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125 comments on Oil Price Poll

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Agric on July 9, 2006 - 7:01pm

Your thoughts are accurate, Tenpin, consumer discretionary spend will be the first thing squeezed and the signs are there already. Malwart, when reporting second quarter results last week, said that consumer staples were their strongest sector and consumer discretionary rather weak.

Consumer spend is approx 70% of the US economy, I don't know of any attempt to define consumer discretionary vs staples spend.

Most gas spend is done on credit card, as is a lot of other consumer spend. There will be a lag before increased gas spend affects behavior. Those who pay credit cards off every month will probably make changes in spending behavior quite quickly. Others may let things drift a while before cutting back drastically, yet others will juggle things into probable bankrupcy.

So, the affect of increased energy prices on consumer spend, and hence the US economy, is likely to be gradual.

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Mad Maxout on July 11, 2006 - 11:49pm

So far, it's like you say, with the demand destruction at the long-range-commute end of the bell curve. I already know someone who succumbed to a barrel-a-WEEK commute. He got a job a lot closer to home. Even with some pay cut, he come out ahead no longer spending $500/month on the gas.

But while the long range commuters get demand destruction first, as the prices rise, the curve will rise and get steeper like a Hubbert Curve! He gave up a $40,000/year job becuse $6,000/year in gas sunk his truck. (and the gas money is after taxes)

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125 comments on Oil Price Poll

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