The Oil Drum | DrumBeat: August 8, 2006

197 comments on DrumBeat: August 8, 2006

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odograph on August 8, 2006 - 9:23am

A fun bit in The Truth About Cars feature called General Motors Death Watch:

My God, how wrong can you be? At last Wednesday's press launch of GM's new(ish) pickup trucks, GM Car Czar Bob Lutz once again explored the possibilities. "The effect [of high gas prices] will decrease over time as people adjust to the thought of $3 a gallon, just as they did when it was $2 a gallon and just as they did when it was $1 a gallon." In other words, sooner or later, GM's truck sales will return to "normal" and everything will be allllllright. And then GM CEO Rabid Rick Wagoner stepped up to the microphone and raised the stakes on Maximum Bob's bluff. GM's new(ish) pickups are "the most important part of our North American turnaround plan."
If that statement doesn't send a shiver down Detroit's collective spine, nothing will. Last month, GM's pickup truck sales slumped thirty-two percent. While that's a year-on-year comparison against last summer's Fire Sale For All program, it's clear that GM's second string cash cow is being gored by gas prices and, less obviously, a downturn in the housing industry. A SMALL company called BIGresearch says over 50% of pickup truck drivers planning on buying a new vehicle in the next six months are considering a more fuel efficient sedan or... wait for it... a hybrid.

http://www.thetruthaboutcars.com/?p=1970

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shepseskaf on August 8, 2006 - 10:48am

Delusional, isn't it? And consumers are following their lead. The blind leading the blind...

Gas prices don't put brake on SUV sales

Funny, though, the skyrocketing gas prices don't appear to have much effect on the type of vehicles sold at local car dealerships.

Joe Spinola is sales manager at Bowser, a large multiline dealership in Pleasant Hills. He said few, if any, customers recently have mentioned gas prices when negotiating for a new car, truck or SUV -- and he doesn't expect that to change as prices top $3 for a gallon of super unleaded.

"I don't think customers who are interested in buying trucks or sport utility vehicles are even concerned with the price of gas, because if they were, they would be looking at buying a small car," Spinola said. "It's just not an issue like they say on TV." ... only 3 percent of respondents to a poll indicated that gasoline prices would factor into a decision about buying a certain type of car.

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odograph on August 8, 2006 - 10:53am

I think, or at least I hope, that one's a puff-piece to make local dealers (advertisers) happy.

Here's one pointing the other way:

Higher gas prices mean lower SUV sales

Smart Motors Inc., a Toyota dealership in Madison, has had a shift in buyer interest, too. Three years ago, about 3% of its yearly sales were gas-electric hybrid vehicles. Now, general manager Allen Foster said, hybrid sales account for 20% - one of every five vehicles sold.
But perhaps nothing spells out more clearly the impact of $3-plus gas than the July statistics from the National Automobile Dealers Association. Sales of large new SUVs were down 19% through the first seven months of 2006, and sales of new hybrid vehicles were up 27%.

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PaulS on August 8, 2006 - 3:13pm

Not to burst your bubble, Odo, but it's a comparison that may not generalize well. On the one hand we're looking at what seems to be a typical affluent region (sprawl?) near Pittsburgh. On the other hand we're comparing it the somewhat self-righteous yuppie/professional but old-line region of Madison, Wisconsin close to the dealer, the sort of place where the houses are grand and old, the leafy curvy streets have sidewalks and are infested with speed bumps and "slow for kids" lawn signs, and despite all that, almost no one is walking (on most days of the year it's too hot, too cold, too rainy, or too icy.) And on the third hand - so much for that metaphor - Madison is sort of a Berkeley East to begin with.

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fleam on August 8, 2006 - 3:16pm

Yeah I agree, it's Madison after all, of course they're going to be selling a ton of hybrids......

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odograph on August 8, 2006 - 3:24pm

That was a quick google for stats. I'm pretty sure the national numbers are running pretty hard against SUVs right now ... this one is a little old, March 06:

US Sales of Full-Size SUVs Continued Decline in March

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fleam on August 8, 2006 - 3:31pm

Yeah, SUV sales are tanking, thank God. I look forward to that if only because there will be a great gain in humor nationwide watching obese ex-SUV-owners get in and out of small cars lol!

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odograph on August 8, 2006 - 10:54am

(SUVs aren't the only gas hogs out there these days though ... we won't know if the aggregate fleet MPG has really budged until the numbers come out.)

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joule on August 8, 2006 - 10:58am

odograph -

Characteristic General Motors foresight and vision.

Suddenly it's 1976!

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odograph on August 8, 2006 - 11:20am

Surely the managers today were the new hires then. You'd think they'd carry those years in their DNA!

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Sunspot on August 8, 2006 - 1:00pm

Pickups have more places to put little flagpoles.

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fleam on August 8, 2006 - 2:19pm

I can think of a few big car - small car - big car - small car cycles over the last 30 years, and as insane as it sounds, GM is not entirely unreasonable in assuming "this will pass".

And, I believe studies during the Great Depression showed that people will give up everything possible before giving up their car or the gas for it.

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tate423 on August 8, 2006 - 2:53pm

Don't have the data, but if I remember from classes wasn't per capita distribution light? I remember the roaring 20's (the setup) and even at it's height car ownership was still a great status enjoyed by a few(including those ford workers paid enough to buy them, there were only so many of them too). Just curious though.

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fleam on August 8, 2006 - 3:15pm

While not the saturation it's at now in the US, I think by the 1930s car ownership was pretty high. Ford had been producing like crazy through the 1920s, had lowered and lowered the price of the T, and the other makers had all been producing like crazy in the 1920s also. Remember the 1920s were a period very much like our own - widening between the rich and poor, real estate speculation, tons of buying on credit, they were one big party - the 1930s were the hangover.

Ever read Archie Comics? They were written about the high school experience in the 1920s. It was a given that high school students had a car if they wanted one, even if it was a beat up old T like Archie had.

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fallout on August 8, 2006 - 3:30pm

A minor correction: The timeframe the characters from "Archie Comics" inhabit is the late 1940's. Immediate post-war period.

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fleam on August 8, 2006 - 3:32pm

Wow really? I read somewhere it was based on the creator's experiences in HS in the 1920s.

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fallout on August 8, 2006 - 3:47pm

That may be true, however the first Archie comic wasn't produced until 1941.
http://www.archiecomics.com/news/pr060206_anniversary.html
Most of the inanimate items in the comics date from the 1940's (from black and white be-bops to roadsters and drive-ins).

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fleam on August 8, 2006 - 3:53pm

Well, if the guy who came up with Archie comics went to HS in the 1920s, he'd be in his 40s or so in the 1940s and started the strip then. I think it was not only a neat and cute strip, but had some appeal as a nostalgic thing, looking back to those good times in the 20s which is understandable after the Depression, WWII, and the recession the US was in right after WWII.

Then, some "modern" things like drive-ins added to make it not seem too much of a nostalgia trip. Besides that, a lot of those things were first come up with in the 1920s. They just got big in the 1940s-50s.

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fleam on August 8, 2006 - 4:21pm

OK, looks like the guy went to Haverhill HS in MA in the 1930s, and started comicking about it in the early 40s.

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pedex on August 8, 2006 - 11:10am

http://www.americanfreepress.net/html/gull_island_oil.html

any truth to whats in that link? I tried searching theoildrum for "gull island" and got nothing

I think its BS myself, I highly doubt anyone could sit on an oil reserve of any size and not do something about it at this point in history.

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GreyZone on August 8, 2006 - 12:49pm

To believe this you'd have to believe that all the IOCs of the entire world would willingly walk away from an oil field that sounds like it's about 3-4 times the size of Ghawar, or that the US government is part of some secret shadowy cabal that can control the IOCs and that they showed foresight in saving the largest deposit for after the time when they've drained everyone else dry. Given today's prices and demand, do you think that this would be true?

It sounds like the guy who claimed that there are gigantic oil reserves off the coast of Thailand that can power the world for hundreds of years. I expect more such silly announcements, especially if they can form a corporation outside the bounds US and European legal authority and get fools to invest.

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fleam on August 8, 2006 - 3:19pm

But dang it! Them blanket trees'n'sausage bushes is there! I done seen 'em! I rubbed elburs wit' them rich folks and seen 'em! See, the thing is, them rich folks is just keepin' 'em to themselves, greedy barstids!

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tstreet on August 9, 2006 - 10:27am

Yes, people have adjusted, but part of their "adjustment" is being done by buying cars with better gas mileage.

On the other hand, if what GM says is true, this is just another reason why we need to raise gas to at least
$10 per gallon in advertised increments or institute a rationing system.

I wonder what the children of today will think about their gas guzzling parents and grandparents in about 30 years. Well, maybe by that time they will have learned to enjoy a fried planet without oil and lots and lots of coal.

It is statements coming from GM like this that justifies GM bashing to the max. They are counting on a phenomenon that will spell disaster for the United States and the people buying their vehicles. I do not wish them well.

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197 comments on DrumBeat: August 8, 2006

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“This order [i.e. capitalism] is now bound to the technical and economic conditions of machine production which today determine the lives of all the individuals who are born into this mechanism, not only those directly concerned with the economic acquisition, with irresistible force. Perhaps it will so determine them until the last ton of fossilized coal is burnt.”

—Max Weber, 1905