More signs of high gas prices leading to reduced demand. The Bloomberg article is written somewhat unclearly. The 2.7% fall in retail gas purchases is in comparison to the prior year.. From Bloomberg:
U.S. gasoline demand fell 2.7 percent last week, a sign motorists are cutting back on vacation plans as pump prices touchrecords, a MasterCard Inc. report today showed.
Consumers purchased an average 9.45 million barrels of gasoline a day in the week ended June 20, down from 9.71 million a year earlier, MasterCard, the second-biggest credit-card company, said in its weekly SpendingPulse report. It was the ninth consecutive week of declines from the year-earlier period.
Demand rose 1.5 percent from the previous week.
“High gasoline prices are depressing the normal peak driving season that occurs this time of year,” Michael McNamara, vice president of research and analysis for MasterCard Advisors, said in an e-mail.
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Hmm. Sounds a bit unlikely. “The report is based on aggregate payment volume over the MasterCard payments network coupled with estimates of total purchases across other payment forms including cash and check.” (From http://findarticles.com/p/articles/mi_pwwi/is_200708/ai_n19428373).
So it’s a guess, then? Based on how people used to use their credit cards? Other possibilities? Peoples’ credit cards are maxed out, so they are using more cash to buy petrol?
eoghan,
First, the credit card issuers have debit card products too. Second, and perhaps more important, they have relationships with service establishments, in this case, the gas stations. Third, miles driven in April 2008 fell to the lowest level since April 2003.
From the same Bloomberg story:
The report from Purchase, New York-based MasterCard was assembled by MasterCard Advisors, the company’s consulting arm, and is based on credit card swipes and cash and check payments at about 140,000 U.S. gasoline stations.
One of my local gas station is *capping* the amount as $50 when the customer pays by credit card.
So it’s a guess, then?
To really know you need some data on the overall trend, seasonality & volatility… model for all then see how far the actual outcome result is off the number one would have expected from the model and how well that difference would be explained by natural variation or an actual shift in usage patterns..
With these prices one would sure hope people are cutting back but without a longer trend showing ‘down’ – saying consumption has slowed is still just a guess. Maybe a good guess, but a guess.
Not to mention the cheapest gas stations are cash-only
I read an article recently–maybe The New York Times?–that said some gas stations will no longer accept credit cards, and others are offering cheaper cash prices, because the credit card fees are absorbing most or all of the retailers’ margins on gas sales.
Why is it so hard to accept that high prices modifies behavior, especially when the economy has not been exactly booming?
The IEA’s latest Oil Market Report (10 June, 2008) notes, e.g:
Adjusted preliminary data indicate that inland deliveries in the continental United States – a proxy of oil product demand – contracted by 1.1% year-on-year in April and by 2.7% in May. All product categories bar LPG and gasoil registered losses in both months. Demand for gasoline and jet fuel/kerosene use, which are highly sensitive to economic conditions and, increasingly, to price, shrank for the sixth consecutive month.
I take it back! The inventories data today doesn’t leave much doubt but that consumers are using less than expected. I still retain the right to be troubled by forecasts based on past experience in these changing times! ;-)