Pinched at the Pump ?

For those of you who still doubt that consumers are being pinched at the pump — assuming yesterday’s Existing Home Sales and today’s Durable Goods numbers didnt convince you — consider the following, via Joanie McCullough:

"We are now cruising along with $2.61 per gallon, regular unleaded, as a national average.

Of course, the high cost of energy hasn’t laid a glove on any of us, right? But I thought you might like to take a gander at a few snippets talking about how some are coping at the moment:

** A small florist chain in Detroit can’t afford hire any more drivers for van deliveries, so they have hired runners to get the job done. (Can you imagine luggin’ a 6-foot funeral tribute across town?)

** A few school districts in Virginia, reeling from the costs of diesel (public schools are exempt from state and federal tax on fuel, mind you) to fire up the school buses and facing the winter heating season, are about the business of adjusting the bus routes. Bottomline: The kids will have to walk further distances. I wonder how the BLS will handle this development, eh? Probably a seasonal adjustment to footwear prices. Down, of course.

But it gets worse: According to South Carolina’s Department of Education, every one penny increase in the price of diesel, jacks their overall transportation expense by $120k.

** The owner of a Chicago dog-walking service says 5 of 27 of his “walkers” are now using bicycles to commute instead of their cars. (Walkin’ Marmaduke all over the county in this heat and then hop on the old Schwinn and pedal home? SOS.)

** A Phoenix-based pizza chain (Streets of NY), recently raised the delivery charge from $2.00 to $2.25. And is in the process of raising all menu prices. Cited: All of its suppliers are adding fuel surcharges on all deliveries to them. (Hold the pepperoni.)

** A Flagstaff-based plumbing business has added a $10 surcharge for “house calls” that exceed a 10 mile trip. The local AC repair has made that a $5 buck surcharge on all “house calls”. (Shower less and keep the windows open!)

** Moving house? Egad. I can’t recap in this space all the instances in all geographies of anecdotal stories of either outright surcharges or significant increases in the hourly rates charged. (Read: Stay put until further notice.)

A couple along more serious lines:

** Mayday: New-boat sales statistics from the Northwest Marine Trade Association indicate that sailboat sales were stronger than those of motor-powered vessels during the second quarter of ’05, as fuel prices have been climbing upward and the higher  prices have been given much media attention. Specifically, sail craft sales rose 4.3% y/y while motor yachts dropped by 8.1%. And look at this: Sales of new pleasure craft of all types were up just 1.1 percent in the second quarter of 2005, a substantially slower  pace than the year before when overall growth hit 15.7 percent for the year.

** Seeing the boating info, you knew this was comin’: Q2 (usually the strongest quarter  RV sales hit the skids. The big 3, Fleetwood, Winnebago and Monaco all cited rising oil prices in some way shape or form. While this is not a commentary on value in this sector as far as the market goes, currently, there are 141 domestic manufacturers in the RV biz. Whew. 141.

So there you have it, a few tidbits of info regarding the higher energy costs which, of course, are not being pushed thru to the consumer. Forgot one: Independent toy shops are jacking prices of plastic toys (petroleum-based) by up to 20%, whereas at the moment, wooden toys are remaining stable. How about a plywood Barbie for Christmas? I think you get the drift.

Next case.

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Discussions found on the web:
  1. Chad K commented on Aug 24

    All the doom and gloom is nice… I love pessimism… but I’d like to hear some commentary about the “New Home Sales” number that came out today.

  2. gary lammert commented on Aug 24


    I am riding on a limited express, one of the crack trains of the nation.
    Hurtling across the prairie into blue haze and dark air
    go fifteen all-steel coaches holding a thousand people.
    (All the coaches shall be scrap and rust and all the men
    and women laughing in the diners and sleepers shall
    pass to ashes.)
    I ask a man in the smoker where he is going and he
    answers: “Omaha.”

    Kindly visit the Economic Fractalist

  3. gary lammert commented on Aug 24


    I am riding on a limited express, one of the crack trains
    of the nation.
    Hurtling across the prairie into blue haze and dark air
    go fifteen all-steel coaches holding a thousand people.
    (All the coaches shall be scrap and rust and all the men
    and women laughing in the diners and sleepers shall
    pass to ashes.)
    I ask a man in the smoker where he is going and he
    answers: “Omaha.” Kindly visit
    The Economic Fractalist

  4. dude commented on Aug 24

    I live in Eugene, Oregon and there are two RV manufacturers near here. They just went thriugh a huge growing spurt and hired a bunch of new people and expanded their plants. That was last year. I’ll be keeping a keen eye on them this year to see how they do. They announced the hiring and plant expansions with great fanfare. I bet that their next moves are not as public.

  5. nate commented on Aug 24

    there are still lines for hot dogs and beverage at ball parks, and the seats are full (although I have not been to enough games this year to compare to prior years). and maybe baseball games boom during downturns.

    i have noticed a “sale” sign in at least one high-end retail boutique in chicago that seemed atypical-

  6. Thijs commented on Aug 24

    And remember that fuel-prices are still very low in the USA compared to some other countries like for example the Netherlands.
    The solution would be to put a higher tax on fuel, so people use less fuel and less dollars flow out of the country and these tax-dollars can be invested in clean alternatives to fossil fuels. Simple yes, but I guess it won’t happen as long as Bush is President. After all, he fares well with high oil prices personally.

  7. Regis commented on Aug 24

    Not so much pessimism, as the reality of what’s coming is casting a huge shadow. The market is hanging on by fingernails to any good news whatsoever and the late morning action shows that.

    The market opened up down on the durable goods news, surely a solid indicator of what’s to come. It was four times lower than expected. Then along comes the housing news and “hurrah!” we’re flying along again.

    Add the news that credit sales of gasoline jumped from 54% last month to 70% this month (IMHO, this tells me that the very stretched American consumer is actually financing their increased gasoline costs with the worst possible tool, the credit card). Bloomberg’s interview of the CEO of RE/MAX and the Mortgage Bankers Association Chief Economist was typical of both industries. A denial of the housing bubble and why not? The herd mindset right now is driving many to hurry up and lock in a house before the interest rates increase, never mind the price.

    Here in Southern California, greedy consumerism is running rampant. Illegal immigrants are driving new cars, people are cashing out thier equity and the spending goes on and on. In speaking to many people, we just can’t figure out how they can afford all this stuff. Considering that American Consumer spending accounts for two-thirds of the GDP (according to a recent article on CNN/Money) something smells really bad.

    What happens when the juggernaut that’s consumer spending stops? The consumer IMHO is stretched to the breaking point. Look at the consumer debt levels and the personal savings level. I live in Palmdale, which has to be the armpit of Los Angeles county and new houses are going for a minimum of $330,000 and these people have to commute at least 50 miles a day.

    I’m going to watch from the sidelines. I think we’re going to see a correction and it won’t be long.

  8. Chad K commented on Aug 24


    Pessimism and reality are not often far from eachother. :)

    The problem with the housing bubble is that it’s very localized. Sure, housing prices are riddiculous in many parts of the country. But here in middle-America, the average value of a home is increasing in value very near to inflation. The value of my neighborhood’s homes actually had a greater increase in the first 5 years of the 90s than in the most recent 5 years.

    The financing of gasoline with credit cards is only speculation on your part. A precipitous rise in consumer debt along with the price of fuel would help to indicate truth to your claim. You’ll also notice that McDonald’s has had a near infinite increase in the number of transactions with credit in the past few years. Most of this can be correlated with the number of gas stations accepting cards at the pump. However, I don’t disagree with the premise that people are likely financing some of their gas purchases. I would just say, not as much as one would think.

    In my region of the country, gas prices don’t have as much effect on your common suburbanite. Cost of living is very low compared to everywhere else. We also don’t use heating oil in our houses. The typical effect on a budget might mean that a family skips a trip or two to McD’s that month.

    I certainly have a small feeling of pessimism… but also feel that we’re getting to a critical mass of pessimism… which has often signaled a turn (that would seem counterintuitive).

    But then, if I could predict all of this… I wouldn’t need a job.

  9. Hank commented on Aug 24

    Misleading anectdotes are the reason we have statistics. Sure there are people severely impacted by the changes in the price of oil. There are also people who gain large benefits, especially in Texas. But, on average, in the broad public, the change is the price of oil has not yet had a big impact on the price of the basket of goods most people buy. People do substitute in response to changes in individual prices, these substitution are also figured into the calculation of inflation, so that when people drive less, gasoline counts less in the calculation of inflation.
    If the price of oil were steady and the price of everything else were down a little, would we still be in the same place? You better believe it.

  10. Options commented on Aug 24

    Main Street

    I would like to see the government make the tax incentives of buying a hybrid so great for a whole host of reasons, that the decision to buy one is made simple. But, since hybrids are in high demand

  11. lola commented on Aug 24

    Where can one find statistics on dining out? Is it my imagination or are people scaling back? The combination of increased commuting costs, increased air conditioning/heating expense, increased mortgage payments, increased school/property taxes, increased college tuition and increased medical care has got to have families tightening their belts. With those fancy home theatres and a $60 monthly cable bill on top of a $30 monthly broadband connection, why get dressed up and drive the behemoth gas-guzzling SUV downtown for dinner and a movie?

  12. john brown commented on Aug 24

    First, Chad K implies rising new home sales somehows negates anecdotal consumer squeezes. Drill down the numbers and you’ll see “the median price fell for the third consecutive month” ( Slashing prices is further evidence the consumer is keeping her hands in his pockets, not an indication of soaring consumer confidence.
    Second, my anecdote: I was in the lift yesterday evening and overheard 2 small shop owners sharing the day’s events. They both complained that it was getting much harder to make a sale. “There are lot’s of people around, but they aren’t buying”.

  13. Chad K commented on Aug 25

    I wasn’t implying for a second that one ray of light somehow negates all of the darkness…. just that it should be considered.

    Here’s my anecdote:

    I’m spending less now than I ever have on gasoline. But, I am also spending less on going out and other useless items (like movie theaters, more shoes, etc). My reason? I want to build a new house in a few years and want to pay cash for it. My lack of consumerism must be a sign that the economy is headed for disaster.

    Here are some other unimportant facts: :)

    I walk to work because I live about a mile away. The only time I take my vehicle is if I need to run errands, the weather sucks or will suck later that day or I don’t feel like walking. Fortunately, if I do drive, it’s about 1.5 miles on roads and I average about 25mpg. Needless to say, filling up my tank once every two months is about the norm (at $30 per tank). A year ago, I used to drive 18mi each way. Along with drives to lunch and other trips, I was averaging two tanks a week (at the time about $20 per tank)…

    New cable-TV competition arrived in my neighborhood about 20 months ago. This lowered my cable/internet/phone bill by a total of $140 each month. My bill is now $80/mo with the HD-PVR, movie channels, unlimited long-distance and 3mbps network. Am I spending less? Yes… is it in any relation to the price of gas prices? No.

    In the past 2 years the wife and I have added 3 members to the family. However, I spend far less on food than I did before kids. Why? Finding time to go out and get a $30 steak with twins can be dificult… and now that the twins can be taken, we have a newborn. Gas related? No. Possibly the mini-baby-boom tightening pockets? I think it’s possible… the Babies ‘R Us around here is packed. Also, the influence of the dollar menu. Why buy a double 1/4lber when two double cheeseburgers is half the price and just as good.

    My total monthly car payments are far fewer than before I got married. Why? The wife found an amazing deal on the car she wanted and 0% financing. Also, why get a new car for myself when I barely drive it… and it’s paid off.

    So, through no influence of economy or fuel prices… I’m saving tons more per month than I used to… and I find no desire to change it. Must be gas prices :/

  14. Jon H commented on Aug 27

    As far as credit-purchased gas goes, it’s probably just because gas purchases have risen to the point people don’t want to carry that much cash.

    It’s probably not that people are borrowing the money to pay for gas, it’s just that plastic is far more convenient.

  15. S Taraman commented on Nov 13

    Palmdale is no longer the armpit of LA… as a matter of fact I would insist that it is far better an area than the San Fernando Valley or Central LA.

    Anyhow, it is only time before hybrid cars become common place and high-speed rail is brought through the City.

    Palmdale is the future… and the local government is taking vast steps to make sure it is a bright one.

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