STOP Crowing About Gas Prices, Brandon
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2022-08-06 07:00 by Karl Denninger
in Macro Factors , 517 references Ignore this thread
STOP Crowing About Gas Prices, Brandon
[Comments enabled]

It's not because you should take credit for anything, other than destroying the economy.

Look right here folks.

Yes, prices are down.  Why?

Right here:

 

That's a 14% drop in gasoline demand .vs. last year, same week at the end of July.  Summer comes every year at the same time.  Vacation season is in the summer.  Driving vacations, to be exact, and everything looked more or less OK and in fact was a very nice economic recovery signal right up until July 4th when it all went to Hell.

Now that's the consumer side, because most gasoline is, of course, burned by ordinary schlubs doing this and that, whether it be going to work or going on vacation, and in the summer that demand spike occurs every single year and is due to vacations and other leisure activities, all of which requires that the average schlub have money they can expend on same.

When they don't that then filters back up to suppliers and businesses, with some sort of lag, because everyone does the happy dance until they can't.  "It's transitory!", "The weather was crappy", choose your excuse everyone makes them in business for a little while.  It is in fact the lag between consumer behavior and supplier actions, along with both exuberance and fear, that drives the business cycle and always has.  In short imperfect information and both the happy and fear game is why there is always a "boom and bust" of some size and nothing you can do has ever, or will ever, change that.

Sometimes the happy dance turns out ok.  But most of the time it doesn't.

This had better not continue to confirm as, you should note, when we start into the late summer and early fall distillate demand goes up because that's the movement of goods for the upcoming holidays.

 

Is that a blip or is that light in the tunnel an oncoming freight train?

We'll see.

Go to responses (registration required to post)
 



 
Comments on STOP Crowing About Gas Prices, Brandon
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Mjeff87 696 posts, incept 2021-11-22
2022-08-06 08:03:06

Funny how the administration claimed POTUS cannot influence fuel prices while they were skyrocketing but now are praising potato for falling prices. I has question....

Some days the supply of available curse words is by far exceeded by my need of their use.

The wife and I did vacation in FL this year, and yes we drove. Spent about $100 and some change in gas. We had a trip planned to SC in a couple months but rethought it and are now planning something MUCH closer to home. Demand destruction, I suppose, for one or more reasons.

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Si Vis Pacem, para Bellum
Tickerguy 186k posts, incept 2007-06-26
2022-08-06 08:04:29

I used to pay zero attention to miles driven, and just stuck the nozzle in when required.

Since the rampjob? Different story. I now choose when and where, and am driving a LOT less as a result. While the greenies might like this the impact on merchants is not to be ignored; a trip not taken is stuff not bought!

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The law of scoreboards is not subject to repeal.
Fuck around and find out.
New business: Karl's Guillotine sales and repair; you slice 'em, we dice 'em.
Jazen 4k posts, incept 2007-07-17
2022-08-06 08:11:52

People eat Diesel, not gasoline.
Last I checked, that is still high

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I hate our Government, but I still love America.
Tickerguy 186k posts, incept 2007-06-26
2022-08-06 08:12:43

It is, as the demand change has not shown up there yet.

The price drop in gas is not due to supply or oil prices -- it is due to demand destruction. That's what the charts tell you.

So FAR that hasn't hit distillate (diesel), but there ARE indications it might be starting to. The next month will tell us quite a bit.

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The law of scoreboards is not subject to repeal.
Fuck around and find out.
New business: Karl's Guillotine sales and repair; you slice 'em, we dice 'em.
Rangeishot 681 posts, incept 2021-11-18
2022-08-06 08:46:39

That relates to the point somebody made in The Bar recently ... gasoline and diesel are both products of refining a single quantity of crude. If gas is not being sold quickly enough, refineries risk running out of storage, which means they can't produce diesel.

Obviously that's how and why demand destruction drives down gasoline prices ... but if people can't afford hotels and restaurants and getting woke with Mikey and Minnie, that gas isn't likely to get cheap enough to make the difference.

Is refined gasoline an exported product?
Bluto 1k posts, incept 2021-07-10
2022-08-06 08:46:56

Where do see the SPR release coming into play?

Brandon decided to deplete our reserves to drive prices down before the midterms, but they (or the next administration) are going to have buy all that back, which will drive up the price.

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The God who gave us life, gave us liberty at the same time; the hand of force may destroy, but cannot disjoin them. Thomas Jefferson
Rollformer 1k posts, incept 2013-02-13
2022-08-06 08:47:05

Bear in mind those demand figures are 4-week averages. So the actual demand has fallen more due to the smoothing effect of the moving average.
Prof_dilligaf 343 posts, incept 2021-09-02
2022-08-06 08:47:12

"But, like, July 4th was on a Monday, maaaannnnn! Everyone was too bummed out to drive! Like Garfield."

All the consumption unconducted and all the services unrendered have yet to really ripple out into the wider economic ecosystem, but they will as the "staycationers" morph into "shut-ins".
Nashville 85 posts, incept 2018-02-27
2022-08-06 08:59:07

That EIA site has lots of interesting information. From what we've all read, we might conclude a large number of folks must have chosen to stay closer to home starting about July 4th - for whatever reason.

However, I for one drove to Pensacola - my 1st such journey to the Gulf in over 20 years to follow my grandkids who were RV-ing. I burned about $180 in fuel and my kids burned maybe 3x that much. We witnessed extremely heavy traffic on I-65 both directions (esp south of Montgomery) as we headed South on Sunday, July 9th. (travel tip: don't plan a vacation to FL in July! Hot as hell and frequent heavy rain. I would have rather visited up Karl's direction, but we felt compelled to accompany kids) FOMO

Two points to offer about this fall-off in travel narrative...

(1) I'm going to throw up a graph from the EIA website that appears contradictory in that it shows 4-week Avg. Ethanol production has been running HIGHER compared to 2021 for the 1st half and running apace since. Shouldn't Ethanol production correlate to regular consumer gas demand?

(2) I also took a glance at TSA checkpoint numbers - https://www.tsa.gov/coronavirus/passenge.... - which appear to be running 10%+ ahead of 2021. So airline travel rebounding nicely, but folks not driving? Does not compute.
Tickerguy 186k posts, incept 2007-06-26
2022-08-06 09:00:17

Price is truth @Nashville.

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The law of scoreboards is not subject to repeal.
Fuck around and find out.
New business: Karl's Guillotine sales and repair; you slice 'em, we dice 'em.
Fenriswulf 20 posts, incept 2021-10-16
2022-08-06 09:43:35

At our last earnings review, the CEO said that people are confusing dynamic markets with a recession. I don't know that squares with Amazon firing the equivalent of 3 of our companies in 1 Qtr but hey he's the CEO.
Greenacr 585 posts, incept 2016-03-15
2022-08-06 09:43:44

I am less than 4 weeks away from a 3 week driving vacation from Ohio to Moab and then Flagstaff. I am hoping for serious gasoline demand destruction for that September period. Hoping that a lot of folks are also not at those parks.

Bucket list trip here so I really don't care what the cost of gasoline is as all my hotels are free. We travel frugally carrying a small Weber BBQ and a large Yeti Cooler. Able to eat at rest/picnic areas rather cheaply.

I am still seeing a lot of folks not filling their vehicles at service stations. Often purchases of $10 or $20. That tells me folks are being squeezed. Local Aldi's Manager has said that they have never been busier which is fine because all these new customers seem to leave their quarters behind which find their way into my pockets.
Bikemechanicdeux 1k posts, incept 2020-03-29
2022-08-06 10:42:08

Do not Trust the EIA sites. Their retail sales averages graph showed lower demand starting long ago, then not long ago all the averages were raised higher and by a lot. When back 10 years or more.

Biden allowed 15% ethy to be sold in the Summer (banned in some States for pollution reasons), might account for the increase compared month to month.

Also people who have flex fuel vehicles and have a federal gas station near a military base probably switched to e85. Only place sold where it made economic sense.

Right now it does not. Price in Pcola for flex at Saufley and PNB I think is 3.19 cheapest is 3.50 or so or so at Sams club there. others 3.69 for me local and uppp. When it was around 4.39 yea flex. Those numbers are pretty current.




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Truth is the daughter of time, not of authority. .
Truth emerges more readily from error than from confusion.Tragedies & Comedies are made of one Alphabet
Francis Bacon
Wayiwalk 478 posts, incept 2016-11-09
2022-08-06 10:42:33

Year Over Year my "no more fucks to give" has similarly plummeted.

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The Lockdowns Will Continue Until the Morale Improves!

I keep thinking, "it can't get any worse" and then it does!

Let's Go Brandon!
Nashville 85 posts, incept 2018-02-27
2022-08-06 10:42:38

No argument! Price is paramount, I'm just a skeptic looking for alternate explanations. Devils advocate since the EIA is after all a government authority - much like BLS. And we should certainly trust them to be truthful when presenting demand. Right? The administration has been stung by inflation and they want it to stop hurting - especially come late October when SPR drain is closed. Or maybe they are thinking a little further down the road?

From EIA: "Retail gasoline prices are mainly affected by crude oil prices and the level of gasoline supply relative to gasoline demand. Strong and increasing demand for gasoline and other petroleum products in the United States and the rest of the world can place intense pressure on available supplies."

Observe WTI just recently dropped from ~$122 to ~$88 - due mostly to recession fears. (It topped mid-June along with TNX rate). I believe that's a primary reason for price decline. So, EIA shows "demand" is down - but exactly what is the source for these numbers? Is it measured at the refinery - the pipeline terminal - the truck delivery - the retail sale? What's the lag?

If you observe the price of your favorite beer dropping daily from $12 a 6-pack to $8.80, would you tend to hold off stocking the fridge today? How would that affect "beer demand". The whole gas/oil biz is just so complicated, I think it may be too early to draw conclusions.
Trappedinca 44 posts, incept 2021-09-14
2022-08-06 10:52:27

I recently completed a 2,200 mile drive from California to Illinois. A trip I have made at least ten times (IL to CA and vice versa) in the last fourteen years. This is all anecdotal but traffic seemed way down and gas stations, hotels, etc. were not as crowded as on prior trips. Also, another anecdotal story, first grocery shopping trip in IL was on Wednesday night, well known local chain, have shopped there many times, parking lot was only 1/3rd full at 5pm on a weekday (usually packed) and the store itself was a ghost town. This chain is not known for the lowest prices around and my conclusion was that people are feeling the pinch of higher gas prices, higher food prices, etc and are shopping elsewhere. FWIW.

Jacksparrow 167 posts, incept 2016-04-15
2022-08-06 11:11:40

A couple weeks ago I traveled by car from WA to CO back and forth 4 times on I-90 & I-25. There wasn't any traffic. I burned thousands on premium. Only place with lots of traffic was Denver which I hate.
Step55 194 posts, incept 2009-02-27
2022-08-06 11:15:54

Ethanol production may be due to efforts to use up 2021 corn before the 2022 crop is harvested. The EPA also allowed E15 to be sold through the summer in areas previously restricted to E10. There is also an advantage in price to use 2021 corn where available.

"WASHINGTON (April 29, 2022) As part of President Bidens commitment to providing Americans relief from market supply issues created by Putins unprovoked war in Ukraine, today the U.S. Environmental Protection Agency (EPA) is issuing an emergency fuel waiver to allow E15 gasoline that uses a 15 percent ethanol blend to be sold during the summer driving season"

https://www.epa.gov/newsreleases/epa-iss....
3sons 1 posts, incept 2018-01-23
2022-08-06 11:30:06

The 3Sons family contributed to the ramp in demand prior to July 4th, 1500+ mile round trip to the keys pulling the boat.

Thought we were so smart going early in the summer because all the "experts" said gas would be over $6 by August.

We averaged less than 9mpg in an suv that normally gets 16 or so, cheapest gas we saw on the road was $4.95. Paid $6.62 for Rec 90 on the water in marathon! Still, the total fuel cost was much less than renting a boat down there if we hadn't pulled our own.
Quantum 557 posts, incept 2021-05-18
2022-08-06 12:49:38

@Bluto This crowd doesn't plan on replenishing the SPR-ever. Get rid of that, kneecap production, and people will be forced to abandon their cars.

Since Bush zeroed it out, the strategic grain reserve (we used to have one) hasn't been replenished, either, even in times of abundant harvest and cheap grain.

https://thewashingtonstandard.com/strate....

That article from 2015 looks fairly prescient.

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Our God, will you not judge them? For we have no power to face this great multitude that is attacking us. We do not know what to do, but our eyes are on you. --2 Chron. 20:12
Gonavybeatarmy 62 posts, incept 2021-05-21
2022-08-06 17:27:05

Im with TG. I used to be a pfft, just fill it kind of guy. I drive from Alberta to Ontario return pretty much once a year, sometimes more. Last year, it cost $500 or so in gas each way in my 95 Grand Marquis. Its about 2100 miles each way. I only hope to pay that much in a TDI Jetta this year.

I drive for a living. This year, its about 15 cents a mile in the Jetta and 40 cents in a cargo van.
Heyjackass 36 posts, incept 2020-04-02
2022-08-06 17:27:25

Paid $4.66/gal at Costco this morning. That's down from $4.95 a week or so ago. Other local non-Costco stations are still $5+. What seemed off was there was virtually no line on a Saturday morning. Typically it's not uncommon for there to be a line winding its way outside of the gas station area. Costco itself was pretty quiet as well, again strange for a Saturday morning.

Also, any money saved at the pump is made up for by the increase in the price of eggs. WTF?
Frat 11k posts, incept 2009-07-15
2022-08-06 17:27:41

I know that for the first time since the 2008-09 debacle, I am actually factoring in gas prices as part of the "Do I really need this?" or "Do I really want to go there?" Seriously, why the hell would I bother if it's not worth my time and money to do so?

Trump was a lot of things - most of them shitty - but he DID give most consumers the faith to go out and spend, because there always seemed to be decent economic conditions in the future.

And Biden? That dementia-ridden fucker has me back to preparing for the apocalypse, much as the fucktard he served as VP under had me doing. Had Hillary stolen it as well as Biden did, we'd probably already be a smoking crater because RUSSIA RUSSIA RUSSIA! would have had to have been dealt with, for whatever retarded fucking reason she could muster.

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We're fucked. There will be no happy ending here; there is no going back to 'normal.'. There are only bad outcomes and worse outcomes. And we don't get to choose those, either.
Burya_rubenstein 2k posts, incept 2007-08-08
2022-08-06 17:27:58

DetroitGasPrices shows the cheeeepest Diesel fuel in Waterford at $4.54 a gallon. It showed $4.44 about a week ago, but $4.99 a couple of weeks before that. (I don't know how to get a handle on average for diesel; the charts only show average for either gasoline or all fuels combined.)
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