Sunday, August 17, 2008

Motor Vehicles and Oil

The Big Picture points to an interesting data point which shows how much transportation costs have shifted from the price of the vehicle to the price of fuel...

Whenever we see a strange data point -- something that hasn't happened for decades, its worth noting. Recall in 2005, the US Savings rate first slipped to zero.

More recently, something else unusual happened. Consumers spent more purchasing fuel for the month then they did on vehicles: Drivers Spend More on Fuel Than Cars for First Time Since 1982.

One can clearly see the increased spending on gasoline starting in the late 1990's. More interesting (to me) is that combined outlays for motor vehicles AND gas has not risen substantially.

In fact, spending on motor vehicles / parts AND gasoline / oil (in nominal terms) has grown at a similar level (or even less) than in years past.

The big difference is that money spent on oil ends up in the hands of oil producing countries, while the recent consumer thrift (as it relates to autos) negatively impacts the U.S. economy.

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