Tuesday, September 16, 2008

The Arabs Cutting Their Own Throats?

Saudi Arabia has the right idea. Lower prices are actually good for the supplier, if they want folks to keep using their product. The market is finally reacting to the what-used-to-be-outrageous-but-we-no-longer-have-any-rage-so-it's-just-really-high price of oil, and using less.

Clark Howard reports that oil demand is down 6% year-over-year since last June.

Also, road fatalities are down all over the place, 20% and more.

Elsewhere I have heard that the resale prices of full-sized SUVs are falling through the floor.

The reasons for these 3 factoids are related.

Young people are priced out of driving just for the heck of it. Young people are as high-risk as old people as far as the actuaries are concerned. Fewer young people on the road = fewer dead people on the road, and fewer gallons of gas consumed.

SUVs use more gas (duh) so they are up to 3 times more expensive to drive than small cars. The women who wanted an SUV to feel safe and sit up high are going to crossovers and small cars. The families are going to not-quite-fullsize minivans & crossovers. The ranchers (like my dad, with his ancient F-250) are stuck with something that will pull a horse trailer, and even the newer trucks are taking a little less diesel. Nobody wants a big truck right now, and they are getting parked. Teeny-tiny little cars that don't kill people when you run them down in one are getting to be much more popular.

I had heard that people were driving fewer miles, but 6% drop in the demand for oil over a whole year, in a time when the economy is growing? That's HUGE.

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Oh wait, I've had an epiphany! The eeeeEEEeeevil amurikins are driving less and using less oil, and the global mean temperature is falling! Since correlation is causation, SUVs cause global warming! How OBVIOUS!

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