MaxedOutMama
Wednesday, February 13, 2008
Gas And Asses
If you would like, you could consider the "Asses" in the title of this post to refer to an alternate method of transportation.
In a prior post I reviewed the trend for US crude supplied as it relates to recessions. This graph shows crude trends, and under normal circumstances, supply doesn't fall unless we enter a recession:
But gas is a different story, although consumption does drop for recessions. Here are some recession periods:
and:
and now:
There's an overall trend here it's easy to miss, so take a look at this:
Gasoline consumption in the US has been falling for years. All those who scream about Hummers and wasteful consumers may be discussing their neighbors, but they aren't discussing the US as a whole. For about 9 years gasoline consumption has been dropping, and in 2007 consumption was the lowest for ten years.
Gas consumption in the US is not price invariant at all. Sales of gas-efficient cars have been steadily increasing, and those fuel-efficient cars will stay on the road for years to come. It's likely that this trend has multiple causes, among which are real declining incomes for a large section of the population, a growing number of retirees who are not forced to drive to work, home workers, and sincere efforts to conserve by a portion of the population. It may also reflect a shift in jobs toward major urban areas in which mass transport is a viable option for more workers.
Regardless, the idea that gas taxes need to be raised to force conservation is a stunningly stupid one. It appears that current gas prices are causing conservation, and that wasteful consumption is restricted to portions of the population that can frankly afford to pay higher taxes without changing their habits. It also appears that US efforts to conserve are not going to affect world trends much - the growth is coming from other areas.
Keeping the overall trend in mind, it is even more remarkable that retail sales show such a growth of retail spending on groceries, gas and pharmaceuticals. The bottom line is that other types of consumption are being suppressed by high spending on necessities. The high spending on necessities is the product of declining real incomes in a large portion of the population, and high inflation for food and fuel.
So is it likely that the stimulus plan will generate much actual economic stimulus? I would say not. The bulk of the individual checks won't hit until May or so, and far more than half of that money will likely be used to pay down other debt or outstanding bills. If people are now using gift cards to buy groceries and gas, they are pushed hard enough to do the same with those checks. Probably it will be a windfall for credit card companies and utilities, but I doubt we'll see much of it in the stores. As the tax refund checks start to come back, we should see some discretionary spending this spring.
A large portion of inflation is coming from the high price of diesel fuel. I expect inflation to keep rising through at least the next few months.
Can government monetary policy do much to restrain inflation of the type we are seeing? I would argue not. There is increased world consumption of necessities, and those are the goods with rising costs. It's rather clear that if anything, US conditions are tight enough to restrain inflation by restraining reseller margins, but of course that has a natural limit.
In a prior post I reviewed the trend for US crude supplied as it relates to recessions. This graph shows crude trends, and under normal circumstances, supply doesn't fall unless we enter a recession:
But gas is a different story, although consumption does drop for recessions. Here are some recession periods:
and:
and now:
There's an overall trend here it's easy to miss, so take a look at this:
Gasoline consumption in the US has been falling for years. All those who scream about Hummers and wasteful consumers may be discussing their neighbors, but they aren't discussing the US as a whole. For about 9 years gasoline consumption has been dropping, and in 2007 consumption was the lowest for ten years.
Gas consumption in the US is not price invariant at all. Sales of gas-efficient cars have been steadily increasing, and those fuel-efficient cars will stay on the road for years to come. It's likely that this trend has multiple causes, among which are real declining incomes for a large section of the population, a growing number of retirees who are not forced to drive to work, home workers, and sincere efforts to conserve by a portion of the population. It may also reflect a shift in jobs toward major urban areas in which mass transport is a viable option for more workers.
Regardless, the idea that gas taxes need to be raised to force conservation is a stunningly stupid one. It appears that current gas prices are causing conservation, and that wasteful consumption is restricted to portions of the population that can frankly afford to pay higher taxes without changing their habits. It also appears that US efforts to conserve are not going to affect world trends much - the growth is coming from other areas.
Keeping the overall trend in mind, it is even more remarkable that retail sales show such a growth of retail spending on groceries, gas and pharmaceuticals. The bottom line is that other types of consumption are being suppressed by high spending on necessities. The high spending on necessities is the product of declining real incomes in a large portion of the population, and high inflation for food and fuel.
So is it likely that the stimulus plan will generate much actual economic stimulus? I would say not. The bulk of the individual checks won't hit until May or so, and far more than half of that money will likely be used to pay down other debt or outstanding bills. If people are now using gift cards to buy groceries and gas, they are pushed hard enough to do the same with those checks. Probably it will be a windfall for credit card companies and utilities, but I doubt we'll see much of it in the stores. As the tax refund checks start to come back, we should see some discretionary spending this spring.
A large portion of inflation is coming from the high price of diesel fuel. I expect inflation to keep rising through at least the next few months.
Can government monetary policy do much to restrain inflation of the type we are seeing? I would argue not. There is increased world consumption of necessities, and those are the goods with rising costs. It's rather clear that if anything, US conditions are tight enough to restrain inflation by restraining reseller margins, but of course that has a natural limit.
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MOM,
I didn't comment on the previous post because i didn't know where you were going. Now I have a few comments.
Gas consumption in the US is not price invariant at all.
No commodity/consumable ever is in a capitialist economy with a nominally democratic government.
Sales of gas-efficient cars have been steadily increasing, and those fuel-efficient cars will stay on the road for years to come. ?
Far longer than the "guzzlers" they replace thus multiplying the effect. New cars last longer. MUCH longer.
It's likely that this trend has multiple causes, among which are real declining incomes for a large section of the population, a growing number of retirees who are not forced to drive to work, home workers, and sincere efforts to conserve by a portion of the population.
Smaller household sizes obviating the necessity of large vehicles.
It may also reflect a shift in jobs toward major urban areas in which mass transport is a viable option for more workers.
This is where we part company. None of those posits are correct. The trend is accelerating towards distributed work locations within aggregated urban areas that are particularly unsuited to transit. Transit use declines in periods of lower economic growth/recession.
Transit is a very bad thing. It costs too much, takes too long and steals road and rail capacity from the efficient use by POVs be they autos or trains.
I didn't comment on the previous post because i didn't know where you were going. Now I have a few comments.
Gas consumption in the US is not price invariant at all.
No commodity/consumable ever is in a capitialist economy with a nominally democratic government.
Sales of gas-efficient cars have been steadily increasing, and those fuel-efficient cars will stay on the road for years to come. ?
Far longer than the "guzzlers" they replace thus multiplying the effect. New cars last longer. MUCH longer.
It's likely that this trend has multiple causes, among which are real declining incomes for a large section of the population, a growing number of retirees who are not forced to drive to work, home workers, and sincere efforts to conserve by a portion of the population.
Smaller household sizes obviating the necessity of large vehicles.
It may also reflect a shift in jobs toward major urban areas in which mass transport is a viable option for more workers.
This is where we part company. None of those posits are correct. The trend is accelerating towards distributed work locations within aggregated urban areas that are particularly unsuited to transit. Transit use declines in periods of lower economic growth/recession.
Transit is a very bad thing. It costs too much, takes too long and steals road and rail capacity from the efficient use by POVs be they autos or trains.
Rob - I was thinking of the demise of manufacturing jobs compared to the rise of "service jobs" and jobs involved in administrative pursuits such as import/export paper shuffling.
In parts of the NE, mass transport truly is viable and is used, such as for commuting into NYC.
You might be right overall. However, the gas consumption trend is real and strong, and flies in the face of so much that we read. It's frustrating that policy is based on stuff written in newspapers that is just not true.
Btw, my guess is that manufacturing will resurge and that gas usage will at least stabilize.
In theory, US population rose by over 22 million people since 1997, or by about 12%. Isn't it an amazing statistic that gasoline consumption is dropping?
In parts of the NE, mass transport truly is viable and is used, such as for commuting into NYC.
You might be right overall. However, the gas consumption trend is real and strong, and flies in the face of so much that we read. It's frustrating that policy is based on stuff written in newspapers that is just not true.
Btw, my guess is that manufacturing will resurge and that gas usage will at least stabilize.
In theory, US population rose by over 22 million people since 1997, or by about 12%. Isn't it an amazing statistic that gasoline consumption is dropping?
Rob, I'd love to have your thoughts on whether China has shot itself in the foot.
Here's what's bothering me: Globalization has succeeded well enough that it has boosted consumption for necessities enough to put pressure on world supply. That includes energy and food.
The developing countries have populations that spend much higher proportions of their incomes for food and fuel. Therefore they cannot consume discretionary products to the degree that the developed countries can.
It now appears that the price of food and fuel is pushing consumption down in the developed countries, which is obviously going to cut their demand for these products from developing countries.
The developed countries are the ones that can afford to deal with pollution and invest enough for energy-efficient production.
Aren't we running into natural limits for the export of production from developed countries to less developed countries? One feature of developing countries is that far too many of them do not distribute incomes well at all.
India has a population of around a billion people. It has 3.7 million broadband connections. At some point, the disparity is going to rebound on everyone.
Here's what's bothering me: Globalization has succeeded well enough that it has boosted consumption for necessities enough to put pressure on world supply. That includes energy and food.
The developing countries have populations that spend much higher proportions of their incomes for food and fuel. Therefore they cannot consume discretionary products to the degree that the developed countries can.
It now appears that the price of food and fuel is pushing consumption down in the developed countries, which is obviously going to cut their demand for these products from developing countries.
The developed countries are the ones that can afford to deal with pollution and invest enough for energy-efficient production.
Aren't we running into natural limits for the export of production from developed countries to less developed countries? One feature of developing countries is that far too many of them do not distribute incomes well at all.
India has a population of around a billion people. It has 3.7 million broadband connections. At some point, the disparity is going to rebound on everyone.
Rob, I'd love to have your thoughts on whether China has shot itself in the foot.
They've shot themselves in the back of the head and find they don't have anyone to bill for the bullet. Blunt enough?
Here's what's bothering me: Globalization has succeeded well enough that it has boosted consumption for necessities enough to put pressure on world supply. That includes energy and food.
Okay, this is tougher. The Chicomms, and don't give me no Neocon labeling crap because I call them that, are in a prosperity trap. Their system cannot support the standard of living they promise.
The developing countries have populations that spend much higher proportions of their incomes for food and fuel. Therefore they cannot consume discretionary products to the degree that the developed countries can.
ahhh but the beauty is that a DISproportionate part of any increase is thus allocated to what we used to call luxury goods.
It now appears that the price of food and fuel is pushing consumption down in the developed countries, which is obviously going to cut their demand for these products from developing countries.
Normal supply and demand. Mexico's ruling class is pissed that their oligarchy is threatened by of all things the price of Tortillas.
The developed countries are the ones that can afford to deal with pollution and invest enough for energy-efficient production.
It is a good thing that you are already married to a better man than I. Yes. Wealth is what cures the environment not the recent reverse political Luddite agenda.
Aren't we running into natural limits for the export of production from developed countries to less developed countries?
Nope, what is happening is an inclusion of external trade exchanges. Our entire so called trade defict with ChiComm would reverse if they would just pay us for the intellectual property they steal.
One feature of developing countries is that far too many of them do not distribute incomes well at all.
I'd go further. It seems an axiom that they misallocate.
They've shot themselves in the back of the head and find they don't have anyone to bill for the bullet. Blunt enough?
Here's what's bothering me: Globalization has succeeded well enough that it has boosted consumption for necessities enough to put pressure on world supply. That includes energy and food.
Okay, this is tougher. The Chicomms, and don't give me no Neocon labeling crap because I call them that, are in a prosperity trap. Their system cannot support the standard of living they promise.
The developing countries have populations that spend much higher proportions of their incomes for food and fuel. Therefore they cannot consume discretionary products to the degree that the developed countries can.
ahhh but the beauty is that a DISproportionate part of any increase is thus allocated to what we used to call luxury goods.
It now appears that the price of food and fuel is pushing consumption down in the developed countries, which is obviously going to cut their demand for these products from developing countries.
Normal supply and demand. Mexico's ruling class is pissed that their oligarchy is threatened by of all things the price of Tortillas.
The developed countries are the ones that can afford to deal with pollution and invest enough for energy-efficient production.
It is a good thing that you are already married to a better man than I. Yes. Wealth is what cures the environment not the recent reverse political Luddite agenda.
Aren't we running into natural limits for the export of production from developed countries to less developed countries?
Nope, what is happening is an inclusion of external trade exchanges. Our entire so called trade defict with ChiComm would reverse if they would just pay us for the intellectual property they steal.
One feature of developing countries is that far too many of them do not distribute incomes well at all.
I'd go further. It seems an axiom that they misallocate.
MoM and DAWG,I appreciate your back and forth.I also believe that the Multi nationals will wait a long time for a thank you from the chinese after they appropriate said Multinationals assets.When things get ugly,someone will need to be blamed and punished...and Tradition is important in china.
# posted by 
: 6:04 PM
: 6:04 PM
A couple of miscellaneous thoughts:
I hope the trend for lower gas consumption continues and doesn't get derailed like it did in the 70s. Once we get enough fuel efficient cars on the roads, they will start to filter down to those of us at the bottom. It's common in call centers for folks to drive Toyotas and Subarus from the 80s. It's certainly better than what they had before ;)
From what I've seen, it's much harder these days to car pool and use mass transit. Too many companies insist upon weird shifts that just don't lend themselves to these activities. I thought it was funny when Charter tried to promote car pooling. They forced you to bid for a different shift every three months! How can you possibly develop an alternative way to get to work when you are likely to be working different shifts in a few months? Mass transit seems to work well only for government employees.
For what it's worth, my father-in-law was on a gun boat in China during the 20s (just like the movie Sand Pebbles). He told him how dreadful conditions were, of a coolie pulling a rickshaw that dropped dead and was pushed out of the way by another who wanted to take his place and have a job. He always felt that the Communists had done a better job of improving living conditions than past rulers. It will be interesting to see if they can stay in power.
I hope the trend for lower gas consumption continues and doesn't get derailed like it did in the 70s. Once we get enough fuel efficient cars on the roads, they will start to filter down to those of us at the bottom. It's common in call centers for folks to drive Toyotas and Subarus from the 80s. It's certainly better than what they had before ;)
From what I've seen, it's much harder these days to car pool and use mass transit. Too many companies insist upon weird shifts that just don't lend themselves to these activities. I thought it was funny when Charter tried to promote car pooling. They forced you to bid for a different shift every three months! How can you possibly develop an alternative way to get to work when you are likely to be working different shifts in a few months? Mass transit seems to work well only for government employees.
For what it's worth, my father-in-law was on a gun boat in China during the 20s (just like the movie Sand Pebbles). He told him how dreadful conditions were, of a coolie pulling a rickshaw that dropped dead and was pushed out of the way by another who wanted to take his place and have a job. He always felt that the Communists had done a better job of improving living conditions than past rulers. It will be interesting to see if they can stay in power.
Teri,Mao was a great man.Not a good man,and certainly not a nice man,but a great one,and china was better off under the communists than it was from roughly 1900-1945.He did reunify China,at the cost of more than 100 million lives,and China is once again a "Great Nation" as well as a viciously corrupt oligarchy of xenophobes.Mixed blessings.
# posted by : 4:54 PM
: 4:54 PM
I consider Mao to be the First Emperor of the Communist Dynasty, after the Time of Troubles caused by the fall of the Manchu Dynasty.
A Chin Shih Huang Ti of our time, even down to the paranoia, legacy-building, and history-erasing.
A Chin Shih Huang Ti of our time, even down to the paranoia, legacy-building, and history-erasing.
# posted by : 2:36 PM
: 2:36 PM
Anon and Teri - actually, it seems to me that the Chinese Communist party mutated right back to a group of mandarins.
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