Large-scale Gasoline Demand Destruction Hits Sky-High Prices in Peak Driving Season: Gasoline Consumption Drops to July 1999 Level

Some demand destruction is behavioral and may bounce back; some is structural, growing, and long term: The decline of an industry.

By Wolf Richter for WOLF STREET.

The spike in gasoline prices motivated Americans to go on buyers’ strike. The phenomenon of a price shock reducing demand for that product is called “demand destruction” in economics. It can reverse when the price falls to such a low level that demand returns. Demand destruction has now turned into a crescendo during peak driving season, including the 4th of July holiday weekend.

In the week through July 8, gasoline consumption plunged by 9.7% to 8.73 million barrels per day, on a four-week moving average, according to EIA data. The EIA measures gasoline consumption in terms of barrels supplied to the market by refiners, blenders, etc., and not by retail sales at gas stations. This was the steepest decline yet so far this year.

Consumption, compared to three years earlier, started dropping in January. At the time, the price was in the $3.30 range:

Demand destruction weighs on price.

The average price of gasoline, all grades combined, after spiking by 63% year-over-year to $5.00 a gallon on June 13, has now dipped for the fourth week in a row, to $4.65 as of Monday, according to EIA data. Between 2015 and 2021, the price ranged between $2 and $3 mostly. It was a shock to suddenly see $5. In lots of places, folks saw over $6 for regular.

Summer driving season in the US means gasoline consumption surges, hitting high points around the 4th of July week and then again around Labor Day. In the 2022 driving season too, gasoline consumption had been rising through mid-June (four-week moving average), but less than three years earlier, and in mid-June it plateaued instead of surging, and now consumption has plunged to the lowest level since mid-April.

The red line in the chart below spans July 2021 through early July 2022. The gray line spans the same weeks in 2018 and 2019.

In the week ended July 8, consumption of 8.73 million barrels per day (four-week moving average) was down by 9.7% from the same period in 2019. But in 2021, June through December 2021, consumption tracked fairly closely the consumption in the same period three years earlier, in 2018:

This demand destruction of gasoline is happening on a global scale – and it doesn’t even figure in yet a recession, but just price resistance, as buyers go on strike wherever they can.

But in the US, people drive a lot more – whether to commute every day or to go shopping or to go on vacation – and they drive bigger vehicles than in most other countries, and they consume a lot of gasoline, and a spike like this in the price is particularly, let’s say, revolting – and finally motivating.

Short-term demand destruction.

Consumers are resorting to all kinds of tricks to put a lid on their gasoline expenditures: Drive a little less, take it easier with the gas pedal, cut out unnecessary trips, plan shorter road trips, prioritize the most fuel-efficient vehicle in the garage, use mass transit, etc. These are behavioral changes.

This is the other shoe that hasn’t dropped yet: During big recessions, when a large number of people suddenly lose their jobs, there is somewhat less driving for daily commutes. But no large-scale waves of layoffs have happened so far, and initial claims for unemployment compensation, though they have ticked up a bit, are still very low. If there are big waves of layoffs, it will remove more demand.

This form of demand destruction is relatively short-term: people, in theory at least, can eventually revert to their old habits, or get a new job, and demand starts picking up again.

Long-term demand destruction.

When people start buying fuel-efficient vehicles and EVs, they’re reducing gasoline demand long-term. If working from home sticks around and becomes the new normal for a larger part of the work force, it also has a long-term impact on demand.

One thing we’re already seeing: Americans are once again favoring smaller more fuel-efficient vehicles, and in terms of new vehicles on dealer lots, they’re nearly sold out.

And people are buying EVs in larger numbers. In Q2, Americans bought a record 196,788 battery-electric vehicles (not including hybrids and plug-in hybrids), up by 66% from a year ago, according to Cox Automotive.

And this occurred even as total sales of new vehicles plunged by 20.8%, and as sales of new ICE vehicles plunged by 23.4% over the same period.

In Q2, EV sales reached a record market share of 5.6% – meaning that 5.6% of the new vehicles sold in Q2, in addition to all the prior EVs sold, don’t use gasoline. As EV sales continue to grow, this transforms into the kind of demand destruction that is permanent, and it has started to be a noticeable factor in gasoline consumption.

Gasoline consumption has been stagnant since 2007.

The no-growth nature of gasoline consumption in the US became clear after the Financial Crisis. The oil industry has figured this out too. Investment in refineries has stalled. Oil industry executives have explained it many times – you just don’t invest massively in an industry with declining domestic demand. And they’ve been ramping up exports of gasoline.

The industry is trying to manage the decline in gasoline consumption over the next decades by not investing in refining capacity. Whatever the politics of this may be amid these price spikes – with silly media pundits yelling at oil companies to invest more in refineries – this long-term chart shows that refining capacity is not the cause of the price spike, as consumption hadn’t gone anywhere since 2007, and has now plunged to levels first seen in July 1999:

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  189 comments for “Large-scale Gasoline Demand Destruction Hits Sky-High Prices in Peak Driving Season: Gasoline Consumption Drops to July 1999 Level

  1. dang says:

    I’m curious whether the work from home is influential in determining the obvious discretionary purchase of gasoline reflected in the data.

    • Wolf Richter says:

      There have been some studies on this, which found that working from home cuts down on driving. People still drive, but not as far and not as often.

      • Rastus says:

        What if the spike in disability claims are valid? Wasn’t Ed Dowd saying that something like a million more people were on disability? Mortality and life insurance payouts are up too. So incrementally more deaths and more people incapacitated = less demand for gasoline.

        • Wolf Richter says:

          Rastus,

          “Wasn’t Ed Dowd saying that something like a million more people were on disability?”

          That’s more internet BS — if he actually said that. Why are these gurus out there spreading lies? All they have to do is look it up. The number of people on disability payments has been dropping for years. You can just look that up on the website of the Social Security Administration. I have no idea why these morons spread such falsehoods.

          Excess mortality is a factor in everything, including consumption, housing, etc., but a substantial portion were older people. Not sure what impact that has on gasoline consumption THIS JULY, but didn’t seem to have any impact last fall.

        • taxpayer says:

          There’s a backlog of 1.1 million applicants for Social Security Disability payments. (source: https://tennesseelookout.com/2022/05/13/delays-in-processing-disability-applications-impose-significant-hardships-in-tennessee/). Last month, 41,016 folks were added to the rolls, and 71,048 were removed. So disabilities could be increasing even tho fewer people are getting payments.
          I do not recall where Dowd gets his data, but we can see from BLS (Current Population Survey) data that working age (16-64) population with a disability increased from 14,826,000 to 15,586,000 between 2020 and 2021 (annual averages), while nondisabled working age population declined. (source, Dep’t of Labor press release USDL-22-0317). Assuming that you trust the data source.

        • Wolf Richter says:

          Even if there is a delay in processing the applications, the number of applications has been going down too. The chart below is from the SSA. It shows the applications and awards.

          The BLS doesn’t track disability claims. It sends surveys to households and takes in the responses into its data.

          From the SSA:
          https://www.ssa.gov/oact/STATS/dibGraphs.html

        • RockHard says:

          I’d also bet that people on disability are the least likely to drive and the most likely to die from C-19.

          Wolf: “I have no idea why these morons spread such falsehoods.” Sure you do, because it makes their readers feel comfortable by not challenging anything that they already believe to be true. Also it makes them more money. Why is Peter Schiff always hawking gold? Oh, look, he has a business storing physical gold!

        • Rastus says:

          Hey Wolf I’m not going to say you’re wrong but a completely different dataset can be found from https://fred.stlouisfed.org/ search disability claims for people over 16.

        • Wolf Richter says:

          You said “a spike in disability claims,” and there is no spike in disability claims, that’s just BS, and the number of people receiving disability has been going down. The data at the St. Louis Fed about disability claims says exactly the same thing because it is taking the data from the Social Security Administration.

          The BLS however doesn’t count claims. It sends surveys to households with all kinds of questions, and then releases the results.

          Disability claims and disability benefits are under the the SSA, not the St. Louis Fed. And here is the data from the SSA. Go look it up:

          https://www.ssa.gov/oact/STATS/dibStat.html

        • Rastus says:

          Wolf your second graph clearly shows a reversal of the long term trend of declining disability applications.
          To my mind any slack in demand is going to be deflationary. Maybe it hasn’t shown up in the stats yet.

      • perpetual perp says:

        So what’s the deal with huge profits by the oilers? If demand has been weak for a long time, and thus there’s no need for more refineries, why did the price balloon so much? Sounds to me like the prices were artificially high. That explains the huge profits. And the inflation created by intentional scarcity. This was monopoly manipulation all along.

        • Wolf Richter says:

          perpetual perp,

          That’s what you get when the “inflationary mindset” kicks in. I’ve been calling it that since February 2021, because that’s what it is: people pay whatever.

          Back then it was used cars and new cars, which are among the most discretionary purchases; people don’t have to buy a car today, they can drive what they have, but they did buy, and they paid whatever.

          Gasoline is less discretionary, but there is still a lot you can cut out. Now we’re seeing some price resistance, but still not enough.

          This inflation is DEMAND driven, from “free money”: stimulus, money-printing, and interest rate repression.

      • al says:

        I think that that increase in disability has got nothing to do with decrease in use of gas. Even if you don’t drive someone has to bring you groceries. If you can’t go to the clinic, the nurse has to come to you. So the reality is that there is no net savings.

      • Tee roy says:

        Based on your graph there really hasn’t been a “plunge” aside from the pandemic. The reason there is emphasis on refining is because all it takes is one small shutdown, one hurricane to hit the gulf coast and we again realize we dont have enough to compensate for any kind of emergency. An adequate system would see little to no change if 1 or 2 refineries were shut down. We do not build refineries anymore and its due to all the political red tape and this crazy notion that we can somehow survive without oil starting tomorrow. The projection is that world wide demand is still increasing, and that next year will need 1 billion more barrels than this year. As inflation goes up, and costs go up you would expect to also see profits go up. Dollar wise. Percentage wise everything should stay relatively the same. Of course their are fluctuations, but my point is you would definitely expect cost for gasoline to go up because there are people who deserve to be paid from the oil field workers to the ceo’s. Understand these employees are also facing inflation. You have to pay them more. Especially in a time where people are making ridiculous money to work from home and these guys are sent out away from their families for months at a time. Competition should bring prices down if demand is down. If thats not happening then perhaps we need more players in the market, but the system, aside from the temporary fluctuations should work. Its whats great about capitalism. However you have a government that meddlesome in choosing the winners and losers constantly and the little guys pay the price. The only hope we have to keep gas prices down is to open the entire market. Stop the BS. TIRED OF THE GOVERNMENT MEDDLING. Gas is going to go back up. By your account we should be looking at eventual dropping prices. They aren’t going to continue to drop much more and they will be at 4-5 bux a gallon for a while after they go back up later this year. Watch.

        • Wolf Richter says:

          “The reason there is emphasis on refining is because all it takes is one small shutdown,…”

          Nonsense. The US is now EXPORTING nearly 1 million barrel per day of gasoline, during PEAK DRIVING SEASON, up by 28% from a year ago.

          That is totally unnecessary. But it does push up the price in the US.

          California, one of the most expensive states to buy gasoline in, is a big exporter of gasoline. I see those tankers go out regularly while we pay $6 a gallon.

          Time to switch to EVs and let these oil companies and refiners export their excess capacity. Good luck.

        • Sams says:

          Prices are set on the margins, the world is the market and if it is correct that the demand worldvise is up the prices will go up. Only stopped by the lack of purchasing power.

          If demand is down in the USA, that do not matter if total demand is up and there is purchasing power to buy at a higher price.

    • Augustus Frost says:

      It isn’t reducing traffic congestion where I live. I haven’t noticed any difference when I go into work or errands during the week. The Whole Foods shopping center near me is more crowded in the day during the week than weekends. I notice it when I go out during lunch hour.

      • Danno says:

        Until Whole Foods stops being so busy, there is far too much money in the economy.

        To me when they start feeling it, recession has arrived.

        • DanS86 says:

          I go to WF during non-lunch hours. Last time there two checker lanes were open at 2 pm. Plenty of parking. It’s been like this for months. Greatest economy ever, Old Joe said not one month ago.

        • Anthony A. says:

          Our Costco, which is one mile from our house, was packed to the gills with shoppers Tuesday at 11:00 AM. Their gasoline center had cars in line waiting for an open pump and there are eight pump lanes with two pumps in each lane.

          Since I am retired, I thought Costco would be “light” of shoppers on Tuesday morning (Hah!). No recession around these parts (North of Houston, TX).

          While gasoline prices are about $4.00/gallon now (87 octane) and diesel is still $5.00/gallon, it’s not evident to me that traffic is reduced. But I am in a very busy and populated area.

        • Turtle says:

          We’ve been having Whole Foods delivered since COVID but have been going in ourselves more often now. Our spending has gone up in the last few months, though we haven’t changed out habits. I see inflation when I do our budget. So now we are changing some habits.

          I’m guessing the ALDI parking lot is a better indicator. That place is cheap, so when it’s parking lot fills up you know people are cutting back. The Whole Foods crowd will be the last to cut back.

        • DeniseSail says:

          Anthony.. My Costco on a Wednesday afternoon was surprisingly empty. You could see it in the parking lot and only two cashiers were open. Gas was a cheap $3.99. 25 to 50 cents under market. Lots os seasonal retirees and lots of people on vacation. But I think they have flown instead of driven on vacation. Possibly people are not needing to purchase bulk items like they used too.

      • RockHard says:

        All you’re seeing is that people are still going to work.

        Also, “data” is not the plural of “anecdote”.

  2. ben sargent says:

    Absolutely the work from home has a big impact on fuel consumption because that fuel is nondiscretionary so to speak.
    very interesting in the dramatic nature of the change. Another component is the missing employees from the charts that Wolf published on employment numbers. Employees count from precovid have not returned.

    • Whatsthepoint says:

      Absolutely…the copium in Miller’s comment is breathtaking….the elephant in the living room is not only staring everyone in the face, it’s about to crap all over the furniture….

    • Tom says:

      Yes!

    • Djreef says:

      This is precisely why I didn’t want catch this “just a ‘flu’” as one of our former presidents described it, and vaxxed up as soon as I was elligible.

    • Anthony A. says:

      A couple of my elderly (70’s) retired friends got Covid and were hospitalized, and recovered. We really can’t tell if their brain fog has increased from levels before the virus.

    • HowNow says:

      Russell, if you’re discrediting someone, how about providing some evidence. Saying, “I’ll leave it at that” isn’t enough.

    • drg1234 says:

      Nothing is real if it didn’t happen to you, I guess

  3. Brant Lee says:

    Some people in the US can cut energy use a lot if it’s worked at. Fewer trips for supplies, a thing called clothes lines, shorter cooler showers, shutting off unused spaces in the home, etc. I don’t know what the happy medium is for gas prices, but it had better come way down for me.

    • andy says:

      Brant, you can use wipes in place of short showers. Better yet, stop bathing altogether.

      • phleep says:

        Whole society built on a model of consumption that is, at this scale, ruinous. Ridiculous irrationalities taken for granted as “normal,” even obligatory socially. Herd of fools rushing off a cliff at high speeds with silly conceits, poses, habits and rituals. Truly bizarre to watch at scale.

        • economicminor says:

          And don’t repair anything, just throw it out and get the newest, latest version. The US consumer became stupid pigs over the last few decades.

        • HowNow says:

          Phleep, if you get rid of the rituals you’d have nothing left.

        • NBay says:

          VERY well said phleep. This is truly a hopeful article. I won’t even list all that I do without and I’m fine.
          How Now, you will probably still have WWE left, so don’t worry so much about change.

      • Lily Von Schtupp says:

        College suitemate used to take seperate showers just to wash her hair, emulating a Clarol Herbal Essences commercial airing at the time. She was a walking chemical dump of every well-packaged beauty product and magazine rag’s crap lifestyle advice, don’t think she even had her own personality. Frightening in hindsight.

        An entire country indoctrinated to seek happiness in consumption has deep rooted effects on behavior and psyche. But if that thought brings you down, there’s always a pill for it. And pills to help with the side effects of that pill. And so on.

        • HowNow says:

          It isn’t our country, it’s every country. Fixation at the oral stage. Gobble it all up, without even chewing. Everyone wants to be a member of the Royal Family.

        • Lily Von Schtupp says:

          By all accounts, the Danes and most of Scandinavia seem to be pretty grounded and adverse to over consumption.

    • Djreef says:

      Ya, I made note of this in Wolf’s previous article. Saw $3.90 for regular unleaded on the way home yesterday.

    • RockHard says:

      I was a child in the 1970s, but I definitely remember my parents doing these things. I was talking to my aunt last week and I mentioned that, she said “well, we grew up during the Depression, so we knew how to handle it”.

      Anybody born after 1980 has seen a few short recessions. My own kids have never had an actual problem in their lives. I’ve been trying to tell them what I remember of the 70s and I hope it doesn’t get worse than that.

      • Flea says:

        My kids want to install a 100,000 $ pool ,told them worst investment of there lifetime. Laughed at me ,can’t fix stupid

    • Rich says:

      I’m treating this summer like last summer when Covid had a lot shut down or curtailed. Minimize driving, enjoy walks in the neighborhood with less traffic instead of driving somewhere. F the rich profiting off of oil speculation.

  4. Einhal says:

    I will admit I don’t understand gasoline prices or a lot of macroeconomics in general. Based on your charts, it’s clear that refining capacity isn’t the issue. But it’s also clear to me that crude prices aren’t either, as they never reached the peak from more than 10 years ago, while gas was substantially higher.

    So what was the cause of the $5/gallon gas?

    • andy says:

      Also, when oil prices dropped into negative two years ago, gasoline somehow stayed positive. It’s a mistery.

      • Ervin says:

        That negative oil price lasted for one day and the volume of oil traded at that price was minuscule as compared to the big picture

      • RockHard says:

        You frequently show yourself to be not a person to be taken seriously, but you really outdid yourself today.

        • Ervin says:

          April 20, 2020 was the last of trading for the May contract. Traders were holding contracts for oil that did not attract any buyers so physical oil was contracted but the cost of handling made the contracts go below $0. April 21 was the first day of trading the June contract and the price was back in the $40 range. RockHard have you ever heard of Google?

    • SoCalBeachDude says:

      Taxes at the state level are $1.21 here in California plus $0.18 federal taxes and nearly 100% of the rest of the price is PURE PRICE GOUGING by the oil companies and the refiners which is reflected in their sky high windfall profits these days in the tens of billions of dollars.

    • Wolf Richter says:

      Refiner profits? Crack spreads? Greed?

      This is what you get when the inflationary mindset gets going and consumer pay whatever. Been saying this since Feb 2021.

      • Wes says:

        If I remember correctly the last new refinery built in the US was in the 1970s. The time to build a refinery can be 5-7 years depending on EPA permitting etc. The payback to breakeven is even longer. While existing refineries have expanded smaller refineries have been closed due to stricter regulations.

        • Apple says:

          Mostly refineries are expanded rather than built from scratch, but Texas International Terminals refinery in Channelview, Texas opened on 1/1/2022.

          With auto manufacturers moving to electric automobiles, I’m not sure it makes sense to expand or build any new refineries.

        • Wes says:

          Remember, you still need jet fuel, pitch for asphalt, diesel for marine use, polymers for plastics and lubricants etc. Refineries produce more than gasoline. There are also medical products made from petroleum such as Vaseline etc.

      • Sams says:

        Sanctions of Russia have shifted supply lines somewhat too. Maybe not less petrol and diesel on the market, but it do not flow as it used to. That may have come with a cost, and for sure given reason to raise prices.

      • Reverse Petunia says:

        Too bad we were too shortsighted, we didn’t destroy the demand with a carbon tax on fuel that would be ploughed into improved infrastructure incentives.

        Windfall could have benefitted the whole country rather than Saudis, Russians, and oil industry capital owners (of which I am one through shares in XOM, CVX etc…

    • CCCB says:

      It’s the same as with lumber, concrete, steel and so on. When sellers at every level discovered that demand was basically inelastic and raising prices did nothing to reduce demand, they all raised their prices. This happened at the refining, wholesale and retail levels.

      Like most industries now… cars, computers, you name it, sales are way down but profits and cash on hand are at all time highs. Get ready for plenty more. If Russia cuts off Europe completely we will blow right through old crude oil and refined product price records, which will raise the cost of almost every other product made, and food.

      • economicminor says:

        Lumber

        I just drove by the Roseburg Lumber mill Wednesday and they have at least 10 acres of decked logs. So it isn’t a shortage of timber causing the price spikes. Last summer we drove thru the NW and noticed all the mills had huge log decks.

    • Marc D. says:

      Refining capacity is part of the issue, as far as I understand. They haven’t been investing in new refineries in recent years, since they see the long-term decline ahead. Why invest in new refineries if the government and the car industry are in the process of converting everything over to EVs on a mass scale?

  5. Roger Dodger says:

    If people aren’t driving to work, and aren’t being driven to work by mass transit buses, and there are more EVs on the road, how did gas consumption rise to near normal July 2021 to January 2022?

    Did all those gas guzzling quad cab pickups and full size SUVs consume the difference?

    There are a lot of people driving HUGE 4×4 pickups, but also a lot of Telsas, being driven locally.

    How quickly the consumer forgot the $4 peak around 1980, or believed it would never reach that high again.

    • Roger Dodger says:

      Correction 2008 not 1980, serious brain hiccup there.

      Can’t explain that typo.

      • SaltyGolden says:

        Long COVID brain fog.

      • VintageVNvet says:

        couple decades ago RD,
        I began to notice that I would frequently get the ”year” right,,, but did not get the decade right…
        As in, 1959-1989 was the reference, but I would say 2009 or some other decade, etc.
        Not at all sure if this is common for elderly folks, but have at least tried to pay more attention to the decade, since.
        This was WAAAY before covid.

        • Phil Blythe says:

          For decades the year 1977 would pop out occasionally when I wrote the date.

    • Harrold says:

      The last chart shows consumption has been about flat for the last 20 years. We must conclude it would be a lot higher if not for demand destruction of all the kinds wolf mentioned.

      Field report from my area. On monday I went to a very touristy coastal area. I’ve been going there for decades. Usually there are RVs everywhere. I think I saw just one the whole day. Much less traffic and the low gas mileage vehicles were left in the driveway.

    • Anthony says:

      There have been such a small number of EV’s sold that they have little or no effect. Tesla have sold just over one million cars in the last five years in the USA from a yearly sale of light vehicles over 13 million…

      Sometime in the future, maybe but not today….

      • Flea says:

        1m x10 gallons a week is 10,m saved = huge

      • Wolf Richter says:

        Hahahaha, BS. Time to wake up. If the active fleet (vehicles that are actively driven and not just parked as a backup vehicle or toy) = 2% EVs, then gasoline consumption is down 2%. That’s a big permanent move in an already stagnant industry.

        • Publius says:

          Does the EV category include PHEVs? If so, gas consumption reduction might only be 1.95%. :-)

        • Wolf Richter says:

          No, as I pointed out in the article. These are pure battery-electric vehicles. I don’t count anything with an ICE as an EV.

          Hybrids are good, and we have one, but to me that’s just another ICE power train, like the choice between a 4-cylinder and V-6. I don’t understand the logic for plug-in hybrids. And I think they will phase out. Just get an EV instead.

        • Auto Insider says:

          Not true. The gasoline saved by electric vehicles is proportional to the vehicle quantity of EV’s AND the average mileage driven by EV customers, which is proportionally less than the entire fleet average. 2% EV’s means consumption down less than 2%.

        • Wolf Richter says:

          Nonsense. Because everyone who has an EV and an ICE vehicle is going to prioritize the EV and park the ICE vehicle, given the operating costs. This is happening all over the place, including at my neighbor’s.

          But it really doesn’t matter what you or think about this. We will just watch gasoline consumption decline year after year, and I will report on it year after year, and a good time will be had by all.

        • Dan Romig says:

          I just watched a video review of the McLaren Artura by Chris Harris. It is a plug-in hybrid.

          Chris’ take on this was that he could have it juiced up in his garage, and drive away from the neighborhood in dead silence. My motorbike and car can be heard at idle– and I try to be as quiet as possible — stock exhaust systems on both.

          The Artura has a range on EV only of about 11 miles. I am not sure if that is only after a plug-in charge, or standard for everyday driving without electric juicing from a wall outlet.

          Ferrari’s hybrid FS90 Stradale is also a plug-in hybrid.

          These are two cars I hope don’t get phased out.

          My SUV is a standard hybrid, and great in the city.

  6. Halibut says:

    49 years ago, in 1973, the world ran out of gasoline. Things looked awful bleak, but Secretariat crossed the finish line in the Belmont Stakes with no contenders in sight and won the Triple Crown.

    Big Red lifted everyone’s spirits, and we all lived to see another day.

    I’ve got his picture on the wall and two V8s in the garage. Go figure.

    • anon says:

      There is a marvelous book about another Race Horse having a similar spirit lifting effect during the Great Depression.

      You would probably enjoy reading ‘Seabiscuit’ by Laura Hillenbrand.

      • Turtle says:

        Too bad we didn’t have a super horse during the Great Recession. Or maybe we did but nobody knew?

      • nick kelly says:

        Great read. The horse and trainer were both unlikely looking contenders. Biscuit looked like a cow pony on a non too prosperous ranch. The trainer had been a traveling hired- man before being given total control by the far- sighted owner. As Biscuit became a celebrity the trainer would exercise him very early in the morning to avoid press and handicapper spies. Often, Biscuit was not recognized by locals as a race horse at all.

        One of the trainer’s rules: Biscuit, who slept lying down, was never to be woken while asleep. Biscuit also liked ladies and an older mare eventually joined him on the circuit, if I recall more as a calming effect.

        Biscuit liked to race and if too far ahead would slow down to taunt the contender. As always in life, this sometimes backfired. He was always well behaved at the post- race photo op, sometimes bending forward to munch on the bouquet.

        But good God those poor jockeys. I never realized how dangerous this job was/is.
        For a long time Biscuit had the same jockey, but after numerous injuries he got trampled. Dumped in the back of a pickup and later driven to hospital. And the cheating. Pre- video almost anything went. Jockeys would lash each other, or hook a leg around the jockey’s leg alongside and hitch a ride.

        The book builds from Biscuit’s unlikely debut to the ultimate showdown with reigning champion Man of War and his very wealthy owner, who evades the challenge for years.

      • Reverse Petunia says:

        Too bad we were too shortsighted, we didn’t destroy the demand with a carbon tax on fuel that would be ploughed into improved infrastructure incentives.

        Windfall could have benefitted the whole country rather than Saudis, Russians, and oil industry capital owners (of which I am one through shares in XOM, CVX etc…

      • NBay says:

        But I bet she’s happy about gas consumption dropping…..I mean gasoline demand destruction……you learning stuff here too?

    • Flea says:

      In 1979 worked at packing house paid 7.29$ a hour gas was 75 cents ,so today’s wage should be 70$ about 10% of wages

    • Xavier Caveat says:

      Horse racing is dying as I type, its a money loser almost guaranteed if you own lesser steeds, which is 98% of them.

  7. John Apostolatos says:

    I am not sure if work from home is responsible for this. If anything, majority of remote workers have been called back into the office (a great culling tactic by employers). Many are hybrid now.

    Demand destruction is real and gasoline is one of them. Just the other day a Chinese restaurant in our neighborhood closed after 35 years. They had survived so many recessions and downturns including Covid, but not this time.

    The owners could not keep up with weekly/monthly increases in costs of all sorts especially labor.

    • Old School says:

      Someone (I think it was S&P) is out with a research report that the world is going to need twice as much copper in approximately 20 years. I want to do more research in the space. Seems the right copper miner would be a good long term investment.

      Evidently it’s nearly impossible to get a big copper mine permitted in USA. Supposedly there is a rich copper deposit in Arizona that’s been trying to jump through all the hoops and is in year 21.

      • Anthony A. says:

        I worked for Anaconda (copper mining and manufacturing) right out of college in 1973. We had mines in Montana and also Chile. In the 1970’s, the Chilean Government took the mines over (nationalized) them. Our Montana mine was not profitable. Anaconda, at that time purchased their copper from other suppliers, for use in manufacturing at their several basic metals production plants,

        Eventually, Anaconda went out of business after a takeover by ARCO as the manufacturing side of Anaconda was still somewhat viable.

        It’s near impossible to get a NEW mining permit in the U.S. due to environmental permitting rules, and mines in other countries are doing well and selling worldwide.

        Look at Freeport-MacMoRan (FCX) if you are interested in investing in copper production. Buy remember, commodities require careful analysis if you are to invest.

        • Old School says:

          Thanks for the info.

        • HowNow says:

          Also, check Southern Copper Corp (SCCO). Mines in Mex. and Peru.

        • NBay says:

          OS,AA,HN,
          Try calling SRK, world wide mining consultants out of South Africa. Ex-GF worked mostly in their Tucson office, also Yellow Knife, Vancouver, and Perth…..helped get permits for lots of AZ mines…incl FCX, I saw the FCX drawings……supposedly. Ya’ll have fun with each other now!

        • Trucker Guy says:

          So that explains why everyone in anaconda is 80 years old, diseased, and in a pissed off mood. Whoda thunkit?

  8. MF says:

    If Amazon and Walmart get their way and last mile delivery goes all electric, this downward trend will steepen and gain steam.

    But again, it remains to be seen how much reliable lithium production can be brought online. My suspicious mind expects most cities to put overhead wires in and electrify the entire bus fleet, a la Seattle. You can get all the urban poors (i.e.: bottom 80%) onto public transit — an idea that makes the typical planning bureaucrat glow like ET phoning home.

    • nsa says:

      “…a la Seattle…..get all the urban poors onto public transit…”
      Besides the smelly people, snoozing homeless, assorted lowlifes on Seattle light rail and buses, normie riders have a new problem to worry about….second hand fentanyl. Seattle bus drivers claim they are experiencing dizziness, drowsiness, and other symptoms indicating fentanyl exposure.

    • Anthony says:

      They have ordered something like 4,500 vans….they would need tens of thousands of delivery vans in the USA alone….probably even more….

      • Flea says:

        Wonder what happens when they self destruct = burst into flames destroying cargo could be a problem

      • Wolf Richter says:

        Anthony,

        That is another lie you’re spreading here. Amazon alone has ordered 100,000 vans from Rivian alone, plus a bunch of vans from others. They all ordered a bunch of vans.

        You’ve hit your quota of EV lies. The rest will be deleted.

        RTGDFA
        https://wolfstreet.com/2022/07/12/why-delivery-giants-walmart-amazon-fedex-ups-even-deal-with-collapsing-ev-startups-ev-spac-canoo-is-the-latest-deal/

        • Not Sure says:

          Assuming these big companies are able to plan well enough to make their EV deliveries work, that could put a big dent in overall demand for fuel. I suppose we’ll know how well it works in time, but it seems like Amazon is doing this backwards. Ordering the vehicles first, then they’ll worry about infrastructure later. It resembles the backwards approach taken by politicians in their push toward full EV adoption.

          A huge EV van order is fine… I won’t venture into my view of their viability, but it would be fascinating to know exactly how Amazon is budgeting and planning for them. Have they ordered the vans without first performing comprehensive surveys of electrical capacity at their individual facilities? Do they have plans submitted and permits pending with the municipalities in which they plan to operate the EVs? Who is supplying the chargers? Have plans been produced or evaluated by an impartial third party, or are they just trusting a rosy picture painted by Rivian’s marketing folks?

          I know of a large national office supplier who tried to do this on a much smaller scale. Even with fixed routes on a daily routine to specific stores, the program didn’t work out. Their EV delivery trucks present challenges, but they weren’t the root cause. It was their executive’s optimism and failure to plan for the myriad non-vehicle factors that must be addressed first in order for the vehicles to work.

        • RockHard says:

          They call you Not Sure, but it’s not stopping you from opining anyway.

          >Ordering the vehicles first, then they’ll worry about infrastructure later.

          Wolf addressed this in the article linked. It’s only a few days ago and I’m sure you commented on it.

          > Have they ordered the vans without first performing comprehensive surveys of electrical capacity at their individual facilities?

          You do realize that Amazon is one of the largest companies in the world and have been doing exactly this for 15 years at all of their various data centers? You do realize that a data center is a couple orders of magnitude more complex than a bunch of vehicle chargers? You’re just making an argument against Amazon management. That sounds like an argument to short AMZN, but not much else.

        • Not Sure says:

          Easy there RockHard. My screenname is just a silly movie reference. Wolf’s linked article was great, but it doesn’t address infrastructure planning. I realize all of your points, but huge/great companies fall to massive planning failures all the time. There are hurdles to overcome, but if Amazon, UPS, Walmart, or whoever proves that EV delivery vehicles are viable at scale, everybody else will pile in and Wolf’s future fuel consumption charts will show a steep drop over the next decade. Amazon could be planning this poorly or they could be executing perfectly. I don’t know. I merely said that it would be fascinating to see what Amazon’s plans are, and I meant it sincerely because I witnessed another large company try and fail.

        • Reverse Petunia says:

          Thanks to Wolf the enforcer!

    • Ron Morrell says:

      Seattle’s electric trolley busses were installed in 1940 to climb hills too steep for the primitive diesel coaches of the day. The system worked well for 80+ years. Now covering 70 miles.
      Albuquerque city government mandated construction of a 10-mile battery bus route which was changed to diesel before it even fully opened.
      After extensive modification, Indianapolis has managed to make battery buses work on the 10-15 Red and Purple routes.
      Trolley busses aren’t cutting edge technology, but their technology is mature.

  9. Dave says:

    Higher gas prices, demand destruction & reduced consumption, and reduced VMT: all good things. This country is so pathetically dependent on the auto and likewise so far behind any other developed country in our transportation systems. We all need a good kick in the pants to start demanding our elected officials deliver some modern, high quality alternatives.

    • andy says:

      You have any examples when your elected officials delivered such high quality alternatives?

    • Brant Lee says:

      Maybe on the next deficit binge, the first 30T got away. After spending that kind of dough you would think every American would have a chauffeur.

  10. dishonest says:

    Who needs to actually physically go anywhere when we’ve got social media? Look toward youth to lead the way, old dudes.

    The virtual world is the real world.

    • medial axis says:

      Yes, the new frontier is not outer space but cyber space. Trouble is virtual worlds function on virtual money such as bitcoin. That’s something most old dudes just cannot accept.

      • Old School says:

        Capital investment in virtual world isn’t working out so well when it comes to providing real needs such as food and housing at a reasonable cost.

        • JJ says:

          This is why the next frontier for computing will be small compartments bursting open tents and food trays for online users, with supplies stored in miniaturized ovens and fridges next to the internal motherboard.

        • Dave Kunkel says:

          I’m an old fart – I like doing real things with real people.

      • phleep says:

        Virtual is an incredible opportunity for fraud and rug-pulls. And the ephemeral quality means your stream of income ceases in a finger snap. Try eating that NFT when your “friends” have wandered, rather sprinted, oh yeah clicked, elsewhere.

        But it is a good placeholder of doing and wasting nothing, instead of the stupid nihilistically infantile-narcissistic pursuits of most humans, especially Americans.

    • 91B20 1stCav (AUS) says:

      dishonest-guessing your ‘/s’-button is implied. (the timeless worldwide demand for a steady, affordable supply of breathable air, potable water and genuinely nutritional foods has been adequately addressed, nay?).

      may we all find a better day.

  11. SoCalBeachDude says:

    Gasoline at right around $10 per gallon would be a desirable price point and would bring the US in line with most of Europe and reaching that level should be and likely is a key goal of US policy.

    • MarMar says:

      Unfortunately, I think that is very unlikely.

    • Old School says:

      Why would good policy be to lower someone’s standard of living?

      • DanR says:

        To protect the Earth by funding mass transit programs and alternative sustainable energy use.

        • Old School says:

          Mass transit is for the little people. The planners take the 600 mph oil burners.

        • Augustus Frost says:

          Yes, so says everyone else that isn’t being inconvenienced or priced out.

          You’ve given up using fossil fuels, right?

          I didn’t think so. “Shared sacrifice” is for suckers.

        • phleep says:

          It is the tragedy of he commons: the psychopaths will take take take, until the resource is depleted and the place a wreck. The good people (or passive or stupid, etc.) will be left in the dust (before that becomes everything everywhere). Yet there are people here touting the psychopath ego-mania line. Sheer nihilism dressed up as grandiose selfishness.

        • KGC says:

          First off, protecting the Earth is a fraudulent concept. This planet will be around long after mankind is extinct. Anyone preaching “Save the Earth” is actually saying “Save my Lifestyle”. None of those prophets are giving up their standard of living.

          Second, it is the height of hypocrisy for any individual in a first world nation to preach to the less developed about how they should tailor their consumption and growth. The world economy has grown tremendously over the past 100 years and the actual percentage of people currently living in what would have been considered poverty at that back then is miniscule. At the same time, while steadily increasing consumption worldwide, we have also continued to increase population growth, mainly in those less developed areas.

          Lesser developed economies must use the cheapest means possible to increase their standard of living, which means they will rely on older technology for most of their growth and consumption. You cannot expect nations like Bangladesh, for example, to invest in EV’s when they can use ICE for a much lower cost. And since those poorer nations are where the population’s growing that’s the expanded need that will have to be filled. ICE will be a dominant technology for another 40+ years; until something that can provide the same advantages is more available at a lower cost.

          We are never, as a species, going to be able to use technology to conserve resources until we regress the population, and politically, culturally, and biologically that’s hard to do.

        • Bigbilljr says:

          Ya take your mass transit to your next campsite or your child’s soccer game. Let’s see how convinient that is. Gotta run to the market, when’s the next bus.
          Impractical and a waste of money

        • Sams says:

          Re Bigbilljr.
          Around where I live people do take mass transit to the soccer games and even campsites. In both cases it may involve some walking, but to campsites the distance is by choise.

          Urban planning make mass transit the most convinient transport to a soccer game in many cases.

          Next bus, tram, tube or train will often arrive a few minutes after you get to the plattform. In London I have seen the underground trains spaced with two minutes intervall at peak hours.

      • Brant Lee says:

        I thought that WAS the Feds policy for most people.

        • phleep says:

          The Fed was trying to keep the whole circus going, for the most people. Seriously. But they took the path that was first easy and cheap, later high-cost. We are all paying now for the freebies, which was inevitable. But they were not going to have the whole thing go under on their watch. So they stretched out the pain into the future. But the future finally arrived, here.

        • phleep says:

          Nudging around costs and benefits is what finance does. It is what government does.

          Try a world that is truly fair and competitive. Most people will flee in terror from that. Blaming and complaining about the government is a super low-cost low-risk alternative.

      • Sams says:

        Last time i filled petrol on my car I did pay about the equivalent of US 10 dollar an US gallon. Quite a bit up from a year ago, but it is not what will lower my living standard.

    • JJ says:

      $10 per gallon in the US? With the US’s huge geographical landmass as opposed to European countries? That’s really a no-go zone there.
      Europeans can tolerate higher gas prices since their travel patterns are much more tightly wound in smaller spaces than the spread out, wide open US of A.

      • DanR says:

        If gas prices keep going up without any taxes, will we start asking questions as to whether we collectively can afford the middle class lifestyle here in America?

        • Turtle says:

          Many young people in SoCal and the Bay Area can’t afford the middle-class lifestyle as it is. Sad.

      • Sams says:

        Well, the USA would then transform to look more like some plases in Europe where space is ample. The people live in areas as dense populated as in the overall dense populated areas. With a lot of almost unocupied space between.

        Imagine US towns as dense as European towns without any exurbs and little suburbs outside city limits.

    • Flea says:

      Are you ready for food,clothes,lumber and everything else to double or triple in price .We created a world that manufactures and delivers all goods on petroleum products

  12. mike says:

    I think the price of Gasoline has something to do with the war in Ukraine as do inflation, am I right?

    • Wolf Richter says:

      Indirectly and only partially. The spike got serious in mid-2021, long before the war in Ukraine. You can see that on the chart.

      The US is a big exporter of gasoline. So the global rise in gasoline prices boosted US exports, which helped boost prices in the US. Same with natural gas. US exports have a big impact on prices here.

  13. SpencerG says:

    I swear that Wolf is reading my mind. If not that then I may have to have my house swept for bugs.

    I literally looked up the EIA statistics about gasoline sales this morning before going to work. I heard a spat on some news show where a Biden representative was taking credit for a 40 cent drop in gas prices and the Republican retort was that it was because of the conservation efforts of American drivers rather than the efforts of the Administration.

    And Wolf is right about consumers making “behavioral changes” when it comes to using gasoline. I am still driving a 20-year-old SUV which just guzzles gas. Until this latest crisis I hadn’t realized how many fuel economy lessons I had gotten OUT of the habit of using. Combining trips… turning off the ignition when a train goes by… making sure the air in the tires is the proper amount… going into the restaurant rather than sit in line with my car running for the take-out window. Without even noticing it I had started doing these things again this year.

  14. Matt says:

    Wife and I got a hybrid in January of 2020. Thank you Toyota. Last summer work made her work from home permanently. Goes in one day every 2 weeks. On a good month the tank may take 7 or 8 gallons . As for the layoffs. What you are not seeing is the tens of thousands losing jobs every week as these small restaurants. Small business close due to retirement. High cost of food and inflation

  15. Michael Engel says:

    BA-5 is spreading. BA-5 imprison people for ten days. BA-5 reduce
    consumption.
    WTIC might drop to the 70-80’s.

  16. historicus says:

    Remarkable is the disparity in local prices.
    Clubs like Costco might have 4.60 price…..and you drive down the road and see Shell at 5.35
    Such differences are historic. (usually just 10 or 15 cent differences)
    This can be attributed to some variations in those stations that “forward priced” their supply purchasing well….or not so well, as the case may be.
    But, it could bolster the notion of many stations “gouging”.

  17. Michael Engel says:

    The other side of consumption is supply.
    “Event” might constrict supply. WTIC might rise in a sling shot to a new
    all time high.

    • phleep says:

      Putin. Saudis. Europe winter. Plenty of potential “events” out there.

      But I like it better than the rosy mental scenarios and anchors of manic freeway-crazed entertainment-addled Yanks.

      I bet in barbell shapes, at the edges, that still anticipate disruptions, up or down, mirroring what I interpret to be much of ME’s remarks here.

      • Xavier Caveat says:

        I translate ME’s missives into Swahili and then back into Finnish before attempting to decipher them my decoder ring.

  18. smashsc says:

    I’m seeing a couple of anecdotes that might explain some short-term trends: (1) When prices were rising, Costco gas lines were long as people were topping off their tanks once they got down to 3/4ths, as they knew they’d pay more in the future. Now that prices are falling, people are running their tanks down to empty, hoping that the next gallon they need to buy will be much cheaper. Supplied gasoline is staying in corporate storage, not individual vehicles. (2) A “general buyers strike” targeting the “as long as it takes” mentality of the current administration is resulting in sales across the board to decline. (ref: credit card sales & lack of gas demand).

  19. Michael Engel says:

    Copper is down. Demand destruct sent Southern Copper (SCCO)
    under Oct 2007 high and Sept 2021 low. It might reach the low 30’s area, a higher low slightly above Mar 23 2020 low.

  20. Michael Engel says:

    1) In 2008 when commodities plunged and DXY reached nadir,
    EUR/USD high freq transmitted pile of debt to China to build RE, infra, factories, military..
    2) DXY is 50% higher. China is struggling with high debt and falling RE prices in dollar terms.
    3) China RE is caving from within, but expanding overseas, enslaving oil and commodities producing nations or strategically important.
    4) China is buying farmland next to sensitive strategically areas in US.

    • phleep says:

      > China is buying farmland next to sensitive strategically areas in US.

      USA has law in place to block that. Where are the watchdogs? But that can be patched later. Lots of walls of various types are going up. Cyber, strategic assets, supply chains, etc.

    • Brant Lee says:

      China is buying farmland next to sensitive strategic areas in US…..

      So is Bill Gates:

      Who now says he will die poor.

  21. Crush the Peasants! says:

    You will drive nowhere and be happy.

  22. Djreef says:

    I’ll probably downsize to one of those Maverick hybrid pickups from the Expedition l’ve been driving since 2006. It’s paid for and we also have a Honda, so on long trips it doesn’t kill us, but still. I’m sure at some point the Expedition will give it up. I do love that truck, tho.

    • Publius says:

      I’ve had my eye on the Maverick, but here it’s $10k over MSRP, if even available.

  23. unamused says:

    “And people are buying EVs in larger numbers.”

    A hopeful trend, even if it’s a bit late.

    NYT reports that companies that have spent years developing longer-range, faster-charging electric vehicle battery cells are starting to build manufacturing facilities, a major step in bringing the batteries to market. Good for ev. Bad for petrol.

    OTOH, Utility Dive reports that battery prices for electric vehicles and storage are expected to rise this year for the first time since 2010.

    You knew there would be headwinds in transitioning away from fossil fuels, but there’s cause to be cautiously optimistic. Still, I wouldn’t hazard a guess as to how it might play out. Always in motion the future is.

  24. Max Power says:

    It’s not surprising that fuel consumption has been stagnant since 2007 since overall US fleet fuel efficiency decreased between the late 1980s and mid-2000s, then started rising in the late 2000s decade.

    • Brant Lee says:

      2007 finished country living for good. Most small independent retailers went out of business then and so did the route delivery trucks who couldn’t pay the high gas prices. Schools closed, most people reluctantly moved to the city. That infrastructure is all gone. And with it, even more decent jobs evaporated.

      • Old school says:

        Not entirely. Rural living is still a good retirement gig because housing is so cheap and pace of life so slow. Pretty easy to get property taxes below $1000 in rural areas where I live, even in a decent home.

        • Jon says:

          Just curious
          Where do you live
          I am looking for a cheap retirement place to settle down
          Not too expensive
          Big city is not for me

        • CrazyDoc says:

          As long as you don’t need any type of emergency medical care, then you are in trouble.

        • Cookdoggie says:

          Old School is in rural North Carolina

  25. Russell says:

    Using diesel to produce corn to supplement gasoline… insanity
    Government needs to get out of the way.
    Farmers are now addicted to high-price corn.
    Congress is afraid of farming lobbies.
    Can’t – break – the – cycle –

    Corn is a food.
    Diesel is a fuel for working engines.
    Gasoline is a fuel for passenger vehicles.

    Straight gasoline is more efficient and better for ICE than when cut with ethanol. Refineries have more capacity when they aren’t required to blend and price to consumer is lower.

    MAKE IT STOP!!!

    • rick m says:

      Ethanol pulls water moisture from the atmosphere inside the gas tank and holds it in suspension, causing corrosive byproducts during combustion, or so I’ve read. Better to keep your tank topped off in a humid, hurricane-prone area. It’s known to eat the small hoses in lawn equipment. I keep forty gallons of 90octane no-eth gasoline treated with stabil for generators and bugging out in a fuel dump away from the house. It’s Good for eighteen months conservatively. I
      may convert one generator to LP. Gotta be ready, the Gulf is at the end of the block. When the cheapest gas was 4.28 at the Wal, lines around the store. It’s under $4 now, empty pumps. They stole gas tanker trucks in the seventies, haven’t heard of that yet. There’s lots of places where ICE vehicles and equipment will make better sense for the foreseeable future. And many more where they won’t. Utility and cost always talk amongst themselves.

  26. Michael Engel says:

    1) JP will raise interest rates to fight inflation.
    2) The German 3M is up to minus (-)0.2 and the 6M is zero.
    3) JP might fight inflation, but US no longer control oil prices. MBS does.
    4) O/N, short in duration, planned in advance limited blackouts, are good enough for ev drivers to go work, to school, to buy food, to create more demand destruction.
    5) If only oil and commodities glut cure inflation, not mortgages between 5%-7%, not even recession, we might have a lost decade with both inflation and recession…
    6) US debt compounding deflation will clear the roads for the zoomers in the 2030’s – 2050’s.

  27. Einhal says:

    So now stocks are up 1.5% supposedly on the basis that “bank earnings” and “retail sales” are good. But that’s just the opposite. Strong retail sales gives the Fed even more ammunition to continue its rate hiking and QT, which of course, is very bad for risk assets.

    The CNBC shill narratives aren’t even consistent with each other.

    • Russell says:

      Einhal –

      Just like following the real estate bust.

      Good news is bad and bad news is good.
      Grass is blue and the sky is green!

    • RockHard says:

      Anybody telling you the reason a market acted like it did on any particular day is just making stuff up. It’s not like the trade button has a survey afterwards asking “why did you buy/sell today?”

      Get that noise out of your head already.

  28. Seneca’s Cliff says:

    UPS has been trying out a small fleet of electric assist delivery trikes. One of them is used daily and parked next the UPS depot I go to. It is all enclosed and has a little roof and windshield and reminds me of those 3 wheeled vehicles you see in India or Thailand. I think 5 years from now streets in the US will look at lot more like Mumbai and Less like the Techn-Yarns Elon is spinning.

    • Island Teal says:

      Good comments. Sadly there are a lot more reasons why the US will be more like Mumbai 😬😬

      • unamused says:

        The US is destined to resemble the old Soviet Union before disintegrating into a Mad Max dystopia, and he paid nothing for petrol. It won’t be long now.

    • rick m says:

      Once upon a time sixty years ago the USPS used Cushman Mailsters, 18hp air-cooled three-wheelers. Seated, enclosed cab with windshield and cargo box. Didn’t go fast. The government would auction off old ones for a few hundred dollars.

    • Flea says:

      I want one

  29. Einhal says:

    Not totally related, but I’m reading that BMW is going to consumers in some markets a monthly fee to use the heated seats.

    I can’t think of anything more stupid and wasteful than spending money and natural resources putting hardware into cars that you’re then going to disable by software.

    I hate the modern “economy” so much I want it to crash and burn.

    • TheRealMRDyno says:

      I just want to sell software control delete kits…

      • Dan Romig says:

        On the other hand, my “old” 2016 M4 is set up, by me, to have the engine map on ‘Economy’ & the steering system on ‘Sport’ when I start it up.

        As soon as I make my way down the alley and onto the street, a quick push on the button by the gear-shift lever (manual six-speed) and the engine map is on ‘Sport.” Having the ability to choose between the three engine/throttle settings at the push of a button, is something I like very much.

        With ‘Sport,’ the engine responds more quickly in revs and power delivery than in ‘Economy,’ but when downshifting, the computer also matches engine revs to make things seamless (as it does in Economy) — without blipping the gas pedal — which I can do, and occasionally do when in ‘Sport Plus’ engine mode.

        The software on my 2019 V4 1100 motorbike is a game changer. Engine mapping, wheelie control, traction control and ABS braking control. My bike is set just the way I want it, and it is so predictable in how it responds when I ride it. My 2002 Kawasaki ZRX 1200 is a great machine, and parked beside my Tuono, but I have no desire to ride it anymore because I am so in love with the newer one.

        Totally agree, the SAAS (software as a service) on the new BMWs is a terrible concept.

        Zero Motorcycles, the EV motorbike company out of California that is also in partnership with Minnesota’s Polaris on electric vehicle development & projects, has all kinds of “Software Downloads” to allow owners, who’ve already paid a shi#load for their bike, get features that are already built in to be usable. F that, eh?

        My gas station in St. Paul, MN, now has 91 octane non-ethanol @ $5.10 per. It was $5.50 per a couple weeks ago.

    • unamused says:

      BMW wants to charge by the ride. You’ve heard of Software as a Service? This is Motoring as a Service. No right to repair either.

      Porsche charges thousands to remove standard equipment to make a stripped down version. As seen on Top Gear.

      In time you’ll be charged a fee to breathe the atmosphere. They’ll buy out The Police for their theme song. Every breath you take, they’ll be watching you.

      • Einhal says:

        Yes. I hate software as a service. I don’t want to pay a monthly fee. I want to buy software I want, and use it for as long as I want until I want a new version. And not forced to upgrade, but choose to.

  30. Jdog says:

    Saw a guy yesterday put $150 of gas in his F150. That has to hurt.

  31. Nate says:

    It’s that long term demand destruction that has me scratching my head at OPEC (really Saudi Arabia since they’re the only ones with real capacity) keeping prices up this long.

    It might be doing a solid for a fellow autocratic nation, but they lost a lot of money flooding the market to take share from more expensive production like shale and oil sands.

    Price is a function of supply and demand. They went after the supply side hard, which makes sense for any price-fixing cartel. But now they’re just letting EV grow instead of keeping it down too (with cheap gasoline). EVs vs. gas automobiles have different pros and cons, but one of the biggest limitations with EVs is they are still more of a DIY/get lucky with refueling. The more share EVs get, with $5-$6 gas as its selling feature, the less people are scared off from giving it a try.

    After all, batteries power American’s true love, their smartphone. Many have little loyalty for gas powered tech.

  32. Lune says:

    Wolf,
    What do you think will happen with infrastructure funding as EVs become more common? Most surface transportation infrastructure, including public transit, is built from gas taxes. As overall fuel efficiency goes up, and especially as EVs proliferate, the amount of tax collected per mile driven goes down.

    Already federal gas taxes aren’t enough to cover spending, and it will get worse. Eventually gas taxes will have to go up higher and higher since it will be borne by a smaller percentage of the road-using public.

    I think some states like Illinois have a special annual permit that EVs have to buy, to compensate for the gas taxes they don’t pay. Perhaps we’ll see more extensive tolling on roads too (transponders make it much easier than having to staff toll booths). But somehow, we’re going to have to figure out a way to pay for infrastructure that’s not tied to gas taxes, and do it soon, before EVs get any more popular.

    (NB: I fully support EVs. We have to move beyond oil. Nothing will make me happier than seeing Saudi Arabia and its corrupt rulers go bankrupt. But doing so will require a rethink on how we fund infrastructure).

    • ru82 says:

      Yes….there will need to be a method to replace the gas tax that pays for the roads.

      I am not sure what the final solution will be but either

      – A EV Tax added to you license tag renewal
      – Property tax is higher for an EV
      – The best solution may be to charge per mile driven. Since all EVs probably have computers and some type of wireless technology like Bluetooth, Wifi, Cellular. You just download your data and pay online. Or since most EVs will have annual paid subscription services, have a pass through from the manufacturer to the state. I just read BMW is going to charge a subscription just to use things like heated seats, etc. I am guessing they will just install heated seats in every car and hope in the winter time people will want the feature and buy the subscription. It may lure people who would not add the heated seat package when they buy the care but they may change their mind later.

    • Wolf Richter says:

      Lune,

      EV owners will have to pay an annual fee at the DMV. That is already happening in may states, including California.

      The federal government will surely figure out how to tax EVs too.

    • Sams says:

      Common taxes on cars:
      – Annual road tax. Not taxed, not road legal.
      – Property tax on vehicle.
      – Ovner change, document change fee.
      – Toll roads.
      – Parking permit fee/tax. Also on own property.

  33. ru82 says:

    Homebuilder related stocks broke out a 6 month trend.

    Now it looks like banks are bouncing.

    Lots of people are thinking 2.5% to 3% is the max rate the Feds will implement?

  34. Michael Engel says:

    The Dow weekly : since June 27 three buying tails, This week is a hammer at the bottom with the longest tail. June 13 landed on Nov 2/9 2020 open gap.
    The dollar index @107.87. The weekly, if today close < last week high
    @107.61, last week, a setup bar. This week, a trigger. The dollar might weaken and EUR/USD might popup.

  35. Michael Engel says:

    The Dow reached May 12 low resistance line.

  36. Erich says:

    No slackening of demand here in the DFW Metromess. Restaurants are packed, roads are jammed and Costco in the middle of the week is crowded. I guess there’s still a LOT of excess money sloshing around to be spent. Gas prices have started to come down slightly as well as some food prices.

    • Justin Turley says:

      I haven’t seen anyone talking about this, I suppose I’ll look and see after I comment, but with more and more people driving electric and hybrid vehicles and all new vehicles are getting better gas mileage in general so as youve pointed out the consumption has stayed about the same over the last 20 years and will almost certainly will decline going forward.
      This is without any of the current demand destruction youre speaking of. With this trend i was thinking the other day there has to be a significant decline in taxes from gas sales that are used for repairing and building new roads along with bridges and other infrastructure. On top of the taxes lost from sales decline the federal govt and possibly states too im not sure, but the electric and hybrid vehicles that are a big reason for the tax revenue decline for roads, these people are getting income tax breaks. A double wammy in my opinion on our road repair. So i ask, should we be giving the income tax breaks? I think not. Certainly not when i dont believe the whole man made global warming, climate change theory. So were at this point where our infrastructure is in a major need of repair and updating and the left wants to take more dollars out of the pockets of people so they can give a significant portion to their green economy buddies and whoever else to pay for something there should already be money for. Just my 2 cents left over from my paycheck after paying bills, groceries and filling my tank that rolled out from under my seat while dodging and swerving to miss the pot holes all the way home the other day.

  37. Justin Turley says:

    Oh and I forgot to mention, maybe we should be taxing owners of hybrid and electric vehicles some other way so they’re paying their share of taxes to repair roads since they’re not buying gas. Should we just move away from gas tax to generate revenue for road up keep and come up with a new system? The left always seem to be concerned with people paying their share of taxes so they, and everyone else who owns hybrid and electric cars, should be volunteering to give back their tax breaks and cut a check for the taxes they haven’t paid from not buying as much gas.

    • Wolf Richter says:

      In many states, including California, EV owners have to pay an annual fee (“road tax” or similar) at the DMV. In terms of federal taxes, they’ll figure out how to tax EVs, no doubt.

      • Wes says:

        You better believe it! You’ll never have to worry about the government not getting their cut.

  38. ooe says:

    Maybe higher prices are a good for the environment. Before the pandemic, the majority of my co-workers lived outside of this city.
    People need to conserve. The same people who drive SUV’s bigger than some houses and live 60 miles from city centers are the same who complain about…high gasoline prices.

  39. rjs says:

    also note diesel fuel demand fell by 1,014,000 barrels per day to a one year low of 3,368,000 barrels per day, the biggest weekly drop since April 2020 (onset of pandemic)

  40. EricL says:

    I know this is about automobile use, but I know several folks (including myself) who have tansitioned lawn/yard equipment over to battery powered, and that trend — while not a major driver of gasoline demand — is only going to grow. And while there are naysayers, I have no regrets. As more and more homeowners replace gas-powered equipment with battery powered tools, this too will contribute to the demand destruction.

    For the record, I am in support of doing what is right for the environment (and my kids), but this switch was largely driven by convenience, cost, increased performance, and not dealing with noise, fumes, and the hassle.

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