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Demand Reconstruction.



October 26, 2008 – Comments (2) | RELATED TICKERS: XOM , CVX , TOT

Demand destruction. Back in June as gasoline was heading over $4.00/ gallon I could see it and hear it and read about it coming. I could hear it coming when my wife was calculating the cost of the gas to go to visit family. "It cost me $8.00 each way!" she would say. This from a woman who a year earlier would say "Who's got time to drive out of the way to save $.05 cents per gallon". I could hear it coming at the gas station when people I did not even know were striking up conversations with me about the cost of filling up their cars. I could read about it coming when blogs were discussing "hypermiling", the merits of hybrids and were they cost effective. I could see it comiing on the road when people were coasting to traffic lights, accelerating slowly, driving at slower speeds and generally not getting out of the way.

Demand reconstruction. Here we are just four months later, and I have not read a post about "hypermiling", "hybrids", or how to get the best mpg's out of a car in two months. Noone has mentioned a word about the high cost of gasoline as it has returned to within pennies of last years October price. Of course that is still a 50% increase from Oct. 2006. The slow accelerations are gone, as is the coasting to stop lights and the average speed on the LIE is 70mph again when traffic allows.

I wonder if any of that will affect demand?

2 Comments – Post Your Own

#1) On October 26, 2008 at 11:26 PM, camistocks (62.15) wrote:

And people are looking to buy a SUV again instead of a Smart...

Did nobody shut down the engine while at a red light? That is what the Swiss government is asking from drivers. And while initially many people followed this, today most don't care anymore despite high gas prices.

Maybe in the USA some are now even leaving the car running, while hopping into a shop to get a couple of snacks. And talking to everyone about how they now can afford to let the car run empty.

All of this while forgetting that the price today is still much higher than it was a few years before. People have a short memory.

Oil and gasoline should be much higher in a few years, $300 , $8 gas. OPEC has already started to reduce output. All prognosis just IMO of course...

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#2) On October 27, 2008 at 10:57 AM, CycleFreak7 (< 20) wrote:

Never underestimate the stupidity of others.

As an avid cyclist, I can see (and feel) it on the roads. More cars, more aggressive driving, less concern for me on my bike than raccoons crossing the road.

Gas is $2.42 at a station near me.  I don't care - I still ride my bike to work.

I need to replace my wife's car soon, so I'm actually glad for this. I'm hoping that demand for high-efficiency cars (particularly hybrids) will drop off to the point where I can get one at a reasonable price.

The next vehicle I buy will get AT LEAST 40mpg.

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