for ever buck they save. You'll never convince me otherwise.

So where are these gas savings going? If you dig into the data from yesterday and last week you get an answer that's equal parts reassuring and disturbing. Americans are spending their gas savings by, in effect, figuring out ways to buy more gas.

Auto sales reported yesterday were at multi-year highs. In fact the dollar value on cars in total is up 60% in five years. But we're buying gas guzzlers. Sub-compacts like the Ford Fiesta saw total sales decline 2.3%. The gains consisted of crossovers like Jeep Cherokee's picking up double digits.

The average consumer spends only $2,418 per year on gas according to the government. If you switch from a Fiesta to a Cherokee your net gas bill goes higher by thousands.

[pzxc]

Yeah, I heard on the radio yesterday: "...SUV sales increased in the last month on lower gas prices..."

Had to do a double take.  WTF?  Gasoline is cheaper now doesn't mean it will be cheaper in 5 years or even in 5 months people !!  (And even if it were, SUVs are still such an unnecessary waste...)

[HairyUpperLip]

Wow, that's just fucking retarded.

[seanc0x0]

Yeah, I heard on the radio yesterday: "...SUV sales increased in the last month on lower gas prices..."

Had to do a double take.  WTF?  Gasoline is cheaper now doesn't mean it will be cheaper in 5 years or even in 5 months people !!  (And even if it were, SUVs are still such an unnecessary waste...)

That may be good for people who can look beyond 'right now'... if plenty of economical small cars start coming in on trade for gas-guzzling boxes-on-wheels, it could drive down prices on the smaller cars.  In theory, anyway.

[Sid Hoffman]

That may be good for people who can look beyond 'right now'... if plenty of economical small cars start coming in on trade for gas-guzzling boxes-on-wheels, it could drive down prices on the smaller cars.  In theory, anyway.

It's still bad for the long term view.  Fewer new economy cars sold today = fewer used economy cars available used in 5 years.  Well, that and it's bad because wasting gas is bad, more budgetary waste, possible pollution, lung disease, global warming, political wars over oil, etc.  I think OPEC is doing this on purpose to try to put the US oil producers out of business.

[seanc0x0]

That may be good for people who can look beyond 'right now'... if plenty of economical small cars start coming in on trade for gas-guzzling boxes-on-wheels, it could drive down prices on the smaller cars.  In theory, anyway.

It's still bad for the long term view.  Fewer new economy cars sold today = fewer used economy cars available used in 5 years.  Well, that and it's bad because wasting gas is bad, more budgetary waste, possible pollution, lung disease, global warming, political wars over oil, etc.  I think OPEC is doing this on purpose to try to put the US oil producers out of business.

True, so amend my statement to include 'ignorning externalities'. ;)

I think you are spot on on the OPEC thing. They really don't want US and Canadian production to ramp up and cut them out of the picture. The drop in oil has not been kind to my investments on the TSX either.

[MoneyCat]

Good.  I hope people keep wasting their money on stuff they don't need so the stock market will continue to increase.  Thanks for the free money, morons!

[Bob W]

One thing that I've read before is that switching from a 20 mpg car to a 34 mpg makes no difference to how much one spends on gas.   People just change their driving habits to drive more with more MPG. 

I bought gas today for $2.60 here in Missouri Ozarks.   Nice!   I am hearing it could go to $2.10 at the low.   That would be a real nice xmas present for consumers,  workers, drivers and the stock market.

It seems gas prices have a lot to do with a lot of what goes on. 

We could be looking at a period of significant deflation which could ultimately be bad as people put off purchases to wait for price decreases.   Could we really see 2% home loans and easy credit next year to stimulate the economy and stimulate inflation?  I think we could.  Deflation is the ultimate killer of economies.

[Pooperman]

One thing that I've read before is that switching from a 20 mpg car to a 34 mpg makes no difference to how much one spends on gas.   People just change their driving habits to drive more with more MPG. 

I bought gas today for $2.60 here in Missouri Ozarks.   Nice!   I am hearing it could go to $2.10 at the low.   That would be a real nice xmas present for consumers,  workers, drivers and the stock market.

It seems gas prices have a lot to do with a lot of what goes on. 

We could be looking at a period of significant deflation which could ultimately be bad as people put off purchases to wait for price decreases.   Could we really see 2% home loans and easy credit next year to stimulate the economy and stimulate inflation?  I think we could.  Deflation is the ultimate killer of economies.

$5k in rebates on credit cards to incentivise buying next year? Hellooooooo free money times are back. Why is that a good thing? Two reasons. First: low borrowing cost for cheap houses (not where I live, but for investing purposes). Second: it'll make a bubble that will induce a minor recession in a couple of years so stocks can be on sale again (I missed the last one being a freshman in college without a clue!).

In all seriousness, spending gas savings on gas is a tried and true method by Americans to stay in debt. As we all know, debt economies are good!