By on November 28, 2014

tcgaspricechart

Courtesy of our own Tim Cain. The fain green line represents gas prices, starting from the peak price of crude oil in 2014. Elsewhere, we see market share figures for passenger cars, SUVs/CUVs and pickup trucks. We’ll be keeping an eye on this as the months roll on. Crude oil dipped below $70 a barrel today – truly a black Friday for world oil markets. Let’s see how consumers respond in terms of new vehicle choices.

 

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51 Comments on “Chart Of The Day: Gas Prices, Trucks And Automobiles...”


  • avatar
    Lie2me

    “truly a black Friday for world oil markets”

    Yeah, it really broke my heart this morning to fill-up and only pay $30 instead of the normal $40

    • 0 avatar
      theupperonepercent

      Premium Unleaded 93 was $1.89 in January 2009.

      It’s currently $3.35.

      I haven’t seen lower than $1.75 since Hurricane Katrina.

      Why are we celebrating again?

    • 0 avatar
      highdesertcat

      Lie2me, yeah, and it may very well be possible for oil prices to get down to the mid-fifties as we progress into 2015, all things remaining the same. This may even cause Russia to go into a recession, if the price drops. Wouldn’t that be something? Or how about Venezuela declaring bankruptcy, in spite of all its nationalized oil wells.

      But all this isn’t without peril for the US either, especially in the US banking and lending industries that finance much oil exploration in the US.

      All it takes is for one of the shale oil companies to default on their loan and we’ll see some unintended consequences of having too much oil on our hands.

      We’ve got so much oil in the US that much of it is parked in tank cars on secondary rails, waiting to be marshaled to a refinery, in time.

      As I was blasting past the White Oaks exit on US54, I saw miles and miles of miles and miles of parked railroad tanker cars just sitting out there in the desert. And I’ve seen even more parked in the desert north of Santa Teresa as well.

      In the worst case, we, the people, can always bail out and nationalize the shale oil defaulters and banks.

      If we can bailout dead GM and Chrysler, we can bail out a much larger and more influential segment of the US economy — the huge shale oil industry!

      • 0 avatar
        Tonto

        Exactly. this is nothing but a Saudi plan to bankrupt the US shale oil extraction sector.

      • 0 avatar
        jimbob457

        Watching the end of an oil boom anywhere in or near Midland is an unforgettable experience. You don’t have to be told anything.

        • 0 avatar
          highdesertcat

          jimbob457, we went through that tragedy in New Mexico decades back. It was terrible! Ruined lives. Lost homes. Sadness and grief.

          That’s when my wife’s dad got into the real estate business (after he retired from Civil Service) and bought several failed real estate businesses.

          He ran those real estate businesses at break-even or loss by not paying himself, for years.

          People always need a place to live, a roof over their heads, and he capitalized on it, even if he had to plow all the meager profits back into the business to keep it operating.

          I just hope “the end of an oil boom” doesn’t happen again because at the present, things are really going good.

          People have money to spend and the political climate for the next two years is for a do-nothing Congress and a lame-duck president.

          The economic outlook for this area, and the whole nation, is better than it has been since 2009.

          The outlook for the next two years is bright and shiny for America! People are planning trips, buying cars, buying homes, buying “stuff”, committing future income to improving their lot.

          And Obama gets all the credit for it because it happened on his watch. But all that could change.

          Some here in NM say that at $40/bbl the extractors in New Mexico (and the Bakken) will still enjoy a 10% profit margin. Not bad.

          Currently they enjoy a 100% profit margin and when oil was at/near a $100/bbl, they enjoyed an even greater profit.

          Finally, some relief for most people from the devastating economic policies of the past 5 years. We’re doing our best to enjoy it to the max.

        • 0 avatar
          highdesertcat

          Yup, we went through this in New Mexico a few decades back. It was awful! I hope it never happens again.

          At least the political climate today is stable for the next two years, with a do-nothing Congress and lame-duck president.

        • 0 avatar
          highdesertcat

          jimbob457, we went through this in New Mexico a few decades back. It was awful! I hope it never happens again.

          But at least the next two years look very promising. A do-nothing Congress and a lame duck.

          BTW, I lost two of my earlier comments because I was distracted and failed to proof read them. But they illustrated how bad times for some can be really good times for others.

          • 0 avatar
            jimbob457

            Three decades ago I was sent to Midland by the big boss to report back. My observation was: “all of your earlier decisions were completely wrong, and we are totally screwed.”

            So, verily. It always happens again.

            This is the eternal truth of any mining industry.

            P.S. The one piece of good news is that fracking technology is the real deal. It may or may not help your local economy going forward, but the people who know how to do it will prosper.

          • 0 avatar
            highdesertcat

            jimbob457, what I find enormously wasteful is the burning off of the natural gas at the New Mexico and West Texas pump sites and refineries.

            They have multiple huge flares burning 24/7. I understand their problem in that they simply don’t have the storage capability and must burn it off.

            Nor is it economically feasible to build storage tanks for natural gas since the demand for it is relatively low.

            Big Oil in New Mexico is providing the state with an enormous source of income. We need that income because the feds were storing their illegal aliens in Artesia and other centers, along with all the ones that were released into the wild for one reason or another.

            We’re doing a booming business in New Mexico when it comes to illegal aliens from Mexico and Central America.

            This is where those anchor babies really started to pay off! They were born in America, gratis, free of charge, are collecting welfare, foodstamps, WIC, free lodging, three squares a day, and whatever.

            The name of the game is to come to America because once here, we won’t kick them out. But someone has to pay for it.

            Were it not for New Mexico’s oil industry, the property owners in New Mexico would see massive increases in property taxes, and most cannot afford them.

            New Mexico is the second poorest state in the nation.

      • 0 avatar
        APaGttH

        Mid 50s would be bad, very bad for Canadian tar oil sand operations, ethanol producers, and fracking operations.

        Right now Canadian tar oil and ethanol is upside down. Russia is at a 75% chance of recession, 60% of all government revenue comes from energy production, 50% comes from oil and natural gas exports.

        Only Kuwait and Qatar are cash flow positive at the current price per barrel of all OPEC nations. Some deep water wells have already been stacked, and the world is over producing to the tune of 700,000 barrels – a day.

        There are a lot of complex reasons on why mid-50s would be bad long term for the United States, which has created two-million energy sector jobs since 2007, and represents the fastest growing private sector in the US economy.

        The old rules of dirt cheap gas means a booming economy aren’t as relevant anymore because of US vastly expanded supply.

        One thing is for sure, if you think we’ll see regular unleaded at pre-2005 levels every again, you’re dreaming. Global oil production can’t sustain at that price point.

      • 0 avatar
        Lorenzo

        Crude storage has been consistently in the 1 milionn-1.1 million barrel range since 2009. That’s still well below ultimate tank capacity. The rail cars are just waiting for refineries, who are cranking out refined products for export and are having trouble finding ships to move it overseas. Tanks that normally held crude for refineries is holding refined fuels waiting for ships to haul it away.

        That’s part of the pressure the Saudis feel, not just price. The flood of American refined products at a lower price is reducing refinery demand overseas for middle east crude and eating into Saudi market share. Our refineries have sales that could make the Saudi dilemma much worse, but the bottleneck in delivery has given them a grace period to try to blunt fracking production.

        • 0 avatar
          highdesertcat

          Lorenzo, you’re right.

        • 0 avatar
          jimbob457

          Both flaring casinghead gas and hauling crude oil in tank cars are indicative of the recent explosive growth in oil production due to fracking. Look at it from the Saudi point of view. If they don’t stop the rapid expansion right now, they are screwed.

          The Saudis are also savvy that the geopolitical ramifications of lower oil prices will work in their favor. Recall how, not so long ago, they drove crude down to $10 per barrel to ease the transition to Abdullah in Jordan. Trouble gets close to the Kingdom, they don’t mess around.

          • 0 avatar
            highdesertcat

            We never used to see oil-laden tank cars parked on secondary rails in the middle of the desert, waiting to be marshaled to a refinery. I’ve been back in this area since 1980. This is new.

            America’s greatest export these days is gasoline, much of it exported to Rotterdam and Antwerp, some say (unofficially) even to Iceland, Ireland and the UK. The US can do it cheaper because of the economies of scale.

            Ironically, in my part of the country we import a ton of gasoline from PeMex by way of El Paso, Santa Teresa and other US border cities with Mexico.

            It’s good gas, well, at least until El Paso blends in the 10-percent Ethanol.

            And that’s why I can’t understand why Canada doesn’t build that pipeline to Vancouver so that they can export to Asia from there.

          • 0 avatar
            Lou_BC

            @HighDesertCat – we have to deal with environmentalists, First Nations Groups, and petty politics.

            There are 3 proposed routes:

            1. Keystone XL – ship Alberta oil to the USA gulf states. That one is held up more in the USA than in Canada.

            2. Northern Gateway Pipeline. That one would tie in to lines north of Edmonton Alberta and ship it over the Rockies to a deep water port of Kitimat in Northern BC. The disadvantage is parts of it go through remote areas with heavy snowfalls and spills might not be detected early enough. A big advantage is sailing times from Northern BC to Asia can be up to 3 days shorter than Vancouver.
            This one is basically in my back yard and makes the most sense.

            3. Transmountain Pipeline. That one involves an extension and/or upgrade of an existing line. Political blundering along with First Nations and Greens are killing that one.

            Pipelines are the safest way to transport oil.

          • 0 avatar
            highdesertcat

            Lou_BC, the greenweenies are probably more infectious in America than anywhere else. Something about freedoms in America that allows them to tread on the rights and beliefs of others to further their own agenda.

            Pipelines are indeed the best way to transport oil.

            The reason I mentioned it is that Obama looks on this Keystone pipeline as just a conduit for Canada to send its oil to New Orleans, from where it is sold and shipped to points elsewhere.

            Therefore, I would gravitate towards finding an alternative method of transport within Canada in order to foster Canada’s economy. Hell, given a choice between rail or pipe, even the Canadian greenweenies would have to opt for pipe.

      • 0 avatar
        stuki

        The Shale players pure enough to go bankrupt, are too young to have had time building up much of a lobbying presence.

        The banks who lent to them will be bailed out. Pretending banksters are simultaneously both literate and useful, is a key pillar in this particular, if not all, progressive dystopias.

        • 0 avatar
          jimbob457

          The US still has an odd law that prohibits export of crude oil. It reflects a situation from 40 years ago.

          The economics of exporting refined products from the US Gulf Coast to Europe and elsewhere also hinge on fracking. The cheap natural gas it created is temporarily only available to US refiners. In effect, Rotterdam is screwed.

          I am going to stop now before I talk myself into predicting $50 oil.

          P.S. The Keystone pipeline is not for the Tar Sands. It’s for the Bakken Shale.

          • 0 avatar
            highdesertcat

            There are some who are predicting $30/bbl.

            I must admit that I thought oil would drop below $75/bbl but then hover somewhere between $68 and $75.

            But this is such a dynamic industry that even the pros are currently having a time of it.

            Who knew that OPEC would encounter so much resistance within its own ranks to cutting production?

  • avatar
    HerrKaLeun

    Seems a bit misleading to only show the past few months.

    Car sales have been declining and CUV sales rising before oil price dropped. Show the past 10 years and you seee car sales declined with expensive oil as well.

    Are you trying to proof something with a few data oints while ignoring the entire dataset that may disprove your agenda?
    Lies, damn lies, statistics….

    • 0 avatar
      danio3834

      Once an assertion has been made, defend at all costs!

      The increases in the purchases more expensive vehicles like trucks and CUV/SUVs is mostly attributable in increased consumer confidence. As you noted, the trend was already strongly in place when fuel prices were much higher than they are now.

      The average consumer is more cynical about the nature of fuel prices than anyone actually educated on the subject. They don’t expect the trend in prices to last, they just expect the prospects of their ability to pay for the fuel to be good for the forseeable future.

      • 0 avatar
        HerrKaLeun

        The trend may be a decade old. It took OEM years to bring all these CUV to market.

        So OEM started developping those when oil was expensive. Ignoring data of those years because it wouldn’t go with what the author wants to show seems not what TTAC used to be.

      • 0 avatar
        Pch101

        As I noted, combining sales of vehicles such as the Honda CR-V with the Chevy Suburban and the like is going to provide misleading results.

        The large BOF SUVs have taken an enormous hit since the oil bubble and have not recovered. Personally, I don’t see them making a comeback; tastes have changed and the market has moved on. In contrast, crossovers have benefited from the shift; it would seem that some of those large vehicle buyers may have downsized.

        • 0 avatar
          Lie2me

          Many of the BOF SUVs of ten years ago no longer exist replaced by the CUV. Even if people wanted to rush back to SUVs, their choices would be limited.

          Also, keep in mind that soaring gas prices alone was not the only reason for the move to CUVs, it just sped-up the process

          • 0 avatar
            PrincipalDan

            It would be more illustrative to show the price of a gallon of regular charted against the top ten sellers by year. Does lower gas prices equal worse fuel economy for the best selling (most popular with consumers) vehicles?

          • 0 avatar
            HerrKaLeun

            Principal Dan:
            Good point. The 4-cylinder CUV of today has better mileage than most sedans back then.

            In addition cost should be adjusted for inflation. $70 today is like $50 back then. So oil price dropped even more dramatically.

        • 0 avatar
          Lou_BC

          @Pch101 – I agree. Large BOF SUV’s need to be in their own category. It was posted a while back that a huge portion of large SUV sales went to fleets. IIRC 40-50%. IF BOF SUV’s were separated out we’d see a sharper rise in CUV’s and SUV’s.

          Pickups have improved mpg so that helped offset rising fuel prices to a small degree. Pickup sales have gradually been improving and I doubt we will see a spike in sales due to dropping fuel prices.

          The Middle Eastern strategy of dropping oil prices has the potential of doing more harm to the Western World than any Jihadist.

  • avatar
    Pch101

    Rising oil prices over the last decade severely damaged the large mainstream body-on-frame SUV segment, but helped the compact and midsized crossover segments. Accordingly, it would behoove you to separate the crossovers from the large SUVs, as the former has cannibalized the latter.

  • avatar
    BrettAM

    I’m curious how those different vehicle sales change throughout the year neglecting gas prices. Do truck/SUV sales pick up just before winter to deal with bad weather, or pick up in the spring when the working season starts up? Is there a big jump or dip around tax season?

  • avatar

    Itb seems that a chart of small cars would show the trend better but as i recall when gas dips average fuel economy drops not a large amount but enough to show a trend.

    • 0 avatar
      highdesertcat

      You’re right, although a V8 Silverado or V8 RAM equipped with cylinder-management can throw off the chart because they would run/idle on 4 cylinders much of the time, only using all eight cylinders when accelerating or otherwise needed.

      Years ago, one of my kids had a Chrysler 300 5.7 with the cylinder management, and at that time the transitional algorithm between 4 and 8 cylinders was noticeable as a shudder.

      Not any more. Today it is as smooth as silk and overall fuel economy is no worse than the 3.6 V6. Ditto in the half-ton trucks.

      They’ve come a long way. Coupled with CVTs, even large cars, like the Honda Accord, can get good mpgs.

      So charts can be deceiving.

  • avatar
    energetik9

    Not sure how 5 months of data can really speak to a trend when multiple factors are in the marketplace. Can you really identify trends across broad categories either? Not to mention 2-3 months of low prices do not necessarily challenge consumers to change behavior. Here’s my analysis, this chart doesn’t really tell me anything.

  • avatar
    jimbob457

    First, pump prices have to go down. Then the vehicle buying public has to decide they will stay down for at least a few years. Last, the motor vehicle buyer has to have occasion to make a purchase. What you get out of all this is a lead-lag relationship that is only beginning to emerge.

    The first phase has already mostly happened. We are in the middle of the second phase (wha’ happen? – ‘fracking’ dude). The third phase will play itself out like it has always done in the past.

    The value of motor vehicle inventories will adjust. ‘Gas guzzler’ good – econobox bad.

    • 0 avatar
      Dave M.

      It’ll be interesting to see how the fracking issue plays out in Denton…

      • 0 avatar
        jimbob457

        In an urban setting a fracking operation needs to be ultra clean. No trucks. Everything in and out via buried pipelines. Government inspectors all over the place all the time.

    • 0 avatar
      Lorenzo

      The thing about fracking is that it’s brute strength hydraulic fracturing of the shale. There’s already a dry fracking technology that uses no water, using metal oxides to create a high pressure thermal reaction to heat up and fracture the shale.

      Even better would be a form of ultrasound fracturing that could be repeated to create smaller and smaller fractures, releasing the oil in multiple stages. That’s still theoretical, but offers even higher production from the same shale play than one time hydraulic fracturing, and spreading the cost over more barrels produced.

      The Saudis may be able to kill off the high cost or over-extended frackers, but the march of technology and the richest shale deposits is likely to make America once again the arbiter of oil prices.

      • 0 avatar
        highdesertcat

        It would not surprise me if the US taxpayers would bailout the “high cost or over-extended frackers”.

        The US taxpayers bailed out a dead GM and Chrysler and that didn’t do anyone any good except the UAW.

        Oil production benefits 100-percent of our entire nation, not just the 6-percent that make up the auto industry in America.

  • avatar
    Big Al from Oz

    I do think Derek purposely chose the data the way he did, with a limited window of time and a limited number of variables that affect vehicle sales.

    I do think those cheap and extended loans play a role. As does economic activity and the average age of the US vehicle fleet.

    If people are trading in older pickups for newer pickups that have better FE is this bad?

    I think at least a 10-15 year period with the data I laid out above will give you far better information for trending and the ability to produce a better assessment.

    Fuel prices do play a role. How much? I’d say a smaller part than many think.

    • 0 avatar

      I agree that the chart seems biased and to me, is meaningless without historical data, as you suggest.

    • 0 avatar
      HerrKaLeun

      good point i didn’t consider. cheap loans moved more people into trucks and large SUV/CUV than gas prices.

      And 5 months data in an industry that has 6 year model cycles with products that have 15-20 year life is pretty pointless. Just seasonal changes alone have impact. that is like me judging the weather in July 2014 and predicting weather in July 2015 by just looking at November 2014 – February 2015.

    • 0 avatar
      Lorenzo

      Over a longer period of time using historical data, you’ll muddy the short term effect of gas prices on current models available. Over a longer term, technology and automakers’ production mix can change. Derek was limiting the oil/gas price effect to the mix of models available now and in the next couple years. That’s the period of flux before the oil markets settle into a new regime and car makers have time to adjust their offerings.

      • 0 avatar
        Big Al from Oz

        @Lorenzo,
        I don’t disagree that fuel prices do play a role in purchasing decisions.

        Over the period I’m suggesting is you can also look at previous fluctuations in fuel prices as well. But, you can also see what impact employment, interest rates, loan terms, etc can have as well.

        People just don’t go out and say “Geez I will spend $39 000 today and buy a new pickup”. Most people I know spend a much longer time ccons!dering what direction to take prior to the purchase.

        This time would be prior to the current drop in oil pricing.

        So, is their decision to go out now and buy made because of the longer term loans? A person looking at buying a pickup would have already chosen a pickup. The decision might be between a V6 or V8 pickup or even a midsizer vs a V6 full size.

        • 0 avatar
          highdesertcat

          ” A person looking at buying a pickup would have already chosen a pickup.”

          Yeah, that’s been my observation too. Even the newest pickup truck buyers, those who never owned a truck before, decided well ahead of time that they were going to buy a pickup truck, no matter what.

          One young AF Lieutenant my grand daughter is currently dating, lovingly admired my Tundra while over at our house for Thanksgiving dinner.

          Right now he drives his dad’s old hand-me-down Camry but I am certain that will change.

  • avatar
    TW5

    The product mix data is important, but whether or not people are making good decisions in the macro sense would probably be best represented by the UMTRI fuel efficiency data.

    Fleet fuel economy took an unexpected plunge in September before consumers could react to falling prices, and it didn’t budge in October. November numbers will be interesting.

    Also will be interesting to see what happens to VMT as fuel prices ease.

    • 0 avatar
      highdesertcat

      “…..people are making good decisions in the macro sense….. ”

      Who’s to say what is a “good decision?”

      If Americans continue to make the F150 and Camry the best selling vehicles in America, it must be the “good decision” for them, wouldn’t you say?

      Lower fuel prices are great until the unintended consequences set in. And they will.

      In the mean time, enjoy the lower cost of fuel. I do.

      • 0 avatar
        DenverMike

        What’s the unintended consequence? Someone bought a new truck or SUV they couldn’t afford anyways?

        1st, a Yaris is a gas guzzler when an owner can barely pay the gas card, regardless of fuel prices. Most Americans r!de that edge of financial disaster everyday. They must love that (?).

        And the graph proves nothing. Pickups have been growing in popularity for decades. The graph says nothing about commercial/business/utilities/government/military/oil extraction, as the economy improves. Booms in some sectors.

        Nor if it’s simply more pickups getting traded in for more pickups. And don’t the new pickups get dramatically better FE than the old pickups? OR heavy duty pickups traded for 1/2 tons? 1/2 tons for mids!ze?

        You already know it’s old pickups that go to Mexico. We ship possibly a million+ pickups down there annually. So out go the gas guzzler pickups with every new pickup sale.

      • 0 avatar
        TW5

        Some things make us richer and some things make us poorer. We have the ability to measure GDP and trade deficit, and the measurements are relatively objective.

        Falling dollar-value oil imports will boost GDP. We should enjoy the prosperity all the time, but people can’t tell the difference between getting rich and getting poor.

        • 0 avatar
          highdesertcat

          It never ceased to amaze me, when gas prices were at all-time highs, that no one I saw pumping gas was buying any less of it.

          Now that prices are at $2.459/gal in my area (today), people don’t seem to buy any more or any less either.

          This leads me to conclude that if someone wants that pick’m up, they’ll buy that pick’m up, even if they really can’t afford to buy, insure and fuel it.

          The irony is, that as of 1 Oct 2014 when my wife started working from home, MY gas consumption dropped dramatically.

          I have even stopped my gasoline deliveries for my AC generators at home because I haven’t tapped into the two 55 gallon drums I kept on hand for the cars and the generators. My gas is actually going stale.

          So for me, I haven’t been able to enjoy the price drop of gasoline because my wife and I may venture out only once a week, or less.

          And while low gas prices are great for most of us, there are others who work for the oil industry in New Mexico who could possibly be let go, and be without an income when it is no longer profitable for their employers to extract the oil.

          Capitalism is a two-edged sword.

  • avatar
    George B

    I would expect consumers to select the type of vehicle that meets their perceived need while opting for the more powerful engine choice when fuel is less expensive. Turbo engines allow manufacturers to sell more power while passing the CAFE test. As long as consumers understand how the EPA test differs from reality, I’m ok with this gaming of the system.


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