First time I've seen it: Diesel over $4 - a lot over!!! - PeachParts Mercedes-Benz Forum

#1 03-10-2008, 02:04 PM

Quote:

Originally Posted by Hatterasguy

Diesel jumped from $3.97 to $4.04 overnight. At this rate its going to hit the magic $5 mark before the end of the month.

I have been saying for years that $5 is the magic number, people will start to change at that price point. No one is going to be lining up to get crappy SUV's thats for sure.

I hope you are correct, but I suspect the "magic number" is significantly higher. I do think you will start to see some changes at $5, but I don't think it will be drastic.

Most of the folks buying those SUVs are pretty "inelastic" consumers. Say you drive your 15 mpg SUV 15K miles per year at $3/gallon, thats $3000 per year ($250/month, $8/day). If the fuel cost increase to $5/gallon, we are talking about $5000 per year ($415/month, $14/day). I just don't see too many folks changing their behavior over $6/day (coffee money).

I do think the used market will take a hit, but that may just encourage folks to keep their SUVs longer because they are harder to get rid of. Over time the new market will take a hit, but I think it will take a while (5 years maybe).

pawoSD · #2 03-10-2008, 02:56 PM

Every time I see (several times per day) some rich soccer mom bringing her daughter somewhere in their extra extra large 2008 GMC Suburban, Escalade, or Yukon XL etc...I feel like shooting out their tires. Why do you need a 19 foot long 7000lb 12 mpg vehicle to bring your daughter places. Insanity. Its almost like the people who can afford to waste a lot (not all those people, but a large amount of them) take it as far as they can and waste endlessly.

I agree on most SUV owners being inelastic customers. Gas will always be a "small" cost to them on a yearly basis, even if it was $10 per gallon.

But then there are the people that can't afford to drive an SUV, but do as a status symbol. I went through a drive through yesterday (only got some fries!) and the guy in front of me in his 2002 Expedition TURNED IT OFF while he was ordering! ha! Started it again when he had to move forward to the window. He must be feeling the pump pain.

turbodeezl · #3 03-10-2008, 03:10 PM

Quote:

Originally Posted by pawoSD

Every time I see (several times per day) some rich soccer mom bringing her daughter somewhere in their extra extra large 2008 GMC Suburban, Escalade, or Yukon XL etc...I feel like shooting out their tires. Why do you need a 19 foot long 7000lb 12 mpg vehicle to bring your daughter places. Insanity. Its almost like the people who can afford to waste a lot (not all those people, but a large amount of them) take it as far as they can and waste endlessly.

I agree on most SUV owners being inelastic customers. Gas will always be a "small" cost to them on a yearly basis, even if it was $10 per gallon.

But then there are the people that can't afford to drive an SUV, but do as a status symbol. I went through a drive through yesterday (only got some fries!) and the guy in front of me in his 2002 Expedition TURNED IT OFF while he was ordering! ha! Started it again when he had to move forward to the window. He must be feeling the pump pain.

Two words: CREDIT CARDS

#4 03-10-2008, 03:15 PM

Quote:

Originally Posted by turbodeezl

Two words: CREDIT CARDS

Yup, and those will be the same people who are $10K upside down on a $20 used SUV. They are already toast, they just don't know it yet.

dieseldiehard · #5 03-10-2008, 07:00 PM

Quote:

Originally Posted by pawoSD

Every time I see (several times per day) some rich soccer mom bringing her daughter somewhere in their extra extra large 2008 GMC Suburban, Escalade, or Yukon XL etc...I feel like shooting out their tires. Why do you need a 19 foot long 7000lb 12 mpg vehicle to bring your daughter places. Insanity. Its almost like the people who can afford to waste a lot (not all those people, but a large amount of them) take it as far as they can and waste endlessly.

I agree on most SUV owners being inelastic customers. Gas will always be a "small" cost to them on a yearly basis, even if it was $10 per gallon.

But then there are the people that can't afford to drive an SUV, but do as a status symbol. I went through a drive through yesterday (only got some fries!) and the guy in front of me in his 2002 Expedition TURNED IT OFF while he was ordering! ha! Started it again when he had to move forward to the window. He must be feeling the pump pain.

Yesterdays news was that the number of car repos spiked last month. Just wait till the people with 2 or 3 reverse mortgages that haven't defaulted on their mortgages start dumping big gas guzzlers, the market will price them down and the poor will buy them to drive and wind up paying the high gas prices then they will go broke when it hits $5 a gal. This is the spiral we are in.

babymog · #6 03-10-2008, 08:42 PM

I see that a lot with diesel pickups, the damn things are so loud that they can't order with their engines running! Sound like cement mixers.

Quote:

Originally Posted by pawoSD

I went through a drive through yesterday (only got some fries!) and the guy in front of me in his 2002 Expedition TURNED IT OFF while he was ordering! ha! Started it again when he had to move forward to the window. He must be feeling the pump pain.

LUVMBDiesels · #7 03-11-2008, 11:15 AM

Quote:

Originally Posted by pawoSD

Every time I see (several times per day) some rich soccer mom bringing her daughter somewhere in their extra extra large 2008 GMC Suburban, Escalade, or Yukon XL etc...I feel like shooting out their tires. Why do you need a 19 foot long 7000lb 12 mpg vehicle to bring your daughter places. Insanity. Its almost like the people who can afford to waste a lot (not all those people, but a large amount of them) take it as far as they can and waste endlessly.

I agree on most SUV owners being inelastic customers. Gas will always be a "small" cost to them on a yearly basis, even if it was $10 per gallon.

But then there are the people that can't afford to drive an SUV, but do as a status symbol. I went through a drive through yesterday (only got some fries!) and the guy in front of me in his 2002 Expedition TURNED IT OFF while he was ordering! ha! Started it again when he had to move forward to the window. He must be feeling the pump pain.

Wait a minute... Some people have big families and/or need to tow or haul stuff. They also might not have the luxury of having enough vehicles to have one for every need. I hate it when people assume that since I am alone in a Suburban I am essentially a fuel hog. I need the truck to move stuff around and tow home my play toys (like the Jeep)

Believe me,I am feeling the pain at the pump. The darnthings gets between 11 and 14mpg on the highway depending on what is in the back and it is now costing me about $200 to go from WV to NY and back!

I cannot wait to get back into my Diesel, but the SD cannot haul the stuff I need to move...

Hatterasguy · #8 03-10-2008, 10:41 PM

Quote:

Originally Posted by Craig

I hope you are correct, but I suspect the "magic number" is significantly higher. I do think you will start to see some changes at $5, but I don't think it will be drastic.

Most of the folks buying those SUVs are pretty "inelastic" consumers. Say you drive your 15 mpg SUV 15K miles per year at $3/gallon, thats $3000 per year ($250/month, $8/day). If the fuel cost increase to $5/gallon, we are talking about $5000 per year ($415/month, $14/day). I just don't see too many folks changing their behavior over $6/day (coffee money).

I do think the used market will take a hit, but that may just encourage folks to keep their SUVs longer because they are harder to get rid of. Over time the new market will take a hit, but I think it will take a while (5 years maybe).

Yeah but the average Joe makes only $30k, so how the F are they going to pull that one off?

Say you make $36,000 a year, thats $3k a month. Throw in the SUV payment of $400 and you are down to $2,600. So with gas and insurance that is almost 1/3 of there income; before living expenses!

Not that this shocks me, I see these types all the time, or actualy my mortgage broker does. They all rent because they cannot afford to buy a house, unless they get rid of the car and make life style changes, which they won't do.

I can understand the coffee money argument if you are making $200k a year, but at an income that is "average" its going to hurt. The more you make the smaller percentage fuel expenses are and the more irrelevent it becomes. But simple finance should make anyone who isn't in the top 10 percent change there habits.

I fail to see how these people can remain inelastic for long.

Knightrider966 · #9 03-10-2008, 10:49 PM

I'm just glad all my vehicles use Biodiesel at $3.59 a gallon if I get lazy and don't feel like making any more!

I'm just glad my vehicles are not big ugly gas guzzling dinosaurs! Even my Dodge Ram Cummins 6 gets 25.6 MPG when I drive it empty!

#10 03-10-2008, 11:03 PM

Quote:

Originally Posted by Hatterasguy

Yeah but the average Joe makes only $30k, so how the F are they going to pull that one off?

Say you make $36,000 a year, thats $3k a month. Throw in the SUV payment of $400 and you are down to $2,600. So with gas and insurance that is almost 1/3 of there income; before living expenses!

I agree that these folks are going to be completely hosed the next time the economy blips due to energy or anything else. Anyone with a $36K income and a $400 car payment almost deserves it, too. IMHO, having any car payment is about the dumbest thing you can do with your pants on anyway. Having 30% of your income tied up in any vehicle is just stupid, I wouldn't even tie up 30% of my income on my housing. These people are the reason the foreclosures and repro's are rising rapidly.