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235 comments on DrumBeat: July 17, 2008

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Leanan on July 17, 2008 - 8:11am Permalink | Subthread | Parent | Comments top

I do believe that demand is dropping. I'm not sure MasterCard is the source to look to for proof, however.

People may just not be paying with credit cards. Many have had their credit cut off due to fallout from the mortgage crisis. And some gas stations are not taking credit cards any more, forcing customers to pay cash. MasterCard's model may not have caught up with that yet.

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Jack on July 17, 2008 - 8:45am Permalink | Subthread | Parent | Comments top

MasterCard Advisors estimates retail gasoline demand based on aggregate sales activity in the MasterCard payments system coupled with estimates for all other payment forms.

It looks like this refers to all gasoline purchased, not just credit cards. I don't know how good the data is, but it does seem clear Mastercard is presenting it that way.

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Leanan on July 17, 2008 - 9:48am Permalink | Subthread | Parent | Comments top

I know, but I question whether their model is accurate, given the recent changes I mentioned.

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mkcmkc on July 17, 2008 - 11:26am Permalink | Subthread | Parent | Comments top

I'm just watching from the cheap seats, but wouldn't a more accurate measure be gasoline production (plus imports), averaged over months, etc.? I would think that virtually all such gasoline ends up being used in vehicles...

Is that showing a downward trend?

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mcgowanmc on July 17, 2008 - 8:57am Permalink | Subthread | Parent | Comments top

For the last three months or so I've seen it.

when I fill up. and I always fill up now, I look at the other pumps.

The prices are always, $10, $15, $20.

The diesel $15, $20, or $154 (guess they've got a job
or run to make).

Demand Destruction is Economic Destruction.

Robert Rapier's trip from Wyoming to Texas very illuminating.

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River on July 17, 2008 - 10:08am Permalink | Subthread | Parent | Comments top

Mac...I have a good friend that drives a big Kenworth for an exotic auto transport company. We talk a lot and it is usually when he is on the road delivering and picking up autos. I ask him specific questions, like how many large RVs are you now seeing compared to a couple of years ago...ans, very few now. He also reports that several large truck terminals that he once used are now closed, he informed me that 'Loves', a large chain of truck terminals is owned by the Chinese, and he said auto and truck traffic is way off in most areas. All this is anecdotal info but if his observations are correct, and I have no reason to doubt him, then it reinforces the data that demand for fuel is down somewhat. One thing that he said recently is that his company is now having fewer requests for auto transport and that his company has cut mileage compensation for all it's drivers. Iow, he has taken a pay cut recently.

The auto transport co owns 32 rigs and their biz is down. My friend suggested that the company might not survive untill Sept. Most of their customer base are wealthy auto collectors that compete in auto shows or rich people hauling their $500K - $Many Millions exotic sports cars south in winter and north is summer...seems even the wealthy are cutting back somewhat.

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HARM on July 17, 2008 - 4:19pm Permalink | Subthread | Parent | Comments top

"Most of their customer base are wealthy auto collectors that compete in auto shows or rich people hauling their $500K - $Many Millions exotic sports cars south in winter and north is summer...seems even the wealthy are cutting back somewhat."

Nooooo!! Oh, the (well heeled) humanity! What's next? Substituting French's for Grey Poupon? Buying suits at Macy's instead of Brooks Brothers? Wha-wha-what will the children think??

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celticoil on July 17, 2008 - 6:16pm Permalink | Subthread | Parent | Comments top

Get this indicator though: I saw a guy the other day going to great pains to look nonchalant while filling his full size Hummer. It must have been killing him, but he wasn't going to let it show! I wonder if a forensic expert would be able to find bits of forehead flesh on his steering wheel?

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Spaceman on July 17, 2008 - 10:36pm Permalink | Subthread | Parent | Comments top

LOL!
Come to think of it I have heard Large SUV owners field a few remarks in recent weeks while filling up.
Nothing mean, more along the lines of sympathy,"Dude, thats gotta hurt".

At least its not as bad as it was in the predigital pump days when the pump would "ding" at every 10c increment.(I believe that was for the benefit of the gas station attendant(me) who would come running to top it off once the sound stopped)
No way to hide it then!

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elwoodelmore on July 17, 2008 - 8:58am Permalink | Subthread | Parent | Comments top

or maybe, more people are paying WITH master card because they ran out of cash. that maxed out credit stereotype does not apply to everyone. i happen to believe that demand is dropping, based on antecdotal evidence, and the fact that i personally have cut down. not because i have to, but because i live below my means.

if one takes a look at the period 1979 to 1984, 5 yrs, there was a lot less demand, so it didnt happen overnight.

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Richard on July 17, 2008 - 9:04am Permalink | Subthread | Parent | Comments top

Leanan,

> Many have had their credit cut off due to fallout from the mortgage crisis.

MC would filter for people who had a cc back then and still have today.

About the same correction that a.o. WalMart makes when they publish their earnings: Increase/decline of sales for shops open more than 12 months (existing stores)

So I would be surprised if they would fall for that.

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Leanan on July 17, 2008 - 9:51am Permalink | Subthread | Parent | Comments top

People still have their credit cards. So far as I know, nobody's has actually been revoked.

Instead, what has happened is that their limits have been lowered (because their house is worth less). So they have the card, but they can't charge anything on it. Or have to be more careful what they charge.

There are also gas stations that have started refusing all credit card purchases. The fees charged have risen along with gas prices, and with their razor-thin profit margins, many can't afford to take credit cards any more.

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embryonic on July 17, 2008 - 10:04am Permalink | Subthread | Parent | Comments top

Another factor is that many debt advisors will suggest, when they think at least part of the debt is due to people not "really" realising the level of their spending (rather than entirely due to dramatic external circumstances), that people use cash in all cases so they can "see" the money they're spending.

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souperman2 on July 17, 2008 - 11:41am Permalink | Subthread | Parent | Comments top

We have gone from 75%Ccards/25%cash to the reverse.

Seeing lots of tatty bills and old coins.

People are spending more time digging through pockets, wallets, purses to get the right change instead of just giving in and slapping a card on it.

Also the CC processor company has announced no more discounts and future rate hike.

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